The "Vortex of Investor Innovation": Communicating During a Period of Extraordinary Opportunities and Existential Risks

Introduction

Welcome to the "Vortex of Investor Innovation," a new period characterized by high-velocity technology, medical, device or solution innovation (as examples), that have been fueled by the convergence of AI and Machine Learning, Blockchain, IOT and others changes that can significantly disrupt or transform industries with unprecedented speed, demanding that companies adapt faster than ever before. A period of extraordinary opportunities and existential risks. It is critical to communicate with investors about both.

While Joseph Schumpeter's concept of "creative destruction" and Clayton Christensen's "Innovator's Dilemma" are two of the leading ideas that explore the dynamics of innovation and its impact on industries, the speed, pace and impact of change today are setting up a "flashpoint era" when the pace of change was measured on public companies valuations in decades, then in years, in months and now potentially in minutes.

To navigate the "Vortex of Investor Innovation", below are guidelines for public companies to ensure rapid, transparent, effective, innovative and confidence-building investor engagement during times of high velocity innovation and to articulate:

• Scenarios for the future
• Opportunities related to Innovation
• Risks related to Innovation and related strategies to mitigate

1. Prioritize Transparency:

Transparency is vital to build and maintain trust. Companies should:

• Report Financial Metrics Clearly: Even if the numbers aren't favorable in the short term, it is essential to present them clearly with a pathway to future innovation.
• Share Key Performance Indicators (KPIs): Disclose relevant KPIs that track your company's performance in its innovative investments and focus.

2. Educate Your Investors:

Investors may not always be familiar with the nuances of your industry's current or future innovations or the potential for impact on your current strategy:

• Host Educational Webinars and Conferences: These can detail new products, technologies, or methodologies.
• Provide Thought Leadership, White Papers and In Depth Research: Offer detailed insights about the impact of innovations on your business and the industry at large.

3. Regularly Update Stakeholders:

With rapid changes, the status quo can shift quickly. Therefore, regular updates are critical, in many industries, off cycle from the current cadence of investor engagement.

• Monthly/Quarterly Newsletters: Share updates on new projects, partnerships, or research findings.
• Periodic Briefings: If there's a significant shift or event, promptly communicate this to stakeholders and characterize how this innovation will impact your business, your ability to respond and reinforce how your own strategy will win.

4. Leverage the Power of Storytelling:

Stories are more memorable than raw data. Use them to:

• Humanize the Company: Share tales of staff working on innovative projects.
• Explain Complex Innovations: Break down complexities through relatable narratives at the patient level for example.

5. Engage in Active Listening and Develop Market Intelligence:

Investor feedback, which we characterize as Market Intelligence, is invaluable. Ensure there are:

• New Channels for Feedback: Allow investors to share concerns, suggestions, or inquiries on areas of interest and concern related to innovation in your industry and shape monthly or periodic briefings
• Regular Engagement: Gauge investor sentiment and adapt your communication engagement content and focus
• Strategic Sentiment or Market Intelligence Reviews: These all source reviews are the next generation of investor perspective that can shape how you communicate with investors.

6. Show Long-Term Vision:

Amidst rapid innovation, it's easy to focus on the short-term. However:

• Share the Big Picture: Articulate how current innovations fit into the company's long-term strategy during your regular earnings cycle and consider an innovation specific mini-investor Day.
• Provide Roadmaps: Visual representations of your company's direction can clarify the trajectory for investors and build out interactive models that can be updated in real-time.

7. Highlight Company Culture and Values:

In a changing landscape:

• Reiterate Core Values: Ensure investors know that despite external changes, the company's foundational principles remain steadfast.
• Showcase Adaptive Culture: Highlight how your company culture encourages and adapts to innovation.
• Update Core Values: Ensure that your core values are up to date with the emerging requirements of an era of high velocity innovation.

8. Anticipate and Address Concerns:

Investors may have concerns regarding the viability, scalability, or implications of certain innovations:

• Maintain a FAQ Section: Regularly update a section dedicated to frequently asked questions related to the company's innovative initiatives.
• Expand and Investment in the Investor Relations Team: The level, type and investor mix during a time of high velocity innovation indicate a need to proactively engage with investors in times of rapid innovation. Consider incremental investments across the "Five I's" of Investor Value Creation for 2024 (more to come on the Five I's soon).

9. Utilize Multimedia Platforms:

Different investors have different preferences for information consumption, with a different mix between institutional and retail.

• Diversify Communication Channels: Use videos, podcasts, written reports, and interactive web tools and target and segment your content in a highly personalized way to prospective investors.
• Maintain a Robust Online Presence: Regularly update the company website, IR site, engage on relevant social media platforms through the leaders accountable for innovation.

10. Encourage Investor Involvement:

Make investors feel like partners in the company's innovative journey:

• Invite to Company Events: This can include product launches, demonstrations, or tours of R&D facilities.
• Engage in Collaborative Decision Making: Solicit investor input on significant innovation-related decisions.
• Develop Scenarios Together: Develop a detailed scenario analysis that can offer investors a comprehensive view of what to expect, laying out the best, moderate, and worst-case outcomes for the disruptive technology adoption.

In conclusion, as the pace of innovation accelerates, clear, transparent, and regular communication with investors becomes ever more critical. By adopting these strategies, public companies can maintain investor trust and enthusiasm, even during tumultuous times of rapid change and elevate your value.