Wednesday, 31 August 2016

Creating Investor Engagement in Technical Disciplines.

The question is, are your company announcements performing as well as they should be?

Companies involved in scientific research and development often make highly valuable discoveries, products or services which, by tapping newly created or already very large markets, could make a material difference to company value. “Game Changing” developments are, by their very nature, new to the market, and as such, require that investors understand the importance and implications of the new development. This can be difficult due to the technical nature of the development and the closed-world of scientific research where scientists talk to other scientists in language that is confined to the scientific community.

It is an information market.

Capital markets trade in information as much as they do in shares. Freely flowing positive news can give impetus to share price appreciation. It is critical in this environment that companies who wish to have brokers and investors talking about their offering, over that of competitors, provide information that is easy to digest and share. Thus any announcement (particularly technical announcements) made by a scientific company should be reviewed to ensure it communicates effectively with its target audience: namely stock brokers and investors.

Understand who you are trying to reach and what you are trying to do. 

Stockbroking, and the investment community generally, is a highly educated arena. However, the education is predominately confined to economics and finance, with only a small adjunct of technical/science savvy analysts whose main role is to judge company value on a case by case basis, usually confined to the very specific list of companies that any given broking firm covers. Given the segregated nature of academic specialization here, it is beholden on scientific companies to ensure that their market communications can reach across the divide. You cannot assume that it is a technically savvy analyst who is reading your announcements.

The curious thing about markets is that they can price-in the value of nearly any company development, no matter how technically difficult to understand it is. However this simply will not happen if the market cannot identify the news value, financial value, corporate value or, indeed, understand what you are saying. The net result is commonly no share price movement at all. So, market communications (announcements, presentations etc.) simply must be made with ease of understanding as a primary goal.

With the above in mind, I wrote a short paper on how to approach the problem of "translating" technical material into readable writing for the general market. It contains greater detail than what is here in this post. You can find it towards the bottom of this page:

Clarity is King.

It should be enough to sell the concept of clear communications on one principle alone – the easier it is to understand a company; the easier it is to invest in that company.

The majority of listed companies understand this well and some have entire departments dedicated to good, clear public communications. However it is still common enough, especially in technical disciplines, for this to be overlooked. In the increasingly busy market, this can no longer be ignored. It may be the only way you can cut through with your message.

Given that you already have many very intelligent, well-educated, well-spoken individuals in your company, many of whom probably write very well, you may not need a dedicated communications or PR team. It may be enough to simply outsource the final writing and editing of your announcements. Get it all ready to go, but give the final job to an external expert. This minimizes the time and therefore cost of good communications with the outside world. It also need not jeopardize your obligation to release information to the market “immediately”.

Ultimately, the market can only judge your company based on what it does and what it says. You've got the what-it-does under control, that's how you got to where you are today. But spare a moment for the what-it-says. That may just be the critical difference for the future of your enterprise.

If you think you need help in crafting clear communications, drop us a line!

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