INTEGRATING INVESTOR RELATIONS INTERNALLYCase Study, Concepts, and Debatable Ideas
Kenny OngCNI Holdings Berhad
www.myCNI.com.my www.OOBEY.com
About: CNI
1. 18 years old
2. Core Business: MLM
3. Others: Contract Manufacturing, Export/Trading, eCommerce
4. Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines, Italy, Taiwan
5. Staff force: ± 500
6. Distributors: 250,000
7. Products: Consumer Goods and Services
www.myCNI.com.my www.OOBEY.com
IR and its problems
Overview of Corporate Communications and Investor
Relations problems
www.myCNI.com.my www.OOBEY.com
How to please Investors (the Dilbert version)
© 1998 United Feature Syndicate, Inc.
How to please Investors (the Dilbert version)
1. Buy back shares
2. Announce massive cutbacks
3. Spin off New Divisions
Ironically and Unfortunately, the above prescription is true in real life…
www.myCNI.com.my www.OOBEY.com
Why is UMW favored by Analysts?
1. high dividend yield,
2. low price earnings multiple,
3. buoyant growth outlook;
Challenges of Investor Relations
1. Stock- vs. Share-holder*
2. Public Opinions
3. Global operations – difficult to explain
4. Increasing focus on ecological, social, ethical issues
5. Diverged expectations for same issue
6. What to do with Excessive Cash?
7. Superficial changes vs. Fundamental Changes
8. Investors depend on ‘hearsay’ vs. ‘facts’
9. Share Price ≠ Market
10.R&D/M.S./HR vs. Investor Expectations
11.Opposing ‘Expert’ views
www.myCNI.com.my www.OOBEY.com
IR problems
“Good news for stockholders can be bad news for other
stakeholders.” Gregory Miller, Assoc. Prof., Harvard Business School.
www.myCNI.com.my www.OOBEY.com
Why integrate IR internally?
The unseen effects of Internal Matters on external Investor Relations
www.myCNI.com.my www.OOBEY.com
Principles of Investor Relations
1. Long-term relationship
2. Consistent and Proactive
3. Performance vs. Controllability
4. Aligned with operating/strategy position
5. One message, Different Emphasis
6. Outside-in Intelligence*
www.myCNI.com.my www.OOBEY.com
Types of Investors (1/2)
Institutional
Fund Managers
Corporations
Sovereign Funds
VCs
NGOs
Non-Profit Org
Financial (Loans)
JV Partners
M&A
Social VCs
Holding Co.
HQ (MNC)
Gov. VCs
Supply Chain
Gov. Partnership
PFI
Competitors
Franchisees
www.myCNI.com.my www.OOBEY.com
Types of Investors (2/2)
Retail
Investor-Shareholders
Employee-Shareholders
Management-Shareholders
Customer-Shareholders
Distributor-Shareholders
Distributor-Entrepreneurs
www.myCNI.com.my www.OOBEY.com
Why do they Invest?
1. Return/Profit
2. Risk Management/ Hedging
3. Tax-benefits
4. CSR/Image
5. Diversify revenue
6. Counter-cyclical balance
7. Support ‘Mission’
8. Exclusive rights
8. Contractual obligation
9. National Agenda
10.Control Supply Chain
11.R&D portfolio
12.Control Management
13.Alternative Cash Flow
14.M&A
www.myCNI.com.my www.OOBEY.com
How do Investors get their ‘INFO’? (1/2)
Institutional
Gov./PoliticsCustomer
s
Suppliers
EconomicsAGM
Market Research
Internet*
Annual Report
Media
Analysts
Fund Managers
Due Diligence
NGOs
NewsletterSpokespersons
www.myCNI.com.my www.OOBEY.com
How do Investors get their ‘INFO’? (1/2)
Institutional
Gov./PoliticsCustomer
s
Suppliers
EconomicsAGM
Market Research
Internet
Annual Report
Media
Analysts
Fund Managers
Due Diligence
NGOs
NewsletterSpokespersons
www.myCNI.com.my www.OOBEY.com
How do Investors get their ‘INFO’? (2/2)
Retail
Gov./ Politics
Customers Public
Events
EconomicsAGMAds
Internet*
Annual Report
Media
Analysts
Fund Managers
Relatives
Friends
Pasar Malam
Employees
Employee Bloggers
Mgmt Action
s
Newsletter
www.myCNI.com.my www.OOBEY.com
How do Investors get their ‘INFO’? (2/2)
Retail
Gov./ Politics
Customers Public
Events
EconomicsAGMAds
Internet
Annual Report
Media
Analysts
Fund Managers
Relatives
Friends
Pasar Malam
Employees
Employee Bloggers
Mgmt Actions
Newsletter
www.myCNI.com.my www.OOBEY.com
How not to talk to Retail Investors
“The holder [of a CAB certificate] may continue to serve regularly any point named herein through the airport last regularly used by the holder to serve such point prior to the effective date of the certificate. Upon compliance with such procedures relating thereto as may be prescribed by the Board, the holder may, in addition to the services hereinabove expressly prescribed, regularly serve a point named herein through any airport convenient thereto.”
