The Strategic IR Playbook

The business of public companies engaging investors needs a playbook. Amazingly, there’s no standard set of best practices for how companies successfully navigate the public markets.

Not up for debate is that a company’s trajectory is intertwined with the market. Companies need the market to finance their business and pay employees. By one study’s estimate, 86% of companies issue equity each year*, including issuing stock to employees.

Also, the market forces management accountability. Public reporting & financial results are one of very few operating motions CEOs and CFOs spend time with their boards on EVERY quarter. Ultimately, it’s the market’s yardstick that writes the history of a management team’s performance.

Enter Investor Relations (IR), the team you entrust to navigate the public markets. We believe elevating IR into a strategic executive function creates a competitive advantage for long-term-focused companies. And as with other key functions in your organization, leveraging standard best practices is a game changer.

What follows is our “Strategic IR Playbook.” We’ve built this concise approach to winning with investors by drawing on 40 years of public market experience as IR leaders, investment analysts, and operating execs.

We’ve also open-sourced the full playbook on a public doc for anyone to read. The doc shares the key plays and a running list of best practices learned from decades of on-the-job experience. We will continue to revise & add to the document over time. LINK

Strategic IR and the Playbook

Strategic IR teams build an enduring narrative to achieve an organization’s long-term goals. The Long-Term Value Advisors Playbook consists of three pillars:

• Pillar 1 - Deliver the strategic narrative: build and tell your long-term story.
• Pillar 2 - Nurture investor relationships: treat investors like customers and nurture the market community around your company.
• Pillar 3 - Build company trust: align your narrative with your organization’s operations and employees.

Here is a brief double-click on the three pillars and 12 specific plays:

Pillar 1 - Deliver the strategic narrative

Most financial disclosures and results content is ignored or glossed over. It’s often opaque & difficult to connect with, especially when it comes to earnings press releases & SEC filings.

Great organizations and leaders communicate through a different lens - they focus on their why. All stakeholders, including your investors, “don’t buy what you do, but why you do it,” best said by Simon Sinek.

We’ve built the concept of strategic narrative on this idea:

• Play 1 - Focus your narrative & brand on long-term vision, mission, strategy, & objectives: We leverage LinkedIn’s “Vision to Values” framework. A great narrative starts with a company’s “Why” and frames principles, strategy, and operating priorities from there. Your financial results connect to your purpose, not vice versa.
• Play 2 - Treat earnings like a company showpiece & align your narrative across all comms (external & internal): Quarterly and annual results are amongst your most public and media-covered events. Lean into them. Take a page from Buffett & Berkshire Hathaway (full history of annual letters | 2023 annual meeting) and approach results with a company-wide lens, not just a narrow financial analyst focus.
• Play 3 - Communicate through the 3 C’s & 2 B’s: Make sure content is Clear, Concise, Consistent, Balanced, & reflects your Brand personality. Bonus points for making it Inspiring. Be memorable, and know your audience is drowning in noise and information.
• Play 4 - Understand what matters most to investors: Investors care most about your valuation, growth rate, and your long-term profitability & operating model. They also care about trust and consistency (ie. don’t surprise them). This means you need to communicate with a tone acknowledging the environment around these key intrinsic value factors.

Pillar 2 - Nurture investor relationships

Investors are most important to companies on the hard days when you need stability, capital, and external support.

I learned this as a young semiconductor analyst. While semis underpin the global economy, their brutal boom & bust cycles described in Chip Miller’s “Chip War” make investing challenging. At Capital Research, we’d use tough days in the market to double down on winners we loved, like TSMC & Samsung. In turn these companies came to trust our stability and relationship commitment. I learned the lesson again while at LinkedIn. When our share price fell nearly 50% on one day in 2016, a group of investors that understood our long-term story provided much-needed market stability and bought our shares.

Those learnings helped cultivate an approach to treat investors like customers and nurture the market community. You need these folks to have your back when you need them most. Some of the plays we’ve learned along the way include:

• Play 5 - Target long-term investors: who will support the company & valuation over multi-year cycles and reduce valuation volatility. Include index fund & sustainability investors.
• Play 6 - Support the “White House press corps”: treat sell-side analysts & smaller fund managers as first-class citizens; they drive market perception and trading volume. Many companies put these folks in the economy car of the train, and that’s a mistake. They offer unique perspective & feedback as partners.
• Play 7 - Share the right balance of information: Always follow the KISS principle (keeping it simple, stupid) because an easy-to-grok narrative keeps investors engaged. At the same time, cultivate a reputation for sharing context & information to help inform investors, not stonewall them. A reputation for being standoffish with disclosure breaks trust.
• Play 8 - Empower IR as an executive function: This team is your gateway to accessing the capital markets. Trust & empower them as your would your S&M or R&D leadership. Side bonus, CEOs & CFOs gain massive time leverage when investors trust the IR team.

Pillar 3 - Build company trust

One key advantage of being a public company, and having a team focused on it, is that you’re constantly in a 2-way dialog with an audience (investors) who have a differentiated perspective on your long-term success. The IR team is nailing it when there is a virtuous and trusted feedback loop between the company & long-term owners.

Key plays include:

• Play 9 - Integrate narrative with operations & strategy: Infuse your business with long-term perspective & ensure your IR team has a seat at the operational leadership table. Across the companies we’ve been a part of, this means active participation in MBRs, QBRs, weekly metrics reviews, board meetings, strategy sessions, corporate development conversations, and any other ritual critical to understanding and decision-making that drives company results.
• Play 10 - Go inside out, engage the leadership bench with investors: Put your managers in front of investors. Investors love getting this extra depth and insight into the business. In return, managers get to hear the tough questions about their business that they don’t usually face, creating a win-win feedback loop.
• Play 11 - Go outside in, prioritize internal comms: Many companies send a canned CFO message to employees on earnings day and leave it at that. Quarterly results give you a unique opportunity to connect your entire team back to the big-picture. This is a crucial factor in employee engagement, especially in large organizations.
• Play 12 - Nail the basics: quarterly earnings & disclosure is a complex, multi-stakeholder process. Treat earnings & investor engagement with strong program management, operational rigor, & executive buy-in. This ensures you’re seen as a trustworthy executor by investors while maintaining the trust of your employee team and board.

This framework will help you build trust with investors and your team, paving the way for your long-term success as a company. Learn more at [email protected] and follow our LinkedIn newsletter, “Shareholder Letters.”

Footnotes

* Eugene Fama & Kenneth French, “Financing decisions: Who issues stock” Journal of Financial Economics 76 (2004); as cited by Baruch Lev in “Winning Investors Over”