Archive for the ‘Messages & writing’ Category

« Older Entries
Newer Entries »

Open mouth, insert … No, wait!

July 8, 2010

“Keeping Your Foot Away From Your Mouth”

This headline in yesterday’s Wall Street Journal piece (p.D1) highlights a common human frailty. Citing gaffes from business leaders, politicians and entertainers, the WSJ says words do matter – and verbal errors can cause lasting damage.

In investor relations, of course, foot-in-mouth syndrome is one of our worst fears. We go to great lengths to avoid selective disclosure, much less erroneous disclosure, of financial information or strategic plans not yet ready for broadcast.

This is why we brainstorm key messages on quarterly earnings or strategic transactions in advance (and put them in writing to use as a reference) … why we write and review drafts of news releases and comments for investor meetings … why we create Q&As for conference calls and corporate events … why we try to make CEOs, CFOs and other spokesmen rehearse speeches and Q&A times.

The gatekeeper role is mission-critical in IR. We exist partly to create a process for orderly disclosure – helping our companies think before they speak.

Of course, some CEOs just are who they are. Most veteran IR people can tell horror stories – on more than one occasion, I’ve rolled my eyes at something coming out of the boss’s mouth. “Did he really say that?” Once the blurting is done, it’s too late for anything but damage control – which often doesn’t work too well.

Maybe one of the key performance indicators in an IR person’s annual goals should read: “Get through the year without anyone in top management sticking their foot in their mouth (at least around our investors).”

Any success stories or tips?

© 2010 Johnson Strategic Communications Inc.

Tags:, , , ,
Posted in Messages & writing | Leave a Comment »

PowerPoint goes berserk

April 30, 2010

As investor relations professionals, we’ve all seen PowerPoint slides that get just a little bit out of control. Too many bullets, too many words, too many pictures – the CEO makes one more addition – and a visual aid turns into a visual Frankenstein.

For your weekend enjoyment, I thought I’d share this slide – from a consultant’s presentation to a group of US generals – as reported by the UK’s Daily Mail:

Yes, someone got a little carried away. “When we understand that slide, we’ll have won the war,” quipped Gen. Stanley McChrystal, US and NATO force commander.

This slide has nothing to do with IR – as far as I can tell – but I have seen graphic concoctions at brokerage conferences that come close to this level of complexity. The spaghetti bowl above reminds me of one “business model” slide I saw.

In our eagerness to tell everyone everything, we can become indecipherable. We must remember that IR is about getting people to quickly grasp our story – to understand, not to be wowed by management’s quantum mechanics-style thinking.

Some quick tips on PowerPoint slides:

  • Consider doing without. Some CEOs tell a more compelling story by simply talking. Depending on the setting, no slides can be very effective.
  • Limit the overall number. Fifty is settle-in-for-a-nap time (sorry if I offend). Twenty is a more palatable presentation for already distracted investors. The marathon analysts’ day is a different story – but, still, don’t get carried away, and build in some breaks from the daylong visual bombardment.
  • Each slide should make a point. It should have a single purpose. The point may be “Our 5-point strategy aims to drive EBITDA,” but the takeaway for an investor is the outcome, more than the 5 individual priorities.
  • Use the 6 by 6 rule. That is, 6 bullets of 6 words each – as a maximum per slide. Even that’s a lot of words.
  • Consider the magic of 3. Some experts swear by the psychological appeal of 3 things – 3 points, 3 bullets, 3 whatever – to make a memorable impression.
  • Graphics or pictures must serve the content. It’s not about eye candy. Visuals must help the listener understand – your finances, customers, markets, strategies or science. Illustrate for clarity.

I recognize the culture in some countries – hello, European IR folks – favors more complex slides. Mine is a US-centric view. But the core message still applies.

Take two steps back and look at your slides. Use that “View Slide Show” command in PP and imagine you’re a member of the audience watching and trying to listen.

Bottom line: Clear and simple tell the story.

Here are a few previous ideas on good slides, bad slides and surprises in presentations. What’s your pet peeve or best practice for slides?

Tags:, , , ,
Posted in Messages & writing | 1 Comment »

Happy 2010!

January 1, 2010

Just about everyone is happy to see 2009 fading into history and brighter prospects dawning with the new year. I share the enthusiasm for a new start, not to mention more favorable year-over-year comparisons. And I wish you personally a healthy and prosperous 2010.

The first question we confront, as communicators who will often cite the year in presentations and conversations, is how to say it – 2010, that is. People have been chattering on Twitter and other forums about whether “two thousand ten” or “twenty ten” is the way to pronounce 2010. I’ll put my vote in for “twenty ten.”

