April 25, 2012

A Blueprint for Modern IR Strategy

There are old guys around a table watching video.

No. They’re not IR professionals. But stay with me for two minutes.

One says, “He’s got a good swing.”

“He’s got the build of a hitter,” adds another.

“Been playing ball his whole life,” a third guy says.

In last year’s Brad Pitt movie, Moneyball, baseball scouts size up players with the right look because that’s the way it’s always been done.

The movie tells how Billy Beane at the Oakland A’s stood that idea on its head and transformed baseball with data-analytics. What wins games? Runners on base. By any means. For the rest of that story, see the movie.

The rest of our story here is a radical IR proposal. For the past 20 years, the investor-relations profession has relied on our industry’s version of “the build of a good hitter.” You do certain things because that’s the way it’s always been done.

What if there’s more to it? As data-analytics has transformed baseball, internet search, how grocery-store shelves are stocked, and the way advertisements connect people and products, it should also transform IR.

What if you could know the value – call it Rational Price – investors assign to your shares, because you can see it and separate it from market noise and speculation and basket-trading? You could redefine valuation for management.

What if instead of looking at who bought and sold your shares last week, you measured the share of your equity market controlled by rational investment activity – and set a goal to exceed the market average for rational investment? You’d transform your program from backward-looking, to forward-thinking.

What if you could know the sentiment of your equity market ahead of earnings because you were tracking behaviors by purpose and time-horizon? You’d move beyond a myopia that sees the market as a singular motivation, to a holistic view of signal sorted from noise, a mosaic of market activity that moves from threat to opportunity. You would be on the offensive, not the defensive.

What if you organized relationship-building with holders and new investors around the dynamic appeal of your equity market – growth, value, growth-at-a-reasonable price – rather than a static investment thesis? You’d move from two-dimensional targeting, to three-dimensional targeting.

That would be radical. It’s also possible and happening. Here and now. Trading is mathematical. Math can be measured. Just like a baseball player, who swings the bat finite times at quantifiable pitches consisting of balls and strikes.

We can go on watching game film. But maybe IROs of the future, who will add value for management in a new era of trading and capital formation, will move beyond the swing of the bat to what it produces.

What it produces can be measured. We track these IR statistics in our radically revolutionary Market Structure Report. It’s two pages. It transforms the way you think about what matters in IR.

In our PowerPoint presentation called “Running a Modern Investor Relations Program Using Data Analytics,” we explain how to transform your IR strategy through the power of new tools built for the new rules that run today’s capital markets.

Ask, and we’ll send the presentation. And if you’re not using the Market Structure Report to understand your equity market, try it. Leave that old table and view the world a new way.

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