Every industry has its buzzwords that spread like wildfire. The healthcare industry has stem cell research, the technology space has fiber optics, and the bioethics industry – a buzzword in itself – has genomics. In the world of investor relations, the buzzword gaining a lot of speed these days is strategic IR. Ever since the market took a nosedive, IROs have been using the term strategic investor relations – rather than plain old investor relations – to describe what they do. The trouble is, the difference between the two is sometimes hard to identify.
Really, the strategic prefix tacked onto investor relations is redundant. Strategy, according to Webster’s, refers to a careful plan or method aimed at achieving an end. The term investor relations, without the embellishment offered by strategic, already infers a strategy. After all, investor relations involves a series of practices aimed at achieving an end. In short, IR is already by its very nature, strategic.
Does the term strategic IR refer to a highly sophisticated form of IR? Is it so tactical that it requires a pre-strategy strategy?
Color commentary
The phenomenon may be likened to pre-game banter on Monday night football. Before a touchdown there really isn’t anything much for the sports commentators to talk about so the conversation will typically turn to predictions about what will happen during the game.
The IR version of pre-game commentary would go something like this:
John: ‘Well, I don’t know, but I’m guessing that the strategy may involve trying to target new investors. What do you think, Jane?’
Jane: ‘Well, John, you could well be right. Looking at how these IR programs usually go, investor targeting is normally a key part of the team’s strategy. Exactly how this team will do, that’s a different story, however, and something we will undoubtedly learn when they begin to strategize.’
It’s probably no coincidence that strategic is being attached to IR more frequently at a time when corporate budgets are getting the ax. Everyone can understand the need to boost one’s strategic value at a time when senior management is performing the customary slash-and-burn rituals: ‘IT! who says we need IT? I can send e-mails myself. Get rid of that department!’
Straight to the top
One IRO describes strategic investor relations as the ability to be taken seriously by senior management. In this case, the added strategy for IROs involves developing a careful plan for getting the IR strategy to be taken seriously by senior management. Sad as this sounds, this is the case for many IROs, especially those in developing markets.
It would be much easier to leave your IR practices alone and simply say, ‘Senior management needs to take investor relations more seriously so that I can start doing my job properly.’ But perhaps that is too idealistic.
Strategic IR is also used to describe an end goal, as several IR professionals have commented. ‘My goal is to achieve a strategic investor relations program,’ they say, which translates to: ‘Getting more analyst coverage as well as targeting and attracting more investors, both institutional and retail’.
In Washington, political speech writers are encouraged to include the word globalization as much as possible because it helps dispel the myth that George Bush’s idea of foreign relations is to build better trade agreements between Texas and Mexico. In truth, globalization is one of those overused blanket buzzwords that embody different meanings depending on their context and use.
Does strategic IR fall into this category as well? Perhaps not, but it does sound slightly more important than plain old IR, even if there isn’t any difference.