This view finds support from a New Year’s Day column in the San Francisco Chronicle, which cites a grammar zealot who “cringes” at  hearing two thousand ten after a century of nineteen such-and-such. Then, more moderately, a linguist:

“It’s not wrong to say ‘two thousand ten,’ ” [noted UC Berkeley linguistics Professor George] Lakoff said. “And it’s not like ‘twenty ten’ is the right way.” … Nevertheless, Lakoff predicted, ” ‘Twenty-ten’ is gonna take over. It’s shortest. It’s easiest to understand.”

And there’s something to be said for short. Maybe you don’t care, but if you’ve been wondering, there it is: Twenty-ten has arrived.

I hope your new year is a good one!

© 2010 Johnson Strategic Communications Inc.

Tags:, , ,
Posted in Messages & writing | Leave a Comment »

Substance over style

November 13, 2009

The CFO of a local company made a good point today during a panel discussion on the state of the capital markets: It’s the substance of a company’s story that matters to investors, more than style or charisma – especially in tough times.

Ryan VanWinkle, senior VP and CFO of NYSE-listed Ferrellgas Partners LP, was asked at the Kansas City chapter of Association for Corporate Growth to explain the company’s success in raising funds in both debt and equity markets in 2009.

“In the end it’s not any one person. If you have a good story to tell, it doesn’t matter who tells it,” VanWinkle said. For a good company with a track record and a good transaction, he said, “the capital markets are wide open.”

This is a change from late 2008, when even good companies couldn’t raise money, he said. And the day may come again when the doors all slam shut, so VanWinkle suggests that companies add some liquidity to protect against that contingency.

Just thought this was a worthwhile insight on investor relations: The reality of the story makes the difference, more than the marketing flair we show in telling it.

Tags:, , ,
Posted in Capital markets & IR, Messages & writing | Leave a Comment »

IR as a roadmap

November 4, 2009

Roadmap NJ-NYYou gotta love Global Positioning Systems – finding almost anything, guiding you through the streets, offering data to get you to your destination. And you don’t have to fold them back up, like the roadmaps people used in the old days.

I thought about roadmaps – and their GPS counterparts – as I was working on a strategy for communicating a company’s value to investors.

We need to provide roadmaps to our investors, to enable them to envision our destination and see the path the company is taking. A few broad examples:

  • Investors need to see the path back to financial health for most companies coming through the recession. How will the P&L improve, through cost cuts or recovery in revenues? What steps are we taking, and when will we get there? Where do we need to take the balance sheet? (See earlier post on recovery IR.)
  • Investors in biopharma and other R&D-based companies need to understand the path for commercializing new drugs or high-tech products. What’s the process? Where are the challenges? How will we navigate them? What’s the timeline, and will investors see the mileposts along the way?
  • Investors in companies affected by government policy changes – health care reform, cap and trade, tax increases on dividends, you name it – need to visualize the different routes their investments may take depending on what Washington does in specific areas.

We, of course, are the map makers (or people who load data into the GPS devices).

Investor relations professionals should think more about roadmaps. A good map would tell investors where we are, what the destination is, and how we plan to get from here to there. We can’t assume investors – especially those new to a company – know the road. To create understanding, we must craft the clearest possible explanations of how our companies are moving forward to reach our goals.

The analogy to roadmaps suggests one more thing: We should also try hard to give visual expression to key investor messages. Seeing how a company intends to create value adds persuasive power to the verbal explanation of the strategy.

Do you have any examples of useful “roadmaps” in the financial or strategic realm?

Tags:, , ,
Posted in Messages & writing | 1 Comment »

Execution trumps strategy

October 27, 2009

Companies often find themselves explaining strategies to investors, and investor relations people should be experts on how our corporations are creating value, building competitive advantage and so on. But strategy isn’t the whole story.

Some words of wisdom on strategy – and execution – come from Paul Polman, chief executive officer of Unilever, in the McKinsey Quarterly (text here, video here):

I’ve always said execution is strategy in our business. This is consumer goods. I cannot speak for other industries, but for us, execution is strategy. It’s absolutely important. In fact, the strategies that we have as companies might differ a little bit, but that’s 5 percent or 10 percent of the work. And then the other 90 percent is execution.

I’ve seldom met a consumer—and I go to a lot of home visits or go around with shoppers—and I’ve seldom met a consumer who buys our wonderful Knorr products or Lipton or Omo or Skippy because they like our strategy. And so, our business is a very simple one of getting the right products at the right place at the right quality at the right price—all the time.

And in our industry, share movements are often happening because of lack of execution on the other side. So, this is a very, very important part of us. Now, organizations normally don’t tend to gravitate towards execution, because strategy is the sexy part of all of this.

An interesting thought, in its implications for messages to investors.

