Picking up from my last video in which I said good riddance to the quarterly call, I concluded that the recent proposal by the SEC for semi-annual formal reporting creates a rare opportunity to evaluate and modernize how we talk with the street.
Whether or not your company pursues semi-annual reporting, there are four good reasons why we should take advantage of this timing opportunity.
First, as I explained in the previous video, most companies are not doing as great job at IR as we all should be, so there is an opportunity here to jump ahead of our competitors.
Second, people’s information assimilation habits have been shortening, so things like our hours-long annual investor days are outmoded.
Third, we finance people have been slow to adopt new tools that can increase not only the effectiveness of our IR efforts, but that can reduce the IR burden on the CEO and CFO, which should also be one of our objectives.
Fourth, we can do a better job of providing information at multiple points along the investors’ diligence journey, just like our marketing departments think about the buyer’s journey.
Now, I want to talk about every aspect of our IR programs, so this will be a series. So let’s talk first about the tool that I think is the biggest risk for misuse as we upgrade our IR program, AI.
To my mind, two key potential uses that may require the most thinking or new strategies are AI visibility and AI writing. I want to talk about those and will today skip over using AI for investor targeting and competitive research, which I think seem obvious enough to IROs that we don’t really need to talk about it.
Now, People are moving to search on AI platforms faster than most companies are prepared for. So, one of the priority improvements for our IR programs is making our company stand out in AI searches ahead of our peer group competitors.
Where this gets more complicated is that AI search does not work like, nor respond to traditional SEO. It’s not about keywords anymore. It’s about high quality, original, high-veracity content.
AI intelligently searches for content with those parameters. So different optimization strategies are required. As a starting point, you might ask several of your AI agents how to best provide your information for investors. The best suggestion Ive seen is to approach it in two ways. One, to think about what information most favorably differentiates you from industry peers, and two, to answer questions that investors are likely to ask.
As you pull that information together, you then need to think about where to post that information because putting it more places than just your web site helps improve AI search visibility.
It’s also clear that original and not AI-written content is being prioritized. For example, even simple surveys provide highly search-prioritized information as it’s A, new, and B judged to be more independent.
In that vein, other original content such as white papers or transcripts of not just your CEOs but other company executives’ comments or presentations at industry events can be helpful.
Personally, I highly recommend transcribed interviews with a number of a company’s divisional, geographic and business function leaders, as well as customers, as differentiating (and frankly really easy) content to create.
It’s interesting that in this way, the IR job is becoming much more about communications than it was in the past.
At the risk of being struck by lightning in saying so, this is probably a key time to start partnering and coordinating more with your Marketing department as you move forward in AI visibility.
For the second part, I believe we need to think carefully about AI writing. I think when we are writing for the CEO and CFO, we should be cautious about using AI to write scripts, press releases and shareholder letters. Investors want to know what the CEO and CEO THINK. So if you’re going to let AI write for you, you’d better give it excellent information to start with. If you don’t, your written documents may not sound the same as when the CEO or CFO speaks first-hand with investors. And AI is getting better and better at recognizing its own writing, and deprioritizing it.
Along with your CEOs voice, we also need to be careful not to let it sound like we are getting our business strategy from AI. If what investors are reading on their own AI searches starts sounding a too much like what we are saying, that’s not going to be perceived well.
We both know that talking to investors is in a very big way about building trust, so I believe AI must be utilized very carefully. You may recall Warren Buffet's comment about reputation, "It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently." And I think that holds true here.
Finally, on letting AI write for you, Legal is going to want to weigh in on this. Leveraging AI, you really need to watch for disclosure risks, such as characterizing something in a way your CEO or CFO wouldn't, or even disclosing something you don't want. Legal is supposed to be watching for disclosure risk and error commissions as well as omissions, which you do not want to leave to AI.
This isn't marketing fluff. You and I know that our communications with the Street has material financial consequences. We chose specific language to the street with care. While I am still experimenting with AI, it is still my job as the IRO to shape the message to the street and to pick the right language. That's what we were hired for, and are supposed to excel at. And WE are the channel between the company and the Street! We sit in the quarterly business reviews, talk with many people in and out of the company all quarter long, and see the quarterly results as they shape up. These are not things AI can do. I have always prided myself on writing the RIGHT quotes for the CEO and CFO in the press release. So far, I feel like I can knock out good scripts and press releases faster than I can give full instructions and then fix what AI returns. I'm curious how you feel. Please comment and if you'd like me to arrange a group discussion, let me know.
That's it for this video. I know this was long, but this is a big topic, and while I could have gone on longer, I just want to provide some directional thoughts.
In the next video, I'll dive into some other areas we should be looking at to modernize our IR programs in conjunction with the potential quarterly reporting change.
