INVESTOR RELATIONS AS THE NEW FOCUS IN CREATING LONG TERM CORPORATE VALUECase Study, Concepts, and Debatable Ideas
Kenny OngCNI Holdings Berhad
www.myCNI.com.my www.OOBEY.com
About: CNI
1. 19 years old
2. Core Business: MLM
3. Others: Contract Manufacturing, Export/Trading, eCommerce
4. Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines, Italy, Taiwan
5. Staff force: ± 500
6. Distributors: 250,000
7. Products: Consumer Goods and Services
www.myCNI.com.my www.OOBEY.com
Importance of Investor Relations
Why focus on Investor Relations in the first place?
www.myCNI.com.my www.OOBEY.com
Is Investor Relations important?
1. Funds
2. Brand
3. Intelligence
4. Customer-shareholders
www.myCNI.com.my www.OOBEY.com
Importance: Funds
This is the most obvious.
The objective is to keep the paymasters happy so that they will either maintain or increase their funding.
Crisis Management is one small area that falls into this objective
www.myCNI.com.my www.OOBEY.com
Importance: Brand
Investor Relations is a key component of corporate Branding due to its direct influence on:
1. Multiple parties (Investors)• These parties are either our Branding targets
or has influence on our branding targets
2. Brand Architecture
www.myCNI.com.my www.OOBEY.com
Types of Investors (1/2)
Institutional
Fund Managers
Corporations
Sovereign Funds
VCs
NGOs
Non-Profit Org
Financial (Loans)
JV Partners
M&A
Social VCs
Holding Co.
HQ (MNC)
Gov. VCs
Supply Chain
Gov. Partnership
PFI
Competitors
Franchisees
www.myCNI.com.my www.OOBEY.com
Types of Investors (2/2)
Retail
Investor-Shareholders
Employee-Shareholders
Management-Shareholders
Customer-Shareholders
Distributor-Shareholders*
Distributor-Entrepreneurs*
www.myCNI.com.my www.OOBEY.com
BRAND POSITIONING STATEMENT:
TARGET
INSIGHTS
COMPETITIVE SET
.
PERSONALITY
EMOTIONAL
RATIONAL
REASONS TO BELIEVE
DIFFERENTIATOR
OVERALL BENEFITS
ATTRIBUTES
Brand Architecture
Importance: Intelligence
Two types:
I.R. InvestorsCRM Intelligence
Deal with…
I.R. Management
Investor Intelligence
Deal with…
www.myCNI.com.my www.OOBEY.com
Intelligence: Types of Investors (1/2)
Institutional
Fund Managers
Corporations
Sovereign Funds
VCs
NGOs
Non-Profit Org
Financial (Loans)
JV Partners
M&A
Social VCs
Holding Co.
HQ (MNC)
Gov. VCs
Supply Chain
Gov. Partnership
PFI
Competitors
Franchisees
www.myCNI.com.my www.OOBEY.com
Intelligence: Types of Investors (2/2)
Retail
Investor-Shareholders
Employee-Shareholders
Management-Shareholders
Customer-Shareholders
Distributor-Shareholders
Distributor-Entrepreneurs
www.myCNI.com.my www.OOBEY.com
Intelligence: Why do they Invest?
1. Return/Profit
2. Risk Management/ Hedging
3. Tax-benefits
4. CSR/Image
5. Diversify revenue
6. Counter-cyclical balance
7. Support ‘Mission’
8. Exclusive rights
8. Contractual obligation
9. National Agenda
10.Control Supply Chain
11.R&D portfolio
12.Control Management
13.Alternative Cash Flow
14.M&A
www.myCNI.com.my www.OOBEY.com
Intelligence: How do Investors get their ‘INFO’? (1/2)
Institutional
Gov./PoliticsCustomer
s
Suppliers
EconomicsAGM
Market Research
Internet*
Annual Report
Media
Analysts
Fund Managers
Due Diligence
NGOs
NewsletterSpokespersons
www.myCNI.com.my www.OOBEY.com
Intelligence: How do Investors get their ‘INFO’? (2/2)
Retail
Gov./ Politics
Customers Public
Events
EconomicsAGMAds
Internet*
Annual Report
Media
Analysts
Fund Managers
Relatives
Friends
Pasar Malam
Employees
Employee Bloggers
Mgmt Action
s
Newsletter
www.myCNI.com.my www.OOBEY.com
Intelligence: How to Communicate?
Self Reliant Need Help
Seek Change
Seek Stability
Searchers Collaborators
Streamliners Delegators
www.myCNI.com.my www.OOBEY.com
Investor Intelligence: What?
Examples…
1. Record feedback and questions
2. Competitors’ IR communications
3. Top 10 Analysts’ views on Company
4. Top 10 Analysts’ views on Industry
www.myCNI.com.my www.OOBEY.com
Investor Intelligence: Why?
