Goalward bound: The IR strategic plan

When the term ‘strategic’ first started buzzing around the investor relations community more than 10 years ago, it seemed somewhat redundant. As IR Magazine asked at the time, isn’t the IR function strategic by its very nature?

Nonetheless, the buzzword stuck, and a decade later it’s clear that taking a strategic approach to investor relations offers a host of benefits – and few drawbacks. Indeed, IR consultants argue that a strategic plan can make a real difference to your success with both investors and senior management. But where do you start?

1. What do you want?

To write a plan that will help you reach your IR goals, you first need to decide exactly what your objectives are. ‘The essentials for writing an initial strategic plan should be proper definition of the end point – the future – followed by an understanding of the possible ways to get there,’ says Roger Pondel, chief executive of IR and strategic PR company PondelWilkinson.

‘Any plan that doesn’t have some sort of contingency in it is flawed’ – Angela Campbell-Noë, Tulchan Communications

Angela Campbell-Noë, senior partner at Tulchan Communications in Asia, is more specific, stating that the first thing you needto do is to analyze your share register. ‘I think it’s always about going back to the basics: looking at your shareholders, analyzing who you’ve got, who you haven’t got and who you want, and where you may be vulnerable,’ she says. ‘Making sure you’re spending time on those things is just very good business practice.’

Once you have a clear understanding about what you want to achieve, you can start working out how you’re going to accomplish those goals. ‘Any strategic plan needs to start with a statement of objectives,’ explains Campbell-Noë. ‘It then should identify the resources needed to meet the objectives, determine the management time to be allocated and establish what success looks like.’

2. What are all your peers doing?

Andrew Greenebaum, chief executive at Addo Communications in LA, says strategic plans are now the norm at the companies he deals with, so to be without one could leave you lagging behind your peers.

This presents an advantage, too, however: even if you’re writing an IR plan for the first time, it means that you won’t have to work in a vacuum; you’ll be able to draw on the experience of a host of others who came before you.

Getting down to specifics again, Campbell-Noë advises carrying out ‘detailed peer group mapping so you have a clear list of targets already investing in the sector that you can go after in order to work out a precise marketing plan around the results cycle, the conferences calendar and other capital markets events.’

Pondel stresses, however, that ‘no one size or format fits all – strategic plans must be highly customized.’ Take a look at what your competitors are doing, he advises, then work out how to use this knowledge to bring you closer to your own goals.

3. Make a plan – not a calendar

Any successful strategic IR plan needs to contain key dates in your company’s financial year, but once you reach the writing stage, it’s important not to fall into the trap of simply putting together a calendar, warns Sharon Stern, partner at strategic communications firm Joele Frank.

‘A calendar is really just a series of events, whereas a plan is more thoughtful; it has the company messaging and ties to the corporate strategy,’ she explains.

4. Be realistic

Your goals need to be realistic, tangible and – above all – achievable; there’s simply no point in writing an impossible IR plan. As well as wasting time and resources, a failed plan has the potential to damage your relationship with senior management.

‘The strategic IR plan really makes the investor relations team accountable to the board,’ explains Campbell-Noë. ‘It gives it something upon which to be measured and judged.’ So in some ways you can use the strategic plan as an IR yardstick, which can in turn be used for the ever-tricky task of proving your worth to the C-suite.

A well-executed plan ‘helps reinforce accountability and confidence, and those are critical components of the IR function,’ adds Campbell-Noë.

5. Be flexible

The consultants quoted here all agree every IR professional should have a strategic plan in place – and they’re hard-pressed to find any drawbacks. ‘We see only one main negative to having a strategic plan: following it too rigidly and failing to recognize fundamental environmental changes that should necessitate a rethink,’ says Pondel.

Greenebaum agrees. ‘I think what you need to do is realize that these things are not written in stone,’ he says. ‘You have to be fluid and flexible and adjust as needed throughout the year.’ He advises clients to apply a more definitive road map to the start of the year, becoming gradually less committed later on.

The point being made here is that while you can’t factor in unforeseeable events, you can make sure you leave yourself with room to maneuver. ‘Clearly things happen that you cannot necessarily plan for,’ says Campbell-Noë, ‘so any plan that doesn’t have some sort of contingency in it or that cannot be wavered from is fundamentally flawed.’

Greenebaum, Stern and Campbell-Noë all focus on an annual plan, but with that essential flexibility built in. Campbell-Noë stresses that some aspects of the plan – such as significant investor growth – could take a number of years, with Pondel advising that strategies be written around a longer, three-to-five-year period.

