Corporate Eye

...compare, compete, excel

Archives for September 2008

Corporations Seek Creativity

In previous posts, I have commented on how the corporate world is getting increasingly complex. So much so that the current menu of tools and techniques are becoming less effective. I found an interesting article on the website of the Australian Graduate School of Management (Read the article – edit: no longer available).

One of the defining abilities for 21st century managers is how they deal with ‘wicked problems’ – that is, problems that are socially so complex that they don’t have straightforward answers and for which the past does not prove to be a reliable predictor of the future. Grappling with wicked problems is arguably the greatest and most exciting challenge for today’s manager who needs to adopt new ways of thinking to discover solutions.

And in a 2005 article BusinessWeek mentioned —

What was once central to corporations — price, quality, and much of the left-brain, digitized analytical work associated with knowledge — is fast being shipped off to lower-paid, highly trained Chinese and Indians, as well as Hungarians, Czechs, and Russians. Increasingly, the new core competence is creativity — the right-brain stuff that smart companies are now harnessing to generate top-line growth. The game is changing. It isn’t just about math and science anymore. It’s about creativity, imagination, and, above all, innovation.

No wonder that corporate recruiters are increasingly hiring MFAs instead of MBAs. Companies are also looking into how to promote creativity in their organizations. The CEO and the C-suite must set the tone at the top that encourages a creative corporate culture. Other initiatives are to back this up with with rewarding creativity via special awards (3M) and as components of the compensation plan (GE). See other techniques in the table below.

COMPANY CREATIVITY PRACTICE
Toyota Is best known for an obsessive focus on innovating its manufacturing processes.
Procter & Gamble Transformed its traditional in-house research and development process into an open-source innovation strategy it calls “connect and develop.” It embraces the collective brains of the world…. inventors, scientists, and suppliers for new products that can be developed in-house.
3M Awards “Genesis Grants” to scientists who want to work on outside projects. Each year more than 60 researchers submit formal applications to a panel of 20 senior scientists who review the requests, just as a foundation would review academics’ proposals. Twelve to 20 grants, ranging from $50,000 and $100,000 apiece, are awarded each year. The researchers can use the money to hire supplemental staff or acquire necessary equipment.

General Electric Co. Has begun evaluating its top 5,000 managers on “growth traits” that include innovation-oriented themes such as “external focus” and “imagination and courage.” GE has also added more flexibility into its traditionally rigid performance rankings.
Infosys Technologies Ltd Chairman and “chief mentor” N.R. Narayana Murthy introduced the company’s “voice of youth” program seven years ago. Each year the company selects nine top-performing young guns — each under 30 — to participate in its eight yearly senior management council meetings, presenting and discussing their ideas with the top leadership team.
Adapted from Businessweek “Most Innovative Companies”

I found a good website America Creativity Association with many great resources. If you are just starting to use creativity in your organization, take the Readiness Test.

Another good site is CREATE There are good examples of managing creativity, techniques and case studies. An added benefit: no ads.

Now get those creative juices flowing.

Investor Relations and Main Street

In America, the populist press often likes to refer to Wall Street and Main Street.  Wall Street, of course, referring to all those suit wearing Ivy League graduates who prowl the arcane corridors of finance and insulate themselves from the rest of the world with high walls around their mansions, and Main Street being hard working “normal” people who can’t get a break from Wall Street.  While I doubt most IR professionals would subscribe to that view, it does raise the question, can an IR site be helpful to regular investors?

Investor Relations and Molly Mainstreet

Recently, we discussed how to make IR sites more user friendly for employee shareholders, but how does one go about making an IR site more user friendly for the average person?  The number of people who own stock is higher than it has ever been and it is growing.  So, how can an Investor Relations website target those common “Main Street” folk who are becoming a larger group of shareholders each day?

For Dummies versus Dumbing It Down

For many, the first instinct is to “dumb it down.”  This is a recipe for trouble.  By trying to give an investor just the gist of the information, you risk eliminating pertinent specifics and creating legal and ethical issues.  However, much of the space on an average IR website is taken up by what could be considered technical material.  While a prospectus or annual report is indeed designed precisely to provide information to the public, it can seem overwhelming to investors without a degree in finance.  The beloved, retired, widowed, orphaned, school teacher, is unlikely to find much use out of thick, statistics filled financial statements.  So, how do we reach this audience?

The popular “For Dummies” book series has achieved success by taking one concept and sticking to it religiously, provide the necessary information, but do so in a manner that is friendly, accessible, and straightforward, with minimal use of jargon.  This same concept is the secret to success with the regular investor.  However, the time required to rewrite financially technical materials can be significant, not to mention the need to re-approve everything.  It would be great if there was a source of such material already available.

News, Lots of News

There is one area where some information has already been reduced to a digestible level.  When a company issues a press release, the information cannot be long and unwieldy.  The average reporter would not bother with it, and the affect of the release would be squandered.  So, press releases are, by design, developed as understandable information in an accessible size.  In addition, press releases are also already vetted by the legal and compliance departments before their release, so there is no worry about the information being improper in some way.  In other words, they are the perfect information pieces for our Main Street investor.  Make such news articles and press releases and integrated part of your IR site without pushing them off to the corner where they look like something no one really wants to see and the accessibility issue is already much improved.

Just Talk to Us

The other major focus for dealing with Main Street investors is accessibility.  The image of large companies standing in their towers behind guarded lobbies is a powerful one.  An Investor Relations site can reinforce this image by having contact information buried under various link levels, or silently placed elsewhere on the web site.  To provide the maximum benefit for the common investor, contact information specific to investor relations should be prominently displayed on the IR pages.  This information should include both email addresses (a general catch-all email account is fine) as well as a regular mailing address and if possible a phone number.

