THE SEDUCTIONS OF TECHNOLOGY
“We live in a world bloated with data, yet starved for knowledge.”
- Anthropologist Elizabeth Lindsey
There isn’t a public company in America free of shareholder dissonance. Or a management team that thinks investors value its company fairly. In private life, we call such relationships dysfunctional. But in corporate life, they’re pretty normal.
I spend many of my days speaking with institutional investors on behalf of corporate clients who want to know what their investors (really) think of them. Companies who ask me to do this generally believe that an understanding of what investors think, and why they think it, improves the company’s ability to construct a sound business and communicate its value.
Some of my colleagues in the consulting world approach the investigation of investor attitudes by trying to measure them. After all, management discipline is, as much as anything, about metrics. So, these consultants may ask investors to rate aspects of the client’s strategy and operations on a scale from 1 to 5, for example. Results derived in this way are easily graphable. Such graphs can tell a company whether its investor relations, its transparency, its marketing, or its competitiveness are considered to be better or worse than last year.
My preferred way of developing investor intelligence takes a narrative approach based on asking the question “Why?” It accommodates the possibility that investors have a story to tell that isn’t quantifiable. This approach holds that the crux of investors’ attitudes goes beyond numbers and can’t be understood without probing subjective opinions – the stuff of human impressions. Billions of dollars of market value ride on investors’ gut perceptions of managements, their strategies, and the likelihood that the particular individuals running the company will execute those strategies effectively. These opinions are knowable if you ask. But trying to define them by measuring leaves a big part of the picture blank.
As children, we all began our learning with story. It’s narrative that gets presidents and congressmen elected, sends countries off to war, and moves markets. And it’s investors’ narrative about a company that assigns a premium or discount to its shares. But you have to know what that narrative is before you can change it.
What companies must decide is how much they really want to know.
© 2011 Peter Firestein
