Posts Tagged ‘Presentations’

‘Key to success … is preparation’

June 2, 2014

AlaixJuan Ramón Alaix, CEO of the animal health giant Zoetis Inc. (formerly Pfizer Animal Health, spun off as a NYSE-listed company last year), offers wise counsel on communicating effectively with investors.

In a “How I Did It” CEO interview in the June 2014 issue of Harvard Business Review, Mr. Alaix comments:

A lot of people, when they reach a certain age, are reluctant to accept training. That’s not true for me—I’m very open to it. I’d had communication training over my career, but the preparation for our IPO was much more intensive. Before I did my first TV interview, for instance, I probably spent more than eight hours doing mock interviews. I believe that the key to success in communication is preparation. By the time I gave the first road-show pitch to investors, I’d rehearsed it at least 40 times.

Wonderful words from a CEO! As IR professionals, most of us have had the opposite experience: an exec who is too busy to practice and thinks it’s OK to wing it because, after all, who knows the story better?

Ask the people who listen to investor presentations: The CEO, CFO or IRO who is practiced and prepared will always have a greater impact than the one who fumbles with his thoughts – or just reads the script.

It’s good to hear Mr. Alaix endorse the most basic rule of speech making: rehearse, rehearse, rehearse! I’m sure Zoetis is well-served in its communications – and other areas – by this kind of diligence.

© 2014 Johnson Strategic Communications Inc.

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A pile of dirt and a vision

June 10, 2013

Pile of Dirt2

Sometimes progress looks like a pile of dirt. It’s true of the big construction project starting to take shape. And the biotech company laboring through long years of development to get to market. And the out-of-favor, battered management putting in place a new strategy.

Caught in the snapshot of today’s pervasively short-term thinking, progress often looks like a pile of dirt. When the current financial results aren’t pretty, investors can see an ugly mess – or something entirely different. This brings us to our role in investor relations.

One of our tasks in IR is to communicate the vision to investors – to show the prospective owners the architect’s rendering and give form to what today may seem like a pile of dirt. That vision must begin with the CEO, of course. But the IRO is one of the primary messengers to ensure that others see and understand the picture of the future.

Here are a few thought-starters on how we can do it:

  • Acknowledge the present state. If the past six quarters have been ugly, say so. If the development project has moved more slowly than hoped, admit it. People will give a company credit for recognizing the same pile of dirt they see – and having a plan to get beyond it.
  • Focus on the future state. Any presentation, report or web content should talk more about what is coming than what just happened. I’m referring to  emphasis, not the number of words, because of course we need to give ’em the facts about the company and its performance. Clear accounting results are essential to disclosure and IR – point is, we can’t leave it there. Even past accomplishments are data points for talking about where we are heading, because investing is about the future.
  • Lay out the plan. Executives building a great enterprise – whether developing a medical breakthrough or transforming operations or rolling up an industry through M&A – sometimes don’t clearly explain what they’re doing to those outside. In IR we should be laying out the process so investors know the steps involved in building value. And, of course, then we will tell them each time we complete a step along the way.
  • Give the microphone to the CEO. It’s his or her vision, so challenge the boss to paint the picture of the future. A CEO speaking to investors about nothing but quarterly results seems like a wasted opportunity. Since most CEOs are giving the best part of their lives to a company, they need to share with others the vision that drives their enthusiasm.

What about you – do you have any favorite ways of showing how the company is building value when current results may look like a pile of dirt?

© 2013 Johnson Strategic Communications Inc.

What’s your theory?

June 7, 2013

THEORYThe classic question “What builds value for a company?” often finds its answer in a strategy. But that’s the wrong answer, Todd Zenger, a professor of business strategy at Washington University, argues in the June 2013 Harvard Business Review. The right answer, he says, is the corporate theory. The distinction matters to IR professionals who influence messaging on shareholder value.

In “What Is the Theory of Your Firm?” Zenger says value does not come from strategy, at least not military-style plans for targeting attractive markets and conquering your rivals (“competitive advantage”):

Unfortunately, investors don’t reward senior managers for simply occupying and defending positions. Equity markets are full of companies with powerful positions and sluggish stock prices.

What Zenger calls the theory of your firm is a view of life that runs deeper than any particular strategy:

Essentially, a leaders’ most vexing strategic challenge is not how to obtain or sustain competitive advantage – which has been the field of strategy’s primary focus – but, rather, how to keep finding new, unexpected ways to create value. [The corporate theory] reveals how a given company can continue to create value. It is more than a strategy, more than a map to a position – it is a guide to the selection of strategies.

Three kinds of “sight” go into a corporate theory, Zenger says:

  • Foresight: beliefs and expectations for the future of an industry or its customers
  • Insight: deep understanding of what is rare, distinctive and value in your company’s assets and activities
  • Cross-sight: ability to spot complementary skills or assets that will fit together to create something new

Apple is one example Zenger cites. With PC makers chasing cheaper, faster and bigger computers that basically were interchangeable, Steve Jobs took a different view of how to create value. It was a theory:

… essentially it held that consumers would pay a premium for ease of use, reliability, and elegance in computing and other digital devices, and that the best means for delivering these was relatively closed systems …

This theory guided Apple into a wide range of markets:

Apple was not the first to design a digital music library, manufacture an MP3 player, or market a smartphone. But it was the first to craft and configure those devices and their user environment with elegant, easy-to-use devices and with tight control of complementary products, infrastructure and market image.

So what’s your firm’s theory? One way to find out is to often ask, Why?

Why this, and not that? Is a particular view of the future driving your CEO’s choice of strategy? Does a unique set of assets or skills energize success, across products or markets? Is a novel perspective leading your company to build or acquire new skills and assets to drive growth?

