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Archives for August 2008

SEC Interpretive Release Part 1 Section 1 Usable Details

As we mentioned, one of the keys in Section 1 Part 1 of the SEC’s recently posted interpretive release is whether or not a company website is a recognized channel.

Recognized Channel

So, how does a company go about meeting this standard? That is where things start to get gray. The SEC notes some factors (which it calls non-exclusive) that should be considered when determining whether or not the company web site is a recognized channel of distribution. And it comes down to these factors:

Has the company done a good enough job in letting investors know that the company has a web site and that they should be looking there for information?

To fulfil this requirement, companies should be including disclosure in its reports and press releases that not only lists the site address, but also makes note that the company routinely posts important information there. Furthermore, the company needs to have a pattern or practice of posting such information on the web site. Also, the company’s web site needs to be “designed to lead investors and the market efficiently to information about the company.”

As I noted in a previous posting, not all companies place the same emphasis on their Investor Relations page. If the information is being posted on the IR page, then the site needs to be designed to efficiently lead investors and the market to that page. This will be a much easier claim with a prominent link on the home page to the IR section. It will be a slightly tougher claim with a tiny font gray link lumped in with legal disclaimers at the bottom of the page. It will be an even tougher claim with no link on the front page at all! In other words, if you want your publications on the company web site to fulfill these requirements, then you want to make sure they are very easy to find.

But a well designed site isn’t enough. Companies must also take steps to alert the markets that they have posted such information on their site. The SEC specifically notes the use of “push” technology, or more specifically RSS feeds! If you’ve been thinking about adding a feed but couldn’t justify it, now you have your reason. Other methods include press releases or other channel noting that important information has been made available.

Furthermore, for such a web published information to meet this standard, the company must keep the web site current and accurate. Also considered is what other methods the company uses to disseminate information and whether those other methods are the predominant methods. In other words, if your company throws up information on the website as a second thought, don’t expect to meet this standard.

The last consideration is kind of an unfortunate one. The SEC notes that some websites and companies get better or wider coverage in the press and other media. It goes on to say that a smaller company that does not get much media reaction to its postings on its company website may not count on such disclosures to be pubic. So, a company like Google, where both the on-line and offline media hang on its ever word can be more assured in that postings on the company website are considered public than a smaller company that gets largely ignored in media coverage can.

Basically, the SEC concludes this piece of the release by noting that although posting information on a company website would not be considered “selective” it could still not be considered public.

The waiting period issue remains largely unchanged, excepting that if the information were disclosed on the website and considered public, then the waiting period clock would start when such information was posted on the site.

Lastly, the SEC vaguely hints that your website should not go down. If a release of information sends investors flocking to your website and it crashes, that will be bad news. Make sure your site can handle the traffic it normally gets, plus a big rush if you are looking to go this route.

The Summary

The agency sums it up in the paragraphs about the waiting period by saying,

“a large company that frequently uses its web site as a key resource for providing information, has taken steps to make investors and the market aware of this, and reasonably believes that its web site is well-followed by investors and other market participants,”

can expect to have a shorter waiting period. The rest of this section points to the same standard the whole way.

The Game Plan

So, here is what you need to start with:

  1. Put your company web address in every release and report along with a note that the company regularly posts important information there.
  2. Make a prominent link to your Investor Relations page, or put the information directly on the homepage. I’d go with Option 1.
  3. Start an RSS feed that allows subscribers to be notified of any and all information posted for investors.
  4. Send out a press release to coincide with information being published on the website. You can also do it in advance, but it needs to mention a date and time and you need to meet that date and time.
  5. Release ALL information on the website concurrently with any other form of release. If you send out a press release on Monday and post the information on the site on Tuesday, you won’t be able to claim that the web site is considered your primary distribution method. If you can, release on the website FIRST, then do the other. Even a couple minutes could tip the scales into making your website your primary distribution method.
  6. Make sure your website is ready to handle a big influx of traffic. It may never come, but better safe than sorry. Obviously this applied more to smaller companies than industry giants.

Next up? Satisfaction of Public Disclosure Requirement of Regulation FD

Note: This all has nothing to do with the term “public” as it pertains to insider trading.

