Investor Relations As The New Focus In Creating Long Term Corporate Value - ABF Investor Relations Conference

Slide 1: INVESTOR RELATIONS AS THE NEW FOCUS IN CREATING LONG TERM CORPORATE VALUE Case Study, Concepts, and Debatable Ideas Kenny Ong CNI Holdings Berhad www.myCNI.com.my www.OOBEY.com

Slide 2: About: CNI 1. 19 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

Slide 3: Importance of Investor Relations Why focus on Investor Relations in the first place? www.myCNI.com.my www.OOBEY.com

Slide 4: Is Investor Relations important? 1. Funds 2. Brand 3. Intelligence 4. Customer-shareholders www.myCNI.com.my www.OOBEY.com

Slide 5: Importance: Funds This is the most obvious. The objective is to keep the paymasters happy so that they will either maintain or increase their funding. Crisis Management is one small area that falls into this objective www.myCNI.com.my www.OOBEY.com

Slide 6: Importance: Brand Investor Relations is a key component of corporate Branding due to its direct influence on: 2. Multiple parties (Investors) • These parties are either our Branding targets or has influence on our branding targets 3. Brand Architecture www.myCNI.com.my www.OOBEY.com

Slide 7: Types of Investors (1/2) Institutional Fund Managers Financial (Loans) Gov. VCs Corporations JV Partners Supply Chain Sovereign Funds M&A Gov. Partnership VCs Social VCs PFI NGOs Holding Co. Competitors Non-Profit Org HQ (MNC) Franchisees www.myCNI.com.my www.OOBEY.com

Slide 8: Types of Investors (2/2) Retail Investor- Customer- Shareholders Shareholders Employee- Distributor- Shareholders Shareholders* Management- Distributor- Shareholders Entrepreneurs* www.myCNI.com.my www.OOBEY.com

Slide 9: Brand Architecture DIFFERENTIATOR TARGET ATTRIBUTES PERSON ALITY INSIGHTS RATION OVERALL BENEFITS AL EMOTION AL BRAND POSITIONING STATEMENT: REASONS TO BELIEVE COMPETITIVE SET .

Slide 10: Importance: Intelligence Two types: Deal with… CRM I.R. Investors Intelligence Deal with… Investor I.R. Manage Intelligence ment www.myCNI.com.my www.OOBEY.com

Slide 11: Intelligence: Types of Investors (1/2) Institutional Fund Managers Financial (Loans) Gov. VCs Corporations JV Partners Supply Chain Sovereign Funds M&A Gov. Partnership VCs Social VCs PFI NGOs Holding Co. Competitors Non-Profit Org HQ (MNC) Franchisees www.myCNI.com.my www.OOBEY.com

Slide 12: Intelligence: Types of Investors (2/2) Retail Investor- Customer- Shareholders Shareholders Employee- Distributor- Shareholders Shareholders Management- Distributor- Shareholders Entrepreneurs www.myCNI.com.my www.OOBEY.com

Slide 13: Intelligence: Why do they Invest? 1. Return/Profit 1. Contractual 2. Risk Management/ obligation Hedging 2. National Agenda 3. Tax-benefits 3. Control Supply Chain 4. CSR/Image 4. R&D portfolio 5. Diversify revenue 5. Control Management 6. Counter-cyclical 6. Alternative Cash balance Flow 7. Support ‘Mission’ 7. M&A 8. Exclusive rights www.myCNI.com.my www.OOBEY.com

Slide 14: Intelligence: How do Investors get their ‘INFO’? (1/2) Gov./Politics Suppliers Customer s Newsletter Spokesperson s Analysts Annual Due Institutional Diligence Report Media Internet* Economic s AGM Fund Market Managers Research NGOs www.myCNI.com.my www.