As Zenger suggests, a good theory not only guides a business; it gives power to the value creation story. And if investors buy your theory – well, they buy. We investor relations people should always seek to better understand – and better explain – how our companies are creating value.

© 2013 Johnson Strategic Communications Inc.

What’s wrong with this company?

May 31, 2011

A contrarian approach to messaging for investor relations is to ask yourself, “What’s wrong with this company?” Then, in IR reports and presentations, address the weak points of your business – what causes investors to turn up their noses – along with your solutions.

This offbeat idea was prompted by an interview with Anne Gudefin, a stock picker involved in Pimco’s growing presence in the equity markets, in Fortune‘s May 23, 2011, issue. She is a value investor, and like many I’ve talked to Gudefin is looking for stocks that are beaten down – but have upside potential.

“How do you decide a stock is cheap?” Fortune asks. Gudefin says she likes good business models, high barriers to entry and free cash flow. Then she adds:

I also want to see things that aren’t operating perfectly at the moment, so there’s a margin for improvement. I look for there to be a number of catalysts for value to be unlocked. … During the second quarter of last year we bought BP. Because everyone was so negative about it, we were able to buy very good assets at a very cheap price.

Like many on the buy side, Gudefin is looking for companies with a “catalyst for change.” If something’s wrong, the value-oriented investor sees upside potential.

Sure, IR usually focuses on a company’s strengths – great products, competitive advantages, 24-carat gold balance sheet, smart management. We love bar graphs that show a powerful uptrend. We recite accomplishments of each quarter or year.

Maybe IR should look for vulnerabilities. Good investors will find them, anyway. How about bringing issues out in the open? Of course, we won’t title our roadshow presentation “3 Reasons Not to Invest.” But let’s discuss that catalyst for change:

  • Spell out the challenge. Describe the problem objectively, as investors and analysts are likely to see it. Show a capacity for humility, even self-criticism.
  • Define a solution. Emphasize your strategy for solving the problem. The more tangible the actions you lay out, the more you overcome investors’ doubt.
  • Track your progress. Check off actions as you take them. Quantify the progress. Investors will be convinced after a quarter or two of positive results.

Being transparent about problems has drawbacks, of course. Some challenges are tough, they may stretch over several quarters, and you may report a disappointing lack of progress at some stage – or even have to change the strategy.

Think of the really good questions investors sometimes ask. Why are sales flat in your XYZ division? Your gross margin is underperforming these peer companies – how are you addressing that? What business issue keeps you awake at night?

What’s important is that you recognize what is holding back your company’s value and explain to investors that you are implementing a plan to solve that problem. The goal is improving performance that unlock the value for shareholders.

What do you think? Any tips on IR reporting on business problems?

© 2011 Johnson Strategic Communications Inc.

IPO in the midst of Japan’s earthquake

March 11, 2011

Our prayers go out for the Japanese people after the massive quake and tsunami.

From the Wall Street Journal page live-blogging the quake comes one small vignette that may amaze investor relations colleagues: Calbee, a snack food maker that is 20% owned by PepsiCo, had its IPO today on the Tokyo Stock Exchange.

The WSJ blog reports:

Calbee’s shares did well, outperforming the market. But for [Akira] Matsumoto [chairman and CEO of Calbee], the day got a lot more memorable after the exchange closed. That’s because he went ahead with a news conference, in front of about 50 reporters, after the closing bell—even as aftershocks following the big earthquake, just 15 minutes or so, continued to rattle the exchange. The conference was held in the bourse building, which shook badly in part because of its quake-absorbing structure.

Even as bourse staff warned colleagues, “Please wear a helmet!” or “Keep your head under the table!,” the press conference kept going. Mr. Matsumoto soldiered right on, stopping briefly only when warnings over the P.A. system temporarily drowned him out.

And he stayed on-message. “I feel very grateful for the price (rise),” he said, after discussing corporate strategy rather than earthquakes.

Wow is all I can say. Congratulations to Calbee for getting the IPO done. But more importantly, we offer our heartfelt sympathy and best wishes to all who are grieving or struggling with the aftermath of this catastrophic natural event.

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?

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.

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.

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.

A surprise in the cereal box

March 23, 2009

surprise-in-cereal-boxImagine my delight when I opened up a box of Cheerios and found a surprise inside: a snap-together plastic sports car. Cool! … Yes, I know. They say men are just 8-year-old boys in grown-up bodies, and this explains my glee upon running across a cheap little toy.

Call it quirky, but the surprise in the cereal box made me think of investors and their reactions to a pleasant surprise. We’ve all seen the pop in a company’s stock price when it beats earnings estimates.

But there are other surprises a company can give its shareholders.

Investor presentations offer an opportunity. How about surprising an audience with a speech offering deep insights into your industry and markets, rather than the usual data-dump-in-a-Powerpoint-file? How about announcing a news item at a meeting, approximately simultaneous with a broad release? Or brightening up an analyst day with a bit of entertainment? In a small way, just running on time is a nice surprise (beating a 10- or 20-minute limit demands two disciplines: saying only what matters, and practicing to nail the time).

A little psychology on the substantive side also can help relationships. Sure, there aren’t many positive surprises – earnings or otherwise – in today’s brutal economy. And you can’t hold back material information.

But IROs can help management look for opportunities to highlight an unexpected benefit or unpromised outcome. An acquiring company can deliver synergies faster than projected. A new CEO can implement changes he hasn’t been ballyhooing publicly. A cost-cutting program can exceed its targets. In each case, management can influence both what it promises up-front and how well the company executes. Never over-promising should be a core principle of IR.

For investors, a surprise is like finding a toy in the cereal box. Cool!

(I’m going to go play with my car now.)

© Copyright 2009 Johnson Strategic Communications Inc.