SEC Interpretive Release Part 1 Section 1

As mentioned here previously, the Securities and Exchange Commission recently released an “Interpretive Release” regarding SEC guidance on the use of company web sites.  The document totals 47 pages and can be found here in its entirety.

As reported in my prior post the release is intended to address four specific parts:

  • Clarification of how information posted on a company website can be considered “public” and guidance on complying with Regulation FD.
  • Clarification of the liability framework for certain types of electronic disclosure.  Of note, is that companies cannot require users to waive any protections from federal securities laws as a condition of participating in forums or blogs.  Also, included is guidance on linking to third party information without having to “adopt” such information.  How companies can provide historical data without it being considered “republished.”
  • Clarification of how anti-fraud positions apply to postings by the company or on behalf of the company in blogs and forums.
  • Clarification of which information is not generally subject to the Sarbanes-Oxley Act regarding “disclosure controls and procedures.”
  • Clarification that information may not need to satisfy the “printer friendly” standard in some cases, which would free companies to use “dynamic” technologies.

We’ll start by breaking down the release into each attempted clarification.  It should be noted that in addition to being an interpretive release, the document is also a Call for Comment.  As such, those involved in the production and maintenance of Corporate Websites and the Investor Relations section thereof, should carefully study the release in order to make relevant comments to the SEC.  Such comments are the best way to influence the course of any further action or clarification.

Part 1 Section 1

The first 15 pages of the release primarily cover prior actions by the agency.  So, we’ll jump right in at the first section of “new” information entitled: “Application of Certain Provisions of the Federal Securities Laws to Information Presented on Company Web Sites”

The first section is: “Whether and When Information Is “Public” for Purposes of the Applicability of Regulation FD”

Now, let me just say that if you are looking for some straight forward, “Do this”, but “Do not do this”, then you have the wrong document.  Still, there is some valuable information in here for those charged with maintaining company websites and compliance with regulations.

The information in this first section pertains mostly to when information that is posted on a company’s website can be considered “public” for compliance with Regulation FD.  Specifically when disclosure of information in a private manner to a specific individual or group of individuals can be considered acceptable based on the information having been public.  In order to be considered “public” information must be “disseminated in a manner calculated to reach the securities market place in general through recognized channels of distribution, and public investors must be afforded a reasonable waiting period to react to the information” (see note 1)

The catch here has long been whether or not the company’s website constitutes a “recognized channel.”  As the SEC notes, they have stated previously that such a website could someday be a recognized channel.  Is today that day?  Well, sort of.

The SEC notes that in order to be a recognized channel, investors must know the website’s location, that the company should let investors know that it does now, and intends in the future, to publish important information on its website, and that such information be easy to find, as well as the information be made available for a long enough period of time before any subsequent non-public disclosure.

So, how does a company go about making its website a recognized channel.  Ah, welcome to the gray area.

That is where we are headed next.

Note 1: From page 18 of the release, which cites Faberge, Inc. in footnote 48.

Branding and Disaster Planning

Most companies have a disaster plan in place that gives step-by-step instructions for all employees to follow in case something terrible happens, such as a flood at the headquarters location, loss of power for several days, and more.  Whatever the disaster may be (and let’s hope one never occurs), all employees are given a copy of the disaster plan instructions and told to bring it home and keep it in a safe place.

Business disaster plans are one thing, but what about brand disaster plans?  I’m thinking of disasters that can affect brands in all industries.  For example, consider the poisoned Tylenol incident in the United States in the 1980s.  More recently, toys manufactured with lead paint and foods that carry e-coli and other bacteria have made it to consumers’ hands bringing far more than negative publicity to the companies behind those brands.  While some of these brand disasters are bigger than others, they can all still be called disasters of some sort. 

That leads me to my question.  Do you have a disaster plan for your brand?  You never know what might happen in today’s world.  There are so many external forces at work in a global economy that developing a brand disaster plan isn’t that unusual of an idea.  What would you do if something terrible happened to your brand?  Could your company survive a branding disaster?  Make sure it can by planning for the worst now.

Image: Flickr

Should Social Networking Sites Make Money?