Also helpful is the method for ordering standard printed versions of investor related material.  Since many investors may be working from knowledge gained in the world of mutual funds, a similar concept to the prospectus can be a comforting idea to someone branching out into direct stock ownership.  The three lines of text on an IR site stating how and where to order such materials will be of much use to these investors.

Remember, many people are still more comfortable with a phone call than an email, and the number of people who feel better if they have something “in writing” is still significant.  You can reach out to both groups with a nice contact list.

Banks Demonstrate Casual Approach to Sustainability

HBOS Homepage

On 19th September 2008 I realised something rather profound … I’m now a Lloyds TSB customer. Both my wife and I have always had a Halifax account (although it’s not my main one) but I’ve always had an aversion to Lloyds TSB.

Now the two are coming together to create the UK’s first SuperBank. For no other reason than this I’ve decided to jump on the bandwagon and make Banking, specifically Lloyds TSB and HBOS, the first of my FTSE 100 Website reviews. [Read more…] about Banks Demonstrate Casual Approach to Sustainability

Socially Responsible Brands Jump on Fair Trade Certified Bandwagon

There is a new wave of socially responsible brand labeling available for companies to slap on their products called Fair Trade Certified. In 2008, 284 Fair Trade Certified products were launched in the United States, up from 130 in 2007.  According to an article in Brandweek, Mintel reports that most of the products attaching the new label to their brands are coffee, tea, herbs, cocoa, chocolate, fruit, sugar, rice, spices, cut flowers and (coming soon) wine.

What is Fair Trade Certified you ask?  It’s a product designation handed out in the United States by TransFair USA out of Oakland, California to signify products from farmers in locations such as Ghana or Costa Rica who, “work in safe labor conditions, use environmentally friendly practices and are paid at least a minimum floor price for their crop. These family farmers may also belong to a co-op that democratically decides how to invest their profits in building schools, health clinics or developing better business and sustainability practices.” [Read more…] about Socially Responsible Brands Jump on Fair Trade Certified Bandwagon

Free Patents Release Business From Gollum’s Precious

Gollum: a dirty and warped creature whose bulging eyes, skinny fingers and obsessive behaviour are now synonymous with unfettered desire and greed.

It’s tempting for many of those who argue against Capitalism and the Market State to liken big business to a swarm of Gollums, all scrabbling around in the dark, clutching their own peculiar Precious.

However such a view may be confounded by a growing initiative launched by the World Business Council For Sustainable Development (WBCSD): the Eco Patent Commons. [Read more…] about Free Patents Release Business From Gollum’s Precious

Tate & Lyle Analysts List Makes the Grade

Recently, we covered the SEC’s Interpretive Release in some detail.  One area of concern in that document revolved around companies providing links to third-party information.  The particular example cited by the SEC was a company that provided links to just a few analysts, all of whom had favorable opinions of the company.  The suggested solution to such concerns is to list several analysts without regard to their opinion of the company.

Here we take a look at Tate & Lyle’s list of analysts as displayed on their Investor Relations website.  Such links provide valuable information for investors.  Not only do the links allow investors to quickly find professional analyst coverage of a company, but they also demonstrate to some extent the kind of coverage the company gets from the analyst community.  Thus, the concern of the SEC that someone might see such a list and assume that the two or three analysts listed represent the whole universe of coverage.  So, if a company can provide very beneficial information to investors while at the same time not running afoul of any hint of underhandedness, then we have a winner.

First, the Tate & Lyle page includes a disclaimer at the top of the page frame before the listing of analysts.  This is good positioning as it ensures that any investor who reaches the page should see the disclaimer.  The disclaimer specifically states that Tate & Lyle only provide the links for the investor’s convenience and that the do not warrant the accuracy of the information behind them.  Further, the disclaimer also points out that the list is not comprehensive.  We’ll turn a blind eye to the phrasing, “…nor does it endorse or accept any responsibility whatsoever…”  (Has a court ever ruled that not accepting responsibility is a weaker standard than not accepting any responsibility whatsoever?)

The one concern is the decision to make the disclaimer a light gray text.  While this is standard procedure for disclaimers in general and especially for those in printed text, in the case of IR, it may be better to error on the side of blaring, rather than aesthetically pleasing.  Frankly, it would be preferred if the disclaimer were both in full black color, and a larger font.  In fact, going all the way to bold may even be advisable.

Still, the disclaimer certainly makes the grade.

What about the list?

The list of analysts covers 15 names and companies.  Fifteen names most definitely can be considered a broad list assuming that the 15 were not cherry picked for their positive views.  If there were 20 analysts with coverage and the only five with negative comments were the ones missing, I think we can all see how that would be a flashing red light.

The analysts and companies listed represent a cross section of the biggest names in the investment and analysis world in both Europe, and the U.S.  One can hardly fault a list with these kinds of names.

What is particularly intriguing is that Tate & Lyle has chosen to link analysts via email address.  Many companies that provide a list of analysts fear to link at all.  Even the mighty Google, whose bread and butter are Internet links, chooses to not link to the analysts or even the main page of the companies they work for.  The tactic by Tate & Lyle is an interesting one.  By providing an email link, the IR site is more helpful than a simple list, or even a list with names and addresses as other companies have done.  At the same time, Tate & Lyle does not explicitly link to any information regarding the company, but rather only to information about how to contact people who cover the company.

So, the list gets a passing grade as well.

Best Practices

The Tate & Lyle site provides a solid example of what an analyst coverage page might look like for an IR site.  Using a large list, and a well positioned and well worded disclaimer are the keys to success with this form of investor information.  As an added bonus, it always looks good when your company seems like it is not afraid of the analysts.