Civil Aeronautics Board, 1977
How not to talk to Retail Investors
“It has been determined not to be in the public interest that United Airlines continue to provide air transportation services between San Diego and San Antonio”
“I forbid United Airlines to fly between San Diego and San Antonio”
What topics interest Investors?
Acquisition target
Layoffs
CostCutting
New Mgmt
Treatment of ProfitsConsistency
Ecology
Economics
Politics
Strategy Alignment
CSR-related
Crisis
Topics?
www.myCNI.com.my www.OOBEY.com
What topics interest Investors?
Acquisition target
Layoffs
CostCutting
New Mgmt
Treatment of ProfitsConsistency
Ecology
Economics
Politics
Strategy Alignment
CSR-related
Crisis
Topics?
www.myCNI.com.my www.OOBEY.com
What Events impact Investors?
Politics
Financial Announcements
Shareholdingchanges
Structure
AccidentsEconomic
Crisis
CompetitorMoves
M&A
New Plans
Share-drop
Events?
www.myCNI.com.my www.OOBEY.com
What Events impact Investors?
Politics
Financial Announcements
Shareholdingchanges
Structure
AccidentsEconomic
Crisis
CompetitorMoves
M&A
New Plans
Share-drop
Events?
www.myCNI.com.my www.OOBEY.com
How to integrate IR internally
The unseen effects of Internal Matters on external Investor Relations
www.myCNI.com.my www.OOBEY.com
What to Integrate?
1. Aligning OrganizationTo the Culture
2. Integrating External
& Internal actions
3. Alignment and Consistency to the Strategy
4. Long-term Relationship
Building efforts
www.myCNI.com.my www.OOBEY.com
Principles of Investor Relations
1. Long-term relationship
2. Consistent and Proactive
3. Performance vs. Controllability
4. Aligned with operating/strategy position
5. One message, Different Emphasis
6. Outside-in Intelligence
www.myCNI.com.my www.OOBEY.com
Integrating IR internally
Culture
Importance
of I.R.Investor Relations Principles
StructureResources
Leadership
Person
www.myCNI.com.my www.OOBEY.com
Alignment: Framework
• Operational and Strategic moves have to consistent with messages
• Trust – consistency in external-internal messaging
• Visibility – through Culture and Morale• Clear Employee roles• Outside-in Intelligence for decision
making
Culture
www.myCNI.com.my www.OOBEY.com
The 6 Sins of Greenwashing
1. Sin of the Hidden Trade-Off
2. Sin of No Proof
3. Sin of Vagueness
4. Sin of Irrelevance
5. Sin of Fibbing
6. Sin of Lesser of Two Evils
Study by: TerraChoice, December 2007
Alignment: Framework
• Org Structure• Job Design• C&B• Policies &
procedures• Decision making• Job fit• Management
Systems• BSC and KPIs• Decentralized &
Empower
Structure
•Specialists IR in CR topics e.g. Ethics, Ecology, Politics
•Spokespersons
•Business Unit reporting
•Shares, C&B schemes
•IR ↔ MR
www.myCNI.com.my www.OOBEY.com
Alignment: Framework
• Role modeling• Vision/Mission/
Philosophy• Leadership Style• Delegation &
Empowerment• C&B, Promotions• Sense of Urgency• Speak regularly
about Strategic and Operational direction
Leadership
•Spokespersons
•Business Unit reporting
•Fundamentals vs. Short-term
•IR as MR intelligence
www.myCNI.com.my www.OOBEY.com
Alignment: Framework
• Recognition• Recruitment• Training• Profit sharing• Values• Motivation• Self Efficacy• Awareness• Useful
Competencies• Career aspirations
Person
•Specialists IR in CR topics e.g. Ethics, Ecology, Politics
•Spokespersons
•Business Unit reporting
www.myCNI.com.my www.OOBEY.com
Alignment: Framework
Enablers• Technology• Equipment• Materials• Human• Intellectual
Property• Partners• Property
ResourcesFinancial
Utilization • Investment• Divestment• Dividends• HR• Buybacks• Restructuring
