By definition, a CEO has to be a leader but the mindset of an Alpha CEO is distinct from a "typical CEO." This individual actually thrives in challenging circumstances including those with new competition, disruptive change, pressing social and environmental issues, or economic meltdowns. They appear to have a special capacity that allow them to navigate complex situations with success.
McKinsey & Company’s Deal Volume took a close look at what what it means to be an Alpha CEO, the term’s significance in private equity, and how private-market companies can benefit from having an alpha. This led to further research: McKinsey found 146 CEOs that excelled in the CEO role to study but then cast a wider net to round it out to 200 top-performing CEOs. According to Sach Gai, senior partner in the McKinsey’s Toronto office and leader of the Global Institutional Investor sector, the difference is subtle but a big one. “When we did our interviews and research in the private realm, a few differences stuck out to us. Number one is performance edge. The amount of focus on performance, particularly short- and medium-term performance, is higher in private realms, which makes sense considering the governance structure and the way private equity, for example, operates. That has a material impact on how CEOs make decisions and rightly allocate resources,” says Gai.
While Alphas are extremely prominent in the financial sector, alphas are everywhere and exist in every industry. According to Harvard Business Review, 70% of Alphas tend to be male but that’s not a reflection of female abilities or Alpha tendenciess but of the opportunities available to women at the executive level.
It’s not the ability to take on risk that sets the Alpha CEO apart but knowing when to take it on. However, an alpha isn’t likely to take on too much at one time. Uncalculated bold moves are extremely uncharacteristic for an alpha. While we have it drilled into our brains that change in the workplace environments is often necessary and the ability to adapt to change is a strong indicator of a company’s performance, an alpha CEO is less likely than an average CEO to take on organizational re-design or management reshuffle in their first two years in the job. McKinsey experts explain that “there are only so many initiatives and changes that organizations and people can absorb in a short amount of time.” The Alpha CEO knows the difference between productive change and being the bull in the china shop.
HCA Magazine breaks it down a bit further: “Alphas reach the top ranks in large organizations because they are natural leaders—comfortable with responsibility in a way non-Alphas can never be. Most people feel stress when they have to make important decisions; Alphas get stressed when tough decisions don’t rest in their capable hands. For them, being in charge delivers such a thrill, they willingly take on levels of responsibility most rational people would find overwhelming.”
While there are extreme upsides to having an Alpha CEO in terms of performance and recognition, Alphas are extremely independent and action-oriented, expecting high levels of performance off the bat. This can make an Alpha extremely challenging to work with, as they are rapidly processing and analyzing situations as they are happening which doesn’t leave much room for asking questions or explanations.
Still, it’s important not to overgeneralize. According to Dr. Rob Fazio, writing in Forbes, “Not all alphas talk over people, argue or drive objectives at the expense of inclusion or collective wisdom. Alphas are a combination of awareness and adaptation. There are four types of alphas: the unaware nonadaptive, the unaware adaptive, the aware nonadaptive and the aware adaptive. The aware adaptive alphas, whether they are male or female, are the most successful at influencing others because they know when to turn up or turn down their alpha. The most dangerous alpha is the unaware nonadaptive alpha. These people are often referred to as bullies.”
According to Harvard Business Review, “alphas feel justified in focusing on the flaws in other people’s ideas or arguments. As a result, coworkers get intimidated, which makes learning from alphas difficult. The more pressure an alpha feels to perform, the more he tends to shift his leadership style from constructive and challenging to intimidating or even abusive. Organizations become dysfunctional when people avoid dealing with a difficult alpha and instead work around him or simply pay him lip service.”
"A good Alpha CEO puts their people ahead of themselves. When you demonstrate that you trust, value and believe in your people, they will rise to that belief," shared CEO of Make Love Not Porn, Cindy Gallop. "A company outperforms when its people outperform as a whole, not just the CEO.
