The CEO Secret

Do you remember a time when your mind just popped over learning how something actually was done?

There is a secret to how top CEOs best connect with Wall Street.

I recall an Admin of mine once being astonished to learn that executives quoted in news releases rarely ever said the words they were quoted as saying. (Someone else writes those words and the executive merely approves, or sometimes edits it.)

I recall the lesson that “the meeting before the meeting is where the decisions are really made.” (Those middle managers diligently preparing and presenting in front of the executive team often amount to theater.   A hallway conversation or a casual “aside” made during earlier conversation had already moved the decision ball in a certain direction.)

So too it is with how CEOs best connect with Wall Street. There is a secret to how it is really done when done well.

Investor relations is a Corporate function which communicates what the company wants (and needs) to tell Wall Street. Or is it?

Insight as a two-way street is the magic ingredient to great investor relations.

Here is the secret:

Good IR … real IR … does a lot more, and at a strategic level. It listens before it speaks. It engages investors and receives insights and perspective to better inform CEOs “ahead of the meeting.”

It understands that communication is a two-way street and that the company can benefit greatly from investor knowledge. The investors the CEO met with today, likely met with the competition, or an emerging competitor yesterday. Tomorrow, that investor could be speaking with others who influence the market. And when the investors are in their offices, they might be crunching numbers on your company and your peers – numbers which could give you insights on levers which could be helpful to your business model and future success.

Understanding investor needs and building trust goes a long way toward establishing a relationship which can have the benefit of their valued insights and support. Support that will be welcomed when they fully “get” what you are doing and move to buy more shares.

Investing in a resource to truly build engaged relationships with investors is among the highest ROI endeavors a company can make. It lifts all boats. When someone has the hands on the wheel of proactive and strategic IR, it creates a healthy environment to breed valuation increase … which fuels a fan club for the company stretching to employees, the talent market, and customers alike. Excellence in sharing the company narrative with investors, and excellence in listening to the insights of investors is the secret for many CEOs.

To be clear strategic IR is open and honest, seeks mutual respect and insight, adheres to every legal consideration, embraces fair disclosure, and when done right can be the best “secret” weapon in the CEO’s success kit. It is not about talking numbers. It is about connection.

Note: I was called upon by SEC to present my views on investor relations practices in the formulation process for Reg FD (Fair Disclosure). I was, and remain, a strong proponent.