Keynote Presentation: The Changing Role of IR
Speaker: Ram Charan, business consultant and author
KEY TAKEAWAYS
Ram Charan posed a series of questions IR officers should ask themselves to take their careers to the next level – and that can be taught to the next generation. These are based on his perspective as an active consultant to CEOs worldwide and co-author of both the Harvard Business Review article on The Changing Role of the Investor Relations Officer and a new book, Talent, Strategy, Risk: How Investors and Boards are Redefining TSR. Not surprisingly, Charan’s speaking style owes much to his former service on the faculties of Harvard Business School and Northwestern University, evoking fond college memories for some in the audience.
The topics that resonated most with Charan’s listeners, based on reports from each table toward the end of the keynote session:
- What are the three most critical external changes on the horizon? These may be external shifts with the potential to reshape your company or industry, or broader impending shifts likely to affect multiple industries. To build your external orientation, monitor for warning signals (he mentioned a CEO client who surveys the news seven days a week) and know what your CEO and CFO are thinking about potential shifts. While it initially may be difficult to prioritize doing this, your “return on your time” will improve with practice.
- What is new? You don’t need to know everything about everything, you need to crystalize what is most important, the crux of the matter. Tools to do this include 1) a “buddy system” or networking group you talk with once a month or quarter (may we suggest recruiting a few of your NIRI Chicago colleagues?) and 2) reading The Economist, which is likely to give you at least one significant idea in every issue.
- Do you personally know what the “active boss” wants? Are your large passive institutional investors anxious for more ESG disclosure? (ESG disclosures don’t belong in the appendix.) Do investors have confidence in your CEO and understand how capital is being allocated? Are activists concerned about your company’s ability to deliver on what it has promised? If execution is or will be poor, is the problem structural or one-time (e.g., pandemic-related supply chain disruptions)? Charan emphasized the importance of mastering the balance sheet and cash flow metrics, not just the P&L, highlighting cash generation per share in his discussion.
- What can you do to show the CEO you are a strategic partner? Bring in relevant external information and back it up with facts. Provide bold incisive insights to the C-suite. You may need to test the idea with someone you trust to find better ways to frame a difficult message, address potential biases, and reexamine those predictive signals to anticipate challenges and opportunities.
- What can you do to show other internal colleagues you are a strategic partner? Charan advised not only building your skills (“pick one or two things you will practice improving each year”) but also teaching the people with whom you work. “Build a learning society” or internal buddy system, a handful of people to share IR and company insights and improve your collective skills. And yes, Charan is an advocate of rotational assignments in IR – “You should not stay more than five years in a job.”