One question is, How do we communicate execution as a key message? Surely not just by waiting for the earnings numbers to prove management is executing well – although that’s the ultimate test. IR people need to scour our companies’ everyday and exceptional happenings for achievements that demonstrate skill and discipline in execution. And we need to be telling those stories, as well as our strategies.

Tags:, , ,
Posted in Messages & writing, Quotable quotes | 2 Comments »

Visualize the data

October 23, 2009

If you enjoy seeing your data in graphic form – not just drab tables or bland bullet points – you’ve got to check out a website called FlowingData. Nathan Yau, a PhD candidate in statistics at UCLA, publishes the site – a wealth of interesting pictures.

Investor relations people and our audiences are, of course, data geeks. IR is about the numbers – but more than that, our story is about the change in numbers, the trend that creates value for shareholders. Flat lists of numbers hardly do justice, sometimes, to the powerful drivers of performance for our businesses.

FlowingData mapWe should always be on the hunt for clearer, easier to grasp, more persuasive ways to communicate data on the markets for our products and services, not to mention the financial trends that influence our stock prices. To the extent that investors “get it,” they invest.

It’s worth spending some spare time exploring new graphic approaches. A good place to start is FlowingData’s “projects” page, a sampler of Nathan’s experiments in visualization (he also offers an archive of older projects). Some pearls I’ve found:

  • Living maps - WalMart or Target‘s amazing growth story starts with a single store and expands to fill up the continent, as the years tick by. Instead of showing a static map of locations on a slide in a Powerpoint, or a simple map on your website, go dynamic with a map that comes alive.
  • Bubbles - Discs on a graph, by their size and positioning, communicate a lot. Have a look at this post on US market shares of beer – you see at a glance who the winners are and by how much (unless you’re an upscale beer snob, ignore his comments on Bud, Miller and Coors). To go hyperactive with bubbles – and leave numbers behind - check out Nathan’s moving graph of people’s hopes and dreams as expressed on social media site 43things.com.
  • Choosing a chart – Ever wonder which kind of chart to use? Nathan links to a decision-making flow chart in a PDF file from the Extreme Presentation blog.
  • How not to do it – FlowingData offers six amusing tips here on how to make an ordinary graphic really, really ugly.
  • Blogs on presenting data – A page full of links offers a jumping off point for exploring dozens of viewpoints and how-to sources on visualizing data.

FlowingData doesn’t focus on financial information, though it has some economic content. For example, the humble bar graph isn’t explored much. A staple of data presentation for investors, many bar charts could speak more persuasively if they had movement to show growth over time – or even just better labels and scaling.

My point is simply that IR people need to be thinking and learning about graphics. Visual tools are critical to communicating effectively with investors – and we should be sharpening our craft, even as we keep up with the numbers side of IR. At the intersection between numbers and art, we should be lifelong students.

A few other sources to stimulate your visual thinking: The Wall Street Journal Numbers Guy blog, anything by data graphic guru Edward Tufte, By the Numbers blog in The New York Times, and the Extreme Presentation website.

Do you have a favorite source of ideas for graphics in IR? Share a comment.

Tags:, , ,
Posted in Messages & writing | 1 Comment »

Stakeholders vs. stockholders?

July 14, 2009

A Stanford University business professor, Jeffrey Pfeffer, takes on “shareholder capitalism” in an article in the July-August issue of Harvard Business Review.

Pfeffer argues in “Shareholders First? No So Fast …” that the pendulum is swinging from stockholders toward stakeholders. Noting the recent political changes and populist backlash after the carnage in financial and credit markets, he says CEOs and the rest of us need to get away from shareholder-driven decision making.

I’m not sure I buy the stakeholder-stockholder dichotomy. But we certainly do need to study the mood of our society as we work out corporate strategies – and craft messages for investor relations and corporate communications.

Pfeffer says companies used to be run (in the 1950s and 1960s) for employees, customers, suppliers and communities, as well as shareholders. In the 1970s and 1980s, he says, faith in the wisdom of financial markets became pre-eminent.

He describes the current shift back to stakeholders:

Now opinions on deregulation, finance, time horizons, and the wisdom of corporate leaders are all shifting, and the logic for putting the creation of shareholder wealth ahead of the creation of stakeholder value is rightfully under fire. Given the political realignment occurring in many countries, and the residue of the worst economic meltdown and destruction of wealth since the Great Depression, the chances are pretty good that stakeholder interests will remain at the top of the list a bit longer this time.

Even while stockholders were king, some of the most successful companies like Southwest Airlines put employees first, customers second and shareholders third, Pfeffer notes. The people who most influence a company’s success – employees and customers – don’t really get fired up by shareholder value, he suggests. Employees want to be valued (and paid), and customers want quality, price and service.