Popular social media sites like MySpace, Facebook and YouTube are appearing everywhere over the Internet, buzzing with people who want to make personal connections, business connections and political connections. The direction of Web 2.0 is accelerating quickly towards social media and the phenomenal impact that it has on media relations and business.

Social networking sites are striving daily to become well-respected members of the media world and in many ways they are, although a few isolated incidents can give them a bad name. For example, social stalkers on sites like FaceBook and MySpace can discourage people from becoming members and exploring other business-related opportunities that the site can offer. In addition, the never fail multitudes of get-rich-quick schemes that clutter the average business person’s mailbox is also enough to make them (possibly) not want to sign up with sites like Sphinn and Marktd. If the average online entrepreneur doesn’t persevere and muddle through the distractions, they cannot see how much their business can benefit from social marketing and networking sites.

Twitter, an extremely popular and fast growing social networking site, in a news interview decided that they would not concentrate on monetizing their site. Instead, the owner, Biz Stone, decided that it would be in the best interest of the company to continue providing exceptional service to the micro-blogging community and worry about site monetization later.

“At this point, given that we have plenty of money in the bank, it makes a lot more sense not to distract ourselves with trying to put the finishing touches on a revenue plan,” says the 34-year-old Stone, who founded Twitter with Jack Dorsey and Evan Williams in 2006.”     Full Story

Popular sites like Twitter need a business model and a revenue plan, don’t they? Are businesses going to start cropping up across the Internet with no public plan of action, no business model, no advertisers, no revenue model and no foreseeable way to continue doing business on the Internet? These questions have many bloggers baffled because in the world of blogging and content creation, there must be a way to sustain the business and that’s generally tied to a revenue stream. Advertising, product sales or course tutorials are some of the strategies that sites use to bring in revenue and keep their sites alive. Twitter currently does not do any (blatant) advertising, doesn’t charge members or participants, they don’t ask “sign-up” fees or referral links and the only way you hear about them is word-of-mouth. Yet, they are one (if not only) of the most powerful forms of social networking available today. The site is quite addictive (perhaps their strategy) an d easy to use because the platform only allows 140 characters maximum per blog entry. Links also count as part of the 140 characters so there is limited space to say what needs to be said. That’s the beauty of the system. You can deliver a business blurb, marketing link or re-direct people to your site in brief, succinct communications and make a profound impact. But in a business sense, it just makes sense to make money from something that is 1) growing, 2) widely used, 3) popular and 4) in demand. If Mr. Stone is not interested in Twitter making money, what is his goal?

Everyday, online companies strive towards achieving the type of traffic and following that Twitter has garnered. If they could secure half or even a fourth of the organic traffic that Twitter reigns in, do you think companies would pay for that opportunity?

Twitter provides a weekly statistical data on their current usage and member information. As of this date (August 4, 2008), Twitter shows that it has over 200,000 users and sees over 2,000,000 tweets per week. (Statistics)

After reading more about Biz Stone and the premise of Twitter, I can only speculate that perhaps Mr. Stone will present to the Twitter community at a much later date a business model and plan that will be so impactful and powerful that we cannot resist partaking in it, whatever that will be. Will we be charged for its use later? Will large organizations “sign-up” to allow their tweets to go out to the masses, touting their product or service? Will the average entrepreneur be able to have a twitter-page where they can showcase their wares while paying Twitter a small fee for the honor? Who knows what will happen. One thing for sure though is that Twitter has definitely developed an interesting way of doing business. If this future plan is well-developed and presented effectively, I would imagine that Twitter could invariably double or even triple its size in traffic and growth. Businesses will start to flock to the Twitter band-wagon to enjoy its successes. In the end, Twitter will have firmly been established in the social media circle and become a pattern for other sites to follow.

Best Company Leader Development Programs

Companies can survive poor leaders but thrive with good leaders. That’s why Bersin Associates estimates that companies spend 30% of their trainings budgets on leadership development. Many companies have their own signature programs. Let’s take a look at the best rated programs.

Leadership Excellence performs one of the most comprehensive ratings across a broad range of programs, large and medium sized companies, non-profits and government programs. I will focus on the top large corporations.

Let’s take a look at some of the internal practices of the best rated companies.