1. Broad view of market
2. Less optimistic/review own assumptions
3. Upgrade IR function to be strategic
4. Feed Management discussions
5. Better and more relevant IR communications
6. Support (buy-in)
www.myCNI.com.my www.OOBEY.com
Revenue Growth
Base Retention
Share Gain Positioning Adjacent Market
New Business
Operational Excellence
Product Leadership
Customer Intimacy
Competencies Information Systems
Motivation, empowerment,
alignment
Financial
Learning & Growth
Internal Process
Customers
Investment Strategy
Productivity Market Value
Investor Intelligence: Why?
www.myCNI.com.my www.OOBEY.com
Dangers of Intelligence…
Also known as ‘Beware of Benchmarking’:
1. Big vs. Small company
2. Selective success stories
3. Correlation vs. Causal
4. Survey problems
5. Actionable vs. For-fun
www.myCNI.com.my www.OOBEY.com
Intelligence: Survey Problems…
“In business after business, 60% to 80% of lost customers reported on a survey just prior to defecting that they were satisfied or very satisfied.”
HBR March/April 1996
www.myCNI.com.my www.OOBEY.com
IR and Customer-Shareholders
Retail
Investor-Shareholders
Employee-Shareholders
Management-Shareholders
Customer-Shareholders
Distributor-Shareholders
Distributor-Entrepreneurs
www.myCNI.com.my www.OOBEY.com
Affect Sales
Is Investor Relations important?
1. Funds
2. Brand
3. Intelligence
4. Customer-shareholders
www.myCNI.com.my www.OOBEY.com
Obstacles to Growth of Investor Relations
If IR is so important, why is it not growing?
www.myCNI.com.my www.OOBEY.com
Challenges of Investor Relations
1. Stake- vs. Share-holder*
2. Public Opinions
3. Global operations – difficult to explain
4. Increasing focus on ecological, social, ethical issues
5. Diverged expectations for same issue
6. What to do with Excessive Cash?
7. Superficial changes vs. Fundamental Changes
8. Investors depend on ‘hearsay’ vs. ‘facts’
9. Share Price ≠ Market
10.R&D/M.S./HR vs. Investor Expectations
11.Opposing ‘Expert’ views
www.myCNI.com.my www.OOBEY.com
IR Challenges
“Good news for stockholders can be bad news for other
stakeholders.” Gregory Miller, Assoc. Prof., Harvard Business School.
www.myCNI.com.my www.OOBEY.com
Principles of Investor Relations to counter Challenges
1. Long-term relationship
2. Consistent and Proactive
3. Performance vs. Controllability
4. Aligned with operating/strategy position*
5. One message, Different Emphasis
www.myCNI.com.my www.OOBEY.com
Good News vs. Controllability
Can Control Cannot Control
Internal Attribution
External Attribution
www.myCNI.com.my www.OOBEY.com
?
Bad News vs. Controllability
Can Control Cannot Control
Internal Attribution
External Attribution
www.myCNI.com.my www.OOBEY.com
Obstacles to IR growth
How is IR not maximized?
1.Because I can - Competency problem
2.Poor business value – Ignorance problem*
3. No Budget lah - Alignment problem
4.Not exciting lah – Glamour problem*
5.Idealistic Theories – Practical-ness problem*
2. Aligning IR to Business Priorities
USP
Market Discipline
Profit Model
Business Model
www.myCNI.com.my www.OOBEY.com
Operational Excellence(low cost producer)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
Product Leadership(best product)
Customer Intimacy(best total solution)
2. Aligning IR to Business Priorities
www.myCNI.com.my www.OOBEY.com
Operational Excellence
• Competitive price
• Error free, reliable
• Fast (on demand)
• Simple
• Responsive
• Consistent information for all
• Transactional
• 'Once and Done'
Operational Excellence
• Competitive price
• Error free, reliable
• Fast (on demand)
• Simple
• Responsive
• Consistent information for all
• Transactional
• 'Once and Done'
Customer Intimacy
• Management by Fact
• Easy to do business with
• Have it your way (customization)
• Market segments of one
• Proactive, flexible
• Relationship and consultative selling
• Cross selling
Customer Intimacy
• Management by Fact
• Easy to do business with
• Have it your way (customization)
• Market segments of one
• Proactive, flexible
• Relationship and consultative selling
• Cross selling
Product Leadership
• New, state of the art products or services
• Risk takers
• Meet volatile customer needs
• Fast concept-to- counter
• Never satisfied - obsolete own and competitors' products
• Learning organization
Product Leadership
• New, state of the art products or services
• Risk takers
• Meet volatile customer needs
• Fast concept-to- counter
• Never satisfied - obsolete own and competitors' products
• Learning organization
2. Aligning IR to Business Priorities
www.myCNI.com.my www.OOBEY.com
2. Aligning IR to Business Priorities
Upturn Flat Downturn
Fight Complacency
Sharpen Edge
Keep Momentum
Conquer
‘Change’ mgmt
Reduce Fat
Continuity
Everyone Happy
Innovation
Acquire
Profits
Build momentum
Sales
Cash Flow
Talent Mgmt
Innovation/R&D
Early wins
Slow Down HR Costs
Top Talent focus
Sales, Sales, Sales
Increase attrition
www.myCNI.com.my www.OOBEY.com
4. Glamour vs. Hardwork
• Durian Party
• Wisma Tour
• Hampers
• Umrah
• China Factory Visit
• Large Events
• Donations to Media
• Jakim visit
www.myCNI.com.my www.OOBEY.com
5. Idealistic Theories
Transparency
Integrity
Managerial Competence
Build Trust
Right Information at the Right Time
Integrity + Care towards Individuals
Managerial (Internal) vs. Technical (External)
Manage conflicting ‘Trust’ agendas
Manifestation of Correlation vs. Causal problem
www.myCNI.com.my www.OOBEY.com
IR vs. Communications
Maximizing the value of IR
www.myCNI.com.my www.OOBEY.com
• How do we maximize the value of IR to the organization?