To me, there’s an element of “straw man” in the stakeholder vs. stockholder debate. Most companies I’ve worked with see shareholder value as a long-term outcome of working to motivate employees and excel in meeting the needs of customers. To the extent that any CEOs actually do fit the image of greed-crazed robber barons, I don’t see their behavior as having anything to do with the interests of shareholders.

Pfeffer even suggests that shareholder capitalism contributes to causing recessions. In that, I think he goes beyond economic evidence and joins the political hordes. Not much good can come from taking up torches to burn CEOs at the stake for our current woes. I doubt that shareholders’ interests led to this or any recession.

But stakeholders are the people our companies serve – shareholders, employees, customers, suppliers and communities - whatever order you list them in.

Our message has to do with what leads to business success. So, yes: stakeholders … and stockholders. What’s your view?

Tags:, , , ,
Posted in Governance, proxy & pay, Messages & writing | 5 Comments »

M&A clichés don’t ring true

June 15, 2009

Examples abound of acquisitions that ultimately fail to benefit shareholders, and the wipeout in market values since 2007 has provided lots of new case studies. Exposure of deals-gone-bad serves as a cautionary tale for people who write merger announcements: Too often, standard M&A clichés don’t ring true.

One case in point – the 2006 acquisition of apparel retailer J. Jill by Talbots – is Michelle Leder’s subject in “On M&A Math,” published June 9 at Footnoted.org, a blog dedicated to digging up and highlighting glitches in company disclosures. Talbot’s bought J. Jill for $517 million three years ago. Last week, Talbots said it was selling J. Jill to a private equity group for just $75 million, about 85% less.

Leder writes:

Whenever a deal is announced — and a bunch of them have been lately — there’s the inevitable press release that talks about synergies and how the deal is going to enhance shareholder value. Indeed, that’s pretty much a mandatory sentence. But things don’t always turn out as planned when it comes to M&A, or, quite frankly a lot of other things …

In the February 2006 release on the retailers linking up, the Talbots CEO used several M&A bromides:

Working together, we expect to capture the significant growth potential of the J. Jill brand and enhance shareholder value. We believe our proven expertise in managing a complex multi-channel operation will enable us to maximize the cost synergies of our similar business models, particularly in back-office functions.

In the June 2009 exit announcement, a different Talbots CEO declares:

This is a significant strategic step forward for Talbots as it enables us to focus our time, resources and attention exclusively on rejuvenating our core Talbots brand and return to profitable growth.

Synergy. Shareholder value. Growth potential. Expertise in managing complex operations. It’s too bad when these things come to naught. Of course, the financial crisis and recession have overcome many companies that didn’t merge, too.

But it seems to me that investor relations professionals should learn something from witnessing the wreckage of various mergers in recent years. We should anchor our statements about M&A transactions in specifics, not the traditional broad-brush claims of reaping synergies and enhancing shareholder value.

Tags:, ,
Posted in M&A communications, Messages & writing | 1 Comment »

Let’s make IR more visual

May 20, 2009

Whether you’re raising first-round venture capital or cultivating shareholders in a public company, investors need to understand the business model – and drawing a picture of it may help – suggests Cliff Illig, co-founder and vice chairman of Cerner Corporation, a mid cap healthcare IT company listed on NASDAQ.

Illig told a meeting of entrepreneurs last night at the Polsinelli Shughart law firm in Kansas City that a business model is essentially a value proposition. It’s not about how well-designed your widgets are, or the wonderful efforts you exert internally to develop or produce those widgets.

The business model looks outward and answers the question, “How do we create value for customers?” Someone else has described this less delicately as “How do we move money from the customers’ pockets to our pockets?”

Cerner includes a picture of its business model in each annual report and in every presentation to Wall Street, Illig said. Of course, I had to see this picture – so I looked it up (apologies for the shrunken copy shown here).

CERN business modelWell, Cerner’s business model picture isn’t exactly pretty – most companies bog down in complexity when explaining their business – but it does explain their financials. The graphic is a flow chart showing where the money comes from (sales pipeline on top), how it flows through contracts and backlogs into each of the business segments, what the margins are – and, ultimately, how money gets to shareholders in the form of operating profit and EBITDA (at the bottom).

I’m not pointing to Cerner as the Michelangelo of IR art – but do consider this picture.

A schematic of a business model says a lot. The more you can simplify it, the better. My feeling is that investor relations people ought to be doodlers – always taking what we hear and looking for ways to sketch a picture of it – simpler, more visual and more intuitive. Bottom line, we want investors to understand how we create value.

Tags:, , , ,
Posted in Messages & writing | Leave a Comment »

« Older Entries
Newer Entries »
Follow

Get every new post delivered to your Inbox.