6. It’s about more than the shareholders

While the main focus for any IRO is always going to be justifying the highest sustainable share price, your strategic plan has to cast its net wider than that, says Stern.

She advocates a ‘holistic’ approach to investor relations, and argues that after covering the basics that provide ‘the framework for supporting and developing relationships with the company’s shareholders and analysts’, a thorough IR plan should go beyond the financial community. ‘An investor relations plan should consider other stakeholders, such as media, regulators and employees,’ she counsels.

7. Take time out

While many companies are rigid when it comes to the quiet period, the idea of taking time out before results isn’t universally agreed upon. For Greenebaum, this is an important but often forgotten part of writing a strategic IR plan. This downtime might not be mandated by the SEC, he argues, but assumptions will always be made if a firm continues to be active in the run-up to reporting.

‘Investors tend to read body language and marketing calendars,’ says Greenebaum. ‘You can react to certain inquiries as they come on a case-by-case basis, but you shouldn’t be flying to some big conference and standing up in front of 100 investors two or three weeks before you report.’

8. Revisit your plan

Your plan needs to change and grow along with your company. ‘IROs should take a fresh look at plans regularly and expect them to evolve,’ says Stern.

‘Consider a company going through a transformation where assets have been divested or new growth avenues are being pursued. It’s important to take a step back and ask: are we targeting the right group of shareholders? Do we need to broaden our base? Are we looking at the right sell-side targets – the folks who recommend our stock? Are we attending the most appropriate conferences?’

She emphasizes, however, that while the activities within the plan might change, the fundamentals will always remain the same.

9. What’s the perception?

It is always helpful to know what investors and analysts really think of your company, observes Greenebaum – this will also give you a good idea of how effective your strategies are. ‘You might think about doing a perception study after you’ve been public for a while,’ he recommends.

In fact, the research section of IR Magazine’s May 2013 issue indicates that investor perception studies and investor feedback are the most popular ways of measuring investor relations on a global basis, with 20 percent of respondents mentioning them. This underlines just how important perception is for both your IR efforts and your success in the eyes of management.

10. Use it!

Finally, once all your hard work is done, make sure you actually turn your strategies into action. ‘The only thing that can be a problem with strategic plans is if they remain as plans, as academic exercises that get left in the cupboard,’ says Campbell-Noë.

This means your plan needs to be highly usable. ‘Again, this is not a document that’s meant for beauty; it’s meant for action,’ stresses Campbell-Noë, who advises going for a ‘less is more’ approach.

Pondel adds that your strategies should address those basic things the C-suite often takes for granted – including ‘definition and identification of the organization’s customers, what the company actually does for those customers, and why the company believes it has a competitive advantage’ – as well as high-level concepts.

Believing in your results-driven plan will help you reach your IR goals, Pondel stresses. ‘Enhancing long-term valuation may well be an evergreen objective for all publicly traded companies, and enhancing exposure through research, roadshows and media coverage may be a primary tactic,’ he accepts. ‘But it is the strategic plan in between that paves the way for success.’ 

Strategy and the IRO For Jason Tsai, investor relations and strategy director at Silicon Motion, the strategic plan is all about bringing uniformity to an IR program that covers both the US and Asia. The semiconductor firm – winner of the 2013 IR Magazine Award for best IR by an Asia-Pacific company in the US market – is Taiwanese, but Tsai himself is based in the US. He explains that in the past, one of the ‘bigger concerns’ raised by investors was over a lack of consistency in the information being delivered by the company; putting together a single strategic plan covering all IR activities at Silicon Motion has gone a long way to addressing that. ‘What it did was put on paper a lot of the conceptual things we were talking about,’ Tsai explains, adding that it created an ‘overarching framework’ for the IR program in terms of company policies. That in turn allowed the IR team to better deal with any potential issues or questions. Although the company has only ever written one strategic plan three years ago, Tsai explains that it is revisited every year, with some aspects – such as the disclosure sheet, showing exactly what information can and can’t be made public – being updated quarterly. But, he maintains, ‘it’s not the Bible; it’s a living, breathing document.’ The IR team at Silicon Motion – made up of Tsai in the US, a colleague in Taiwan and the CFO, who also plays an active role in the IR program – understands that the strategic plan must be fluid in order to really work for the firm. ‘Things that happen today may not seem relevant or prevalent, or may no longer be an issue in the future, so you need to make sure you take things in context,’ explains Tsai. Fundamentally, though, Silicon Motion’s strategic IR plan remains the same as it was at inception. ‘It still – to this day – works as a framework for our overall thinking in terms of how we manage the IR program, and as the basis of the communications we have with our investors and analysts,’ Tsai says.