Page 36 - MS Year in Review 2017_Neat

“USING THE ‘PYRAMID OF
ORGANIZATIONAL
DEVELOPMENT’ TO CREATE
‘INCREMENTAL ALPHA’”©

By: Eric G. Flamholtz, PhD
The terms “Alpha” and “Beta” are commonly used by invest professionals. The term
“Beta” refers to the relationship between risk or risk and return: the greater the risk
(of loss) the greater the expected return and vice versa. “Alpha” is the term used
by investment professionals to indicate a differential or incremental value of a
company that is unrelated to Beta.
The purpose of this article is to examine how an empirically validated strategic
management concept termed “the Pyramid of organizational development”
can be to create ‘incremental alpha.’

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