www.myCNI.com.my www.OOBEY.com
IR in Communications
Communications
Internal External
Mgmt Distributors
Suppliers
Media
Government
Public
Authorities
Associations
Universities
NGOs
Investors
Proactive Reactive Proactive Reactive
COMM Tools COMM Tools
www.myCNI.com.my www.OOBEY.com
Employees
Revisit – IR’s Key Roles
1. Funds
2. Brand
3. Intelligence
4. Customer-shareholders
Communication to bring in the Funds
www.myCNI.com.my www.OOBEY.com
Revisit – IR’s Key Roles
1. Funds
2. Brand
3. Intelligence
4. Customer-shareholders
Communication to bring in the Sales
www.myCNI.com.my www.OOBEY.com
Communications to bring in the Funds
1. Long-term relationship
2. Consistent and Proactive
3. Performance vs. Controllability
4. Aligned with operating/strategy position
5. One message, Different Emphasis
6. Outside-in Intelligence
www.myCNI.com.my www.OOBEY.com
Communications to bring in the Sales
Ultimate Objective of Marketing: “Get more people, to buy more things, more frequently, at higher prices.”
Sergio Zyman
“Retention and Loyalty are useless if No Conversion is happening.”
www.myCNI.com.my www.OOBEY.com
Communications to bring in the Sales
“Retention and Loyalty are useless if No Conversion is happening.”
“Comm (IR) is useless if No Conversion is happening.”
www.myCNI.com.my www.OOBEY.com
Communications to bring in the Sales
Loyalty is Useless…
• Virtual Consumption vs. Real Consumption
www.myCNI.com.my www.OOBEY.com
Communications to bring in the Sales
Loyalty is misleading…
• Heavy Consumption ≠ Loyalty
• Loyalty ≠ Heavy Consumption
www.myCNI.com.my www.OOBEY.com
Communications to bring in the Sales
1.Comm = Relationship (something like Dating)
2.Comm ≠ Media glitz 3.Comm ≠ ATL/BTL/BwTL/ArTL/FTL4.Comm ≠ CSR5.Comm = Get more people, to buy
more, more frequently, at higher prices
www.myCNI.com.my www.OOBEY.com
Virtuous Cycle to Maximize IR and Communications
Internal External
Feed
Feed
www.myCNI.com.my www.OOBEY.com
Importance of Investor Relations
1. Funds
2. Brand
3. Intelligence
4. Customer-shareholders
www.myCNI.com.my www.OOBEY.com
Obstacles to IR growth
How is IR not maximized?
1.Because I can - Competency problem
2.Poor business value – Ignorance problem*
3. No Budget lah - Alignment problem
4.Not exciting lah – Glamour problem*
5.Idealistic Theories – Practical-ness problem*
www.myCNI.com.my www.OOBEY.com
Maximizing IR in Communications
Communications
Internal External
Mgmt Distributors
Suppliers
Media
Government
Public
Authorities
Associations
Universities
NGOs
Investors
Proactive Reactive Proactive Reactive
COMM Tools COMM Tools
www.myCNI.com.my www.OOBEY.com
Employees
“…in the past 18 months, we have heard that profit is more important than revenue,
quality is more important that profit, people are more important than profit,
customers are more important than our people, big customers are more important than small customers, and that growth is the key to our success. No wonder our
performance is inconsistent"CEO, Anonymous
www.myCNI.com.my www.OOBEY.com
Don’t forget…
“The business of business is Business, not Investor
Relations”
www.myCNI.com.my www.OOBEY.com
Thank You.
soft copy of slides: http://totallyunrelatedrandomanddebatable.
blogspot.com/