Southwest Arlines

Be seen. I have recommended this in my book and articles. People need to see their leaders. In larger companies there is a greater tendency toward isolation of senior managers.

Take an example from Herb Kelleher former CEO of Southwest Airlines; he routinely visited everyone in his organization from baggage handlers and ticket agents and pilots to flight attendants. Meet the people you support often. Don’t wait for the special events. Invite small groups to neutral area, the cafeteria during off peak hours is good. If this doesn’t work, your office is OK, but be sure that your desk is not a barrier. Move your chair to the front of your desk. Have people speak first and listen. Ask what their suggestions are to do things differently.

Capital One

Kudos to Capital One. They understand that the best leadership educators are their own senior management. They understand the context the company operates within and they have a storehouse of experience regarding how they made it to the top.

At Capital One, we have designed a leaders-as-teachers program to help develop the leadership capabilities of managers and junior-level executives, the pool from which many of our company’s future leaders will emerge. Our program generally functions on the following two platforms:

  • The Executive Speaker Series
  • Leadership Workshops.

The Executive Speaker Series consists of formal, didactic, 90-minute presentations to an audience of several hundred members, covering a broad range of topic areas. Presenters, or teachers, are drawn from the company’s resident “leadership trust” and include the CEO, president, senior vice-presidents and other C-Level executives. During the lecture segment, there is no dialogue. In short, this is an opportunity; in one hour, to tell one’s story and to paint a self-portrait in broad, and sometimes colorfully bold, strokes that says, “This is who I am, how I got here.” Lisa M. Meadows is vice president of executive leadership development at Capital One

Caterpillar

Another company that sees leaders as teachers.

One of the components of Caterpillar‘s Leadership Quest program involves participants presenting to the CEO their strategy for the organization in the year 2020. In October 2005, the Strategic Planning Committee launched Vision 2020 and rewrote the Code of Conduct. The College of Leadership, in partnership with key corporate organizations, rolled out the new strategy and code down through the organization using a leaders-as-teachers approach. Learning sessions designed to achieve divisional alignment were conducted around the world. All leaders were involved in communicating the essence of the new strategy to their subordinates and helping them see their roles in achieving the organization’s strategic goals. (Adapted from Alex Goldsmith “Evolving Leadership, Procter & Gamble’s Distinct Approach to Recruiting”)

Procter & Gamble

Procter & Gamble’s Global Leadership Council, talks about the changing archetype of a leadership. It also shares with students ways they could evoke loyalty from coworkers and distinguish themselves from their peers. There is also a message from Procter & Gamble’s Chief Operating Officer which he emphasizes the importance of values and integrity in decision making.

Additional Resources

Bersin Associates Awards

OPTIMIZING YOUR LEADERSHIP PIPELINE from DDI, Inc. (PDF)

Must Visit Business Information Sites

Anyone who uses the Internet for research knows that there is lots of fluff in search results. However there are some real gems and I’d like to share a few.

The first is ManyWorlds

Topics include the full spectrum of business issues — planning, marketing, organization issues and more. The content is delivered in a variety of formats — whitepapers, presentations, tools, blogs and articles.

Some example topics, “Where is advertising going?”, “When benchmarks don’t work.” To obtain full access registration is needed, but well worth it.

Here is another great site ChangeThis–” We’re on a mission to spread important ideas and change minds.”

Here is a sample of topics —

  • How can you tap the transformational power of the truth? How can you use it to turn ordinary relationships into extraordinary ones?
  • Business Improvisation: The Diving Catch of the Corporate World
  • People Don’t Hate Change, They Hate How You’re Trying to Change Them
  • Seinfeld on Marketing: 7 Marketing Lessons from the Cast of the Show About Nothing

How can you resist a visit? There is a wide range of subject areas. Definitely unique and thought provoking. No registration, but you can sign up for news updates.

Here are a few more —

Need Marketing Information try the MarketingTeacher covers just about anything about Marketing including Bowman’s Strategy Clock.

Another unique site is ConceptSpace from the London Business School. It is a visual search tool. Gives you basic information on virtually any business topic.

Finally this site is the KitchenSink of links to anything you need to know about business and more. It has many external links and spreadsheets and whitepapers to download.

Now you may get through the fluff and find what you need.