Strategic Thinking, Instinct and Flair for Better Investor Communication
Investor communication differs from marketing communication, external relations and media communication (to pick specific ones based on its importance to any company).
Meant in the sense that who-ever is appointed to get investors interested in the company and keeping them interested, should be a strategic thinker firstly. In other words, the investor communication expert should, broadly speaking, be able to find reasons why the share is not performing (or deteriorating); keep the company abreast of a looming fall and, recommend possible interventions.
In dealing with the reasons the share is not performing, the investor communication expert needs to know how the global and country specific financial markets operate. It is a volatile and fast moving environment. World events outside your country borders can impact on your company share price within seconds. A company clearly operating below efficiency is a given one to receive a hiding in the financial markets. Therefore instinct, anticipation and preparation of what could happen and what needs to be done about it strategically, is important.
Reading from financial indicators including price-earning, dividend/cash yields, headline earning, and liquidity, what the share is bought at then sold, in the end the closing price rules! It is the key message to the company every second of the day!
Right here is where the investor communication expert needs to be able to provide the company with strategic information which would normally be troublesome internal and external company issues impacting on operations; and corporate brand and reputation damage. His internal audience would be those that take critical business and investment decisions. Thus, decision makers from board to executive management level.
Time is of essence in the investment world. The expert responsible for investor communication should apply some instinct reading from global and country specific trends, and have an on-going view of how it had in the past and could in future have a detrimental influence on company share performance. Corporate strategic scenarios once a year are there for a reason, but in a fluid investment environment it is often too slow to adapt to a volatile investment world.
An effective board and executive would be able to integrate insight into investor related issues (also critical key driver brand and reputation perception information) with the insight of other experts in the company. Once done, the company would from having an overall picture of the current and potentially future problems impacting on share performance. They would be able to revise former decisions and replace them with new ones to address the performance.
While the investor communication expert is not the board or CEO in one, he/she needs to be used as a key resource and be allowed to do the job! Investment communication experts could only fulfill a strategic role if they have a presence among and, attention at the top level of the company.
If not, the company will relegate investment communication to a level where it becomes nothing more than routine external and internal communication to ''we had bad publicity, the share fell again, go put out a press release'. Pro-active participation by the investment communication expert, in shaping the company as an investment proposition (would besides being allowed to participate at top level), warrant true working knowledge of corporate strategy, business strategy, investment sciences, and communication sciences.
In other articles one would elaborate on what now seems, wrongly if that is the assumption, to be a super person position in the listed company. Not so! While not an expert with very deep specialized knowledge of each mentioned discipline, without sound knowledge of corporate strategy (investment knowledge would form a critical part) and how it impacts on business strategy and operational execution reflecting the company, the communication expert would not be able to add value to the company. Or, find ways from a communication point of view, to get the share to perform better.
Perhaps it is more realistic to position investment communicators as those can that can influence corporate strategy design, and warn on business strategy that might be a strong risk factor if planned wrongly. If the corporate strategy is not understood properly and used as a framework for business planning it could be the start of share under-performance.
Understanding of the investment world, its dynamics, influencers and investors is a non-negotiable. Understanding communication as a science and art is equal to this! Mixing corporate, business, investment and communication strategy is a tough task. You might be very knowledgeable about the investment world but would you be able to drive effective investor communication. Similarly, you may be an excellent marketing communicator in manufacturing and retail or a financial journalist. Would these fields make you a versatile investor communicator? Perhaps, but also not perhaps unless you can think strategically!
Investor communicators find itself in a position where they have to cope with different corporate platforms. Worldwide in the investment world mergers, acquisitions, take-overs, divestment and restructuring of state owned assets towards selling off, are taking place daily. The lists of possible platforms are by no means exhaustive.
It might be that investors have in its totality bought (or holds majority shares) in a state-owned-enterprise. The investor needs to not only make and keep the enterprise a sustainable one, but also raise capital to grow the new company. They would go to the investment market. Investor communication would play a critical role in the overall process.
A private company that lists on the stock exchange would be another corporate platform. Small and medium sized companies could find themselves in a start-up phase, or still growing. They would need capital and the strong option would be to list.
Private to listed company would present the investor communicator with a very particular challenge of introducing the company to investors and, maintaining the shares bought by them. Many investors are careful when they decide to put money into a company which is still to prove it is going to survive. More or less the same with companies that seems to grow, albeit gradually. Investors expect dividends in the near future of the company. Investment horizon is very much alive in the investment world.
Shaping the investment proposition (message 'why-buy versus 'do not sell'') puts the investment communicator to the test. If the message and evidence behind it are wrong the choice of the voice (channels) would also be either wrong or ineffective.
The right message needs acumen and flair, be it proactive and preventative, or during a crisis where shares are tumbling (reacting to the crisis). Here, the worth of a true investment communicator gets tested.
As the saying goes: Prevention is better than cure! A board and executive should allow the investor communicator to fulfill the role of a recognized strategist in the company. They should allocate sufficient funds to enable a proper investment communication strategy with all the necessary structures, systems, human experts and technology in place. Then get to work!
The right person and people (staff and co-operation from others like the board, executive and respective experts) would be the key to getting value from whatever is spend on investor communication.
Effective investor communication is all about getting investors interested in buying shares, and thereafter keep them on board.
If you have any query then consults with the experts at CL King and Associates. CL King Corporate Access is a strong partner in building investor relationships with a long-standing commitment and track record of facilitating meaningful dialogue between public company managements and institutional investors.
Call at 518.447.8647 or visit http://www.clking.com/