www.myCNI.com.my www.OOBEY.com
Integrating IR internally
Culture
Importance
of I.R.Investor Relations Principles
StructureResources
Leadership
Person
www.myCNI.com.my www.OOBEY.com
Integrating Internal/External
Communications
Internal External
Mgmt Distributors
Suppliers
Media
Government
Public
Authorities
Associations
Universities
NGOs
Investors
Proactive Reactive Proactive Reactive
COMM Tools COMM Tools
www.myCNI.com.my www.OOBEY.com
Employees
Integrating Internal/External
Internal External
Feed
Feed
www.myCNI.com.my www.OOBEY.com
Integrating Internal/External
Internal• Halal Committee• Social Education
(e.g. SCK)• Umrah trip• China Trip• RBOS• CFA/HFA• Coffee Van
External• Sponsorship• Donations• News clippings• Newspaper Ads• MHI• Awards• Corporate Profile• AGM• Gov. Celebrity• Analyst research
www.myCNI.com.my www.OOBEY.com
Integrating Internal/External
Internal• Entrepreneur Dev.• Health products• Health education• “Made in Malaysia”• Events• Media Celebrity
External• Website• DSAM• Yayasan• Publish Book• Social Education• Crisis Comm• Children Education• National interest• Analyst BD
connections
www.myCNI.com.my www.OOBEY.com
Alignment & Consistency
• Mamak stall
www.myCNI.com.my www.OOBEY.com
Alignment & Consistency
"They are the most innovative"
"Constantly renewing and creative"
"Always on the leading edge"
"A great deal!"
Excellent/attractive price
Minimal acquisition cost and hassle
Lowest overall cost of ownership
"A no-hassles firm"
Convenience and speed
Reliable product and service
"Exactly what I need"
Customized products
Personalized communications
"They're very responsive"
Preferential service and flexibility
Recommends what I need
"I'm very loyal to them"
Helps us to be a success
Product Leadership
OperationalExcellence
CustomerIntimacy
www.myCNI.com.my www.OOBEY.com
Operational Excellence(low cost producer)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
Product Leadership(best product)
Customer Intimacy(best total solution)
Alignment & Consistency: Market Disciplines
www.myCNI.com.my www.OOBEY.com
The McPlaybook*
Make it easy to eat• 50% drive-thru• Meals held in one
hand
Make it easy to prepare• High Turnover• Tasks simple to learn
& repeat
Make it quick• “Fast Food”• Tests new products
for Cooking Times
Make what customers want• Prowls market for new
products• Monitored field tests
*Adapted from: Businessweek , Februrary 5th 2007
www.myCNI.com.my www.OOBEY.com
Operational Excellence
• Competitive price
• Error free, reliable
• Fast (on demand)
• Simple
• Responsive
• Consistent information for all
• Transactional
• 'Once and Done'
Operational Excellence
• Competitive price
• Error free, reliable
• Fast (on demand)
• Simple
• Responsive
• Consistent information for all
• Transactional
• 'Once and Done'
Customer Intimacy
• Management by Fact
• Easy to do business with
• Have it your way (customization)
• Market segments of one
• Proactive, flexible
• Relationship and consultative selling
• Cross selling
Customer Intimacy
• Management by Fact
• Easy to do business with
• Have it your way (customization)
• Market segments of one
• Proactive, flexible
• Relationship and consultative selling
• Cross selling
Product Leadership
• New, state of the art products or services
• Risk takers
• Meet volatile customer needs
• Fast concept-to- counter
• Never satisfied - obsolete own and competitors' products
• Learning organization
Product Leadership
• New, state of the art products or services
• Risk takers
• Meet volatile customer needs
• Fast concept-to- counter
• Never satisfied - obsolete own and competitors' products
• Learning organization
Alignment & Consistency: Disciplines, Priorities, and KPIs
www.myCNI.com.my www.OOBEY.com
• Operational Excellence• Move know-how from top performing
units to others• Benchmark against best in class• Ensure operations training for all
employees• Use disciplines like TQM for continuous
learning to reduce costs and improve quality
Alignment & Consistency: Market Disciplines
www.myCNI.com.my www.OOBEY.com
Alignment & Consistency: Market Disciplines
• Customer Intimacy• Capture knowledge about customers• Understand customer needs• Empower front line employees• Ensure that everyone knows the
customer• Make company knowledge available to
customers
www.myCNI.com.my www.OOBEY.com
• Product Leadership• Reduce time to market• Commercialize new products fast• Ensure that ideas flow• Reuse what other parts of the company
have already learned• Ensure there are multiple sources of
funding
Alignment & Consistency: Market Disciplines
www.myCNI.com.my www.OOBEY.com
Operational Excellence(low cost producer)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
Product Leadership(best product)
Customer Intimacy(best total solution)
Alignment & Consistency: Market Disciplines
www.myCNI.com.my www.OOBEY.com
Operational Excellence(low cost producer)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
Product Leadership(best product)
Customer Intimacy(best total solution)
Alignment & Consistency: Market Disciplines
www.myCNI.com.my www.OOBEY.com
Challenges of Investor Relations
1. Stock- vs. Share-holder
2. Public Opinions
3. Global operations – difficult to explain
4. Increasing focus on ecological, social, ethical issues
5. Diverged expectations for same issue
6. What to do with Excessive Cash?
7. Superficial changes vs. Fundamental Changes
8. Investors depend on ‘hearsay’ vs. ‘facts’
9. Share Price ≠ Market
10.R&D/M.S./HR vs. Investor Expectations
11.Opposing ‘Expert’ views
www.myCNI.com.my www.OOBEY.com
Principles of Investor Relations
1. Long-term relationship
2. Consistent and Proactive
3. Performance vs. Controllability
4. Aligned with operating/strategy position
5. One message, Different Emphasis
6. Outside-in Intelligence*
www.myCNI.com.my www.OOBEY.com
How do Investors get their ‘INFO’? (1/2)
Institutional
Gov./PoliticsCustomer
s
Suppliers
EconomicsAGM
Market Research
Internet
Annual Report
Media
Analysts
Fund Managers
Due Diligence
NGOs
NewsletterSpokespersons
www.myCNI.com.my www.OOBEY.com
How do Investors get their ‘INFO’? (2/2)
Retail
Gov./ Politics
Customers Public
Events
EconomicsAGMAds
Internet
Annual Report
Media
Analysts
Fund Managers
Relatives
Friends
Pasar Malam
Employees
Employee Bloggers
Mgmt Actions
Newsletter
www.myCNI.com.my www.OOBEY.com
What topics interest Investors?
Acquisition target
Layoffs
CostCutting
New Mgmt
Treatment of ProfitsConsistency
Ecology
Economics
Politics
Strategy Alignment
CSR-related
Crisis
Topics?
www.myCNI.com.my www.OOBEY.com
What Events impact Investors?
Politics
Financial Announcements
Shareholdingchanges
Structure
AccidentsEconomic
Crisis
CompetitorMoves
M&A
New Plans
Share-drop
Events?
www.myCNI.com.my www.OOBEY.com
What to Integrate?
1. Aligning OrganizationTo the Culture
2. Integrating External
& Internal actions
3. Alignment and Consistency to the Strategy
4. Long-term Relationship
Building efforts
www.myCNI.com.my www.OOBEY.com
Don’t forget…
“The business of business is Business, not Investor
Relations”
www.myCNI.com.my www.OOBEY.com
Thank You.
soft copy of slides: http://totallyunrelatedrandomanddebatable.
blogspot.com/