The products Cognex builds are about as high-tech as they come. After a particularly bad year, however, management at the Massachusetts-based firm took a decidedly low-tech approach to its annual report. It printed it on recycled paper, featured black-and-white caricatures of company executives, and touted the report’s low cost to investors: 21 cents each.
‘At the time it was considered bad form not to do a glossy report,’ explains Susan Conway, director of IR at Cognex. ‘But we said, That doesn’t make sense. Business isn’t good this year. We did it with humor, too.’ The report stood out from the crowd and got a lot of attention from both potential and current investors, most of it good. ‘We went a little bit out on a limb, but investors ended up applauding us for it,’ Conway says. ‘They really appreciated it.’
The days when all annual reports looked the same are long past. Whether a company spends 21 cents per report like Cognex or more than $1 mn in total like Xerox did last year, most are now using these reports to do much more than dutifully meet their legal reporting requirements.
‘The annual report offers an opportunity to build your corporate brand and tell your company’s best story, on your terms, in the most compelling, informative and differentiated way,’ says Cary Martin, senior vice president at Chicago-based design firm Paragraphs. ‘Your audience will infer quality, confidence, direction and momentum from what you say and how the information is presented. What people think about your brand influences what they do about your brand – which affects your business’ value in the share price. Why wouldn’t you leap at the chance to shape those perceptions?’
Reports that work
The best documents inspire investors and create excitement with art, emotion and good writing, says longtime annual report aficionado Reni Witt, president and founder of MerComm’s ARC Awards, which recognize the best annual reports. ‘After all, investors own that company,’ notes Witt. ‘They want to feel proud of it.
They want to feel a connection.’ One of Witt’s recent favorites is Novartis’ 2006 annual report. The Swiss pharmaceuticals giant’s book features a black-and-white cover photo of a bald little boy clearly undergoing chemotherapy. He stares into the eyes of his young father and the subtitle reads: ‘Caring and curing’. Inside, the report offers case studies of patients from around the world to highlight the firm’s global reach.
‘You could be moved to tears just looking at the cover,’ Witt says. ‘You feel the suffering. This is a major global pharmaceuticals firm and it brings it right down to earth, right down to the person.’
Another route companies are taking is to use ‘hyper’ colors. Camden, a real estate investment trust, uses this to nice effect in its 2006 ‘special collector’s edition’ annual report: silver with lime and hot-orange type, it fits with the rock-and-roll theme of the layout. ‘You look inside and every page has some sort of artistry or graphics,’ Witt says.
IBM has a different message: its ability to develop solutions to complex problems. To get that across to investors last year, IBM issued a booklet that was smaller than most – 6.5 inches by 7.5 inches (16.5 cm by 19 cm) – and which sported an ebony black cover emblazoned with the word ‘THINK’.
‘Our world is made up of complex systems,’ the second page announced, introducing a series of stunning photographs bursting with color: the eye of a storm as seen from space; Asian fishermen in a tropical bay; a close-up of a human iris; a row of hospital beds flanked by computer screens; a child.
The rest of the report highlights how IBM is finding real-world applications for its technologies, and making sense of complex systems. It’s a powerful presentation, with a clear message that packs a punch. ‘It’s a really interesting book,’ says Witt. ‘I think even non-stockholders would like to read it.’
The subtle approach
Xerox chose a less flashy approach. Its report has a picture of a pen on its cover with the company name and the words ‘Dear shareholder’. Using bright purple and orange, the report notes that many companies now use color in their communications, rather than just black and white. The point? Xerox is giving people tools to make choices about how they communicate. Then it uses easy-to-follow bullet points to highlight financial gains, with charts and pull quotes.
‘Obviously it’s a branding statement,’ says Marie Seymour, manager of corporate communications at Xerox. ‘We try to get across to a certain extent what our key strategies are in the business.’
This strategy of highlighting simplicity and clarity makes sense given that Xerox’s whole business is to help its customers communicate clearly. It is also one investors can understand. Seymour has a letter taped to her door: addressed to her CEO, it’s from plain-English zealot Warren Buffett, praising Xerox’s shareholder letter.
Witt says the reports of Novartis, IBM and Xerox excel at communicating the story. But for lesserknown entities, clear and compelling sometimes investors can understand. Seymour has a letter taped to her door: addressed to her CEO, it’s from plain-English zealot Warren Buffett, praising Xerox’s shareholder letter.
Witt says the reports of Novartis, IBM and Xerox excel at communicating the story. But for lesserknown entities, clear and compelling sometimes isn’t enough, and it can be crucial to find a ‘hook’. Last year, for example, Cognex’s report spoofed a cover of style magazine Martha Stewart Living, Photoshopping Stewart’s distinctive blond hair onto the head of an executive holding a tray of electronic equipment, next to the headline, ‘What’s cooking at Cognex?’
Texas oil company Denbury Resources famously created a board game modeled on Monopoly. The actual report was made to look like the game’s rules and it came with a board, tiny figurines, dice and cards that explained different business practices in the oil refining business.
In Austria, Baumax, a home improvement chain, issued its report in a box that came with a screwdriver, bolts and folded sections of the annual report, which instructed investors to put together the document however they liked. ‘It’s clever, reinforcing what this company does,’ Witt says.
