Growth Lessons Learned from Juggling the Three “Eyes” of the IPO

March 13, 2023

Original article published by Alabama Inno

An initial public offering is different from other events that spur growth. For maybe the first time, a new IPO is in the public eye. Passing of the Sarbanes-Oxley Act of 2002, and additional regulations that continue for these firms, reminded everyone of the importance of being in the public eye. As anyone who goes through an IPO can tell you, the effect of regulation is not the whole story. Even before and in addition to Sarbanes Oxley, there is tremendous scrutiny getting ready for an IPO and life as a public company. The management team seems to be constantly dealing with lawyers and accountants while being reminded about the many Securities and Exchanges Commission (SEC) regulations. The needs and requirements associated with being in the public eye for a new IPO are many; however, the consequences for other parts of the firm are not always fully considered.


In addition to the public eye, there are two other perspectives that deserve attention, and these others often receive far less time. The second “eye” is the operations eye. While the management team is focused on internal meetings about the IPO and then later heading out for weeks to do the road show (meet with potential investors), the company must continue to operate. It’s not only the CEO who is distracted by the IPO process; many members of the leadership team who are either part of the IPO process or covering for the people who are away on IPO business also have additional duties. This means operations are stressed, and a plan for handling the work needs to be made.

However, even if a firm adequately manages the flow of work, there is yet one more “eye” that needs attention, and this one is often the most neglected. I call the third eye of the IPO the internal eye. The internal eye focuses on what the employees are seeing and experiencing. One of the most important and noticeable changes from the employee perspective is the treatment of communications.

The Internal Eye

In most cases what I see with IPOs is lack of understanding of the internal eye. As business focus moves to the public and operations eyes, often it is assumed that managing those two well will automatically cover the needs of the internal perspective. However, time and time again I watch organizations ignore the internal eye and then suffer consequences that later negatively affect operations (firm performance goes down) and subsequently the public eye (stock price declines). Thus, the internal eye is an important view of the firm that any leader desiring to complete a successful IPO must pay attention to – and earlier rather than later.

Over the years, I have worked with several CEOs going through IPOs. This CEO was very focused on retaining his company’s culture even during the significant change of the IPO. He understood that the IPO had the potential to damage the culture because the way the firm communicated would change. There are many types of information that were freely discussed and shared pre-IPO, which due to the strict reporting requirements in place post IPO, could not as easily shared with employees. However, the CEO’s response was to be open with other information and continue to support the company’s cultural norms as much as he could. In this vein he was incredibly creative.

The Road Show Diary

One such communication innovation started during the IPO process. This CEO, Robert Felton, turned the IPO road show into a company event through a small and simple intervention he called the “Road Show Diary.”

The road show is a grueling but energizing endeavor that every IPO firm’s leadership team experiences. It involves about 3 weeks of non-stop travel and continuous meetings. Days are filled with one-on-one meetings, large group presentations at lunch, more one-on-one meetings in the afternoon, schmoozing events, group meals and very little sleep. The employees back “at home” know the leadership team is out drumming up business for their IPO, but most really don’t understand the process. They do, however, know that the CEO and team are gone.

It’s a big event, and in most cases, it also is a giant black hole. This type of lack of visibility and communication can start to create internal or employee-based problems if not considered carefully and managed. Thus, Mr. Felton’s diary provided the needed personal touch combined with facts to keep his team as energized as it has been during its growth to date.

The road show diary was a nightly account of the daily events. Bob wrote personal notes, talked about meetings, not specifically but generally. He shared no confidential details, but he was able to discuss the cities he visited, his reactions to events, food, people and more. He used the diary to teach and to share the experience as if they were part of the road show team. I know that it wasn’t easy for Mr. Felton to end every evening by writing diary entries and sending to his employees, but the response he received was so positive that it kept him going. Employees appreciated it so much that at a few of the stops the leadership team found care packages awaiting them. The employees pitched in and put together care packages with personal notes, stuffed animals, homemade cookies and more for the team.

The road show diary was only one way that Bob was able to keep his firm’s culture alive during the events of the IPO. He saw the positive effect it had on the process and team, and then during the rest of

the IPO and post IPO, continuing into a merger post IPO, the leadership team at innovated and built a structure that continued to support growth.

Managing the Paradoxes of Business Growth

Focusing on the three eyes of the IPO, the public eye, the operations eye and the internal eye can help any organization better manage the change that happens when a company goes from being private to public. In one of the other studies I have done on IPOs I found that employee energy was very highly correlated with stock price (measuring the data weekly). You might think that’s wonderful, but we learned it was a very negative side effect of much of the IPO attention. The causation cycle was not that employees worked hard, and the market noticed and then stock price went up. The CEO of this company learned that because employees had the stock price running along their computer screens, and it was streaming on monitors all around the office they were far more in tune with the small fluctuations of stock price than was healthy for them. The regular ups and downs caused by things not at all associated with their company’s performance were randomly de-motivating employees because the causation cycle was that stock price was affecting employee energy, which my research shows is a measure of productivity. There were negative and unexpected consequences of this cycle. Thus, the company had to engage in a major educational campaign to de-link attitudes from stock price. This was initially very counter intuitive because the firm had a stock purchase plan, and they wanted employees to feel their efforts mattered, but that sense of linkage was really needed for longer-term performance vs. daily stock price fluctuations.

I have done significant work on companies going through initial public offerings, and when reviewing this work and sharing it, I found the lessons and learnings extend beyond the IPO to other change events. Regardless of the types of changes, positive or negative, that affect a company, it is critical to consider the three eyes that are always present – the public eye, the operations eye, and the internal eye. Learning, engaging , storytelling and anticipating the effect of change on all these pieces of the business is important for growth and change of any type. The paradox is that even though indicators of growth, such as the IPO and stock price changes, are important to share with employees, they can be demotivating if only seen through a narrow lens. This same phenomenon can exist when changes in senior leaders occur, mergers or acquisitions happen, or when many other large change events drive public attention to a company. Anything that affects the public eye must also be viewed from the operations and internal eyes for longer-term success.