Not Too Hot, Not Too Cold, But Just Right

I had the privilege of speaking last week before the Austin- San Antonio chapter of NIRI. The topic was one of my favorites, Insights from Academia, or What I’ve Learned About Investor Relations by Teaching in a Business School. Every time I give the talk, it’s a chance to step back from the day-to-day activities that comprise investor relations and think about the process as a whole. This time when I gave the talk, I was struck by the need to achieve balance in what we do.

Those that are involved in investor relations recognize that in order to do it right, you need to combine skills from the disciplines of finance, marketing, law and communications. So there are a lot of factors at play. If one chooses to emphasize one factor over another the entire message can suffer. For example, if a press release is written where legal factors and accounting dominate, the result is a stilted document that tends to read like a SEC Form 10-K filing or a lawyer’s brief. In other words, something that’s deathly dull and uses language to obfuscate rather than clarify. Similarly, if the marketing and communications disciplines dominate, what you wind up with is a document that is more hype than substance and is bound to turn off your audience of sophisticated investors. The key to getting the message right is to balance the various factors.

One of the things I have learned from combing through business textbooks in preparing for my class on investor relations is that a catchy graphic helps to explain complex relationships. Couple that with the fact you almost can’t give a talk without powerpoint slides and I simply had to create a graphic to illustrate this point. So here it is – my attempt at capturing the need to combine all four disciplines in your investor relations message.

Of course, it’s one thing to understand the theory, it’s another thing entirely when you are trying to incorporate comments to your press release by the CFO, the General Counsel, the outside auditors and the communications department. This is where investor relations officers should think back to the Goldilocks story and say to themselves, “Not too much law, not too much marketing, but just right…” It’s at times like that I recommend you pull out the graphic to remind yourself what it is you are trying to achieve.