Category: Investor-Relations 

Investment professionals have a challenging if not daunting job: gaining an understanding of how a company’s business model operates, how management strategies are being implemented, and how that translates into performance and value creation. 

Management teams that are able to tell a clear story will not only help investment-oriented stakeholders but in the process also enhance their own reputation and capital-raising potential.

“Never invest in a business you cannot understand” 

Warren Buffet is not only a famous investor, but he is also responsible for quite some quotable passages through which he conveyed his investment perspective on the corporate story. Essentially his perspective is to invest only in company’s you understand, run by people you admire and trust.

For companies that do meet his criteria of being easily understood businesses that will survive for the long term, his favorite holding period is “forever”. His views about investing have provided sensible guidance for developing a corporate story.

Sift the complex from the sound

It has become common place in the corporate world for executives to talk about their business to varying stakeholders, such as employees, business partners, analysts, bankers and investors.  The established way of doing this has become the PowerPoint presentation, with dot point summaries of words and numbers, list of facts and occasional diagrams and tables. 

While some of these can be effective, there are also many examples where a corporate story or context is not put around the information provided, ignoring what happens in inter-personal conversation and despite the characteristics for presentations laid out in literature going back as far as Aristotle. 

In the investment community this runs the risk of appearing stale and can diminish the extent to which key stakeholders might perceive executives as capable, casting doubts about their leadership and whether to trust investment funds to their care. 

The issue this raises is that it is not any story that can be applied in the corporate sector. It needs to meet certain requirements and illustrate conviction, therefore it is useful to consider structures of stories developed for more widespread stakeholders, as a guide in considering how to approach this task for investment-oriented stakeholders.

The complex lens of an investor

The present-day abundance of financial information has created a complex world for investors and sharpened their lens through which they gaze into the corporate world and their assets. 

The corporate story must be concise and to the point because investors can easily get lost in the maze of information complexity. This can turn out a lost opportunity as they may not invest in a company if they have difficulty understanding it- a complex story equates a high level of uncertainty and therefor risk. It is therefore paramount to develop and package the corporate story and besides also consider how long to retain it and the extent to which the company should be altered to match the corporate narrative. 

Six steps for creating a sustainable corporate story

Investor relations is at the end of the spectrum of where its function is based on communicating a holistic story about the company framed for investment-oriented stakeholders. Here is what to consider in creating and packaging  your corporate story;

1. Positioning - An essential part of the story development process is the positioning of the company vis-à-vis its peers, which is to compare the story to those of peer companies especially to see how the story impacts valuation. The single most important factor in the development of the corporate story is to identify the key elements most closely associating the company with an enhanced valuation, and then leverage those factors through the initial formulation and subsequent packaging of the story. 

Positioning should not result in a considerable conceptual stretch as it is entirely possible that this type of positioning will be completely ignored by the marketplace and instead assign a valuation closer to that of other companies. Therefore, it is important to create a corporate story that realistically links the company to a valid peer group. 

2. Link story to corporate identity - Linking the story to the company’s identity, is a reflection of perspectives, opinions and beliefs from people on the inside of a company and what they see as distinctive. 

3. Link to reputation - An integral part of the story development process is the link to reputation. A concept that essentially reflects perceptions of those outside a company. There are a number of drivers of reputation from outsiders, depending on their experience and perspective. This information can help to craft messages that resonate with key stakeholders, some of whom the company may eventually turn to seek funding. 

4. Plotting the story - Plotting the story usually encompasses providing proof points for positioning, adopting an appropriate tone of voice and weaving a story around abilities, activities and accomplishments with a clear and compelling premise. 

Sidenote: as every investor knows, if something sounds too good to be true then it almost certainly is.

5. Implementing and 6. monitoring – This involves implementing the story, possibly by testing drafts by selected key stakeholders and then monitoring feedback for further refinement. 

Monitoring stakeholder feedback and their concerns may prove valuable in recognizing and mitigating risks that may not be obvious from the outset. Done in the right way, their feedback and engagement can help in the positioning of the company for optimal growth. By implementing the story and monitoring feedback, executives and stakeholders will not only better understand a company’s value but also combat any negative perceptions. 
Accompanied with open lines of communication, key stakeholders and executives have the keys to improving any corporate story and their business environment. It creates a clear picture and besides increases transparency.

Summary - The considerations of how to advance a corporate story does not mean cutting the red tape to create an upbeat spin i.e. “putting lipstick on a pig.” If so, it will sooner or later become evident that a company is not able to deliver on its promise. Instead, the focus should be on creating a corporate story and related packaging that is sensible within a company strategic capabilities to support. The foremost way to do this is to ensure that all information is presented in a way that is clearly understandable, so that investors can reach a level of comfort to make up their mind whether they have spotted an appropriate investment opportunity. 

Lastly, the growing use of technology has allowed for an exponential offering of financial information and has created a virtually limitless number of sources for investment opportunities. Simplifying complex narratives in a way that rings true to internal and external stakeholders takes time but pays off on the long term. This is especially true today.

 

Are you curious to explore how we can help to discover, develop and tell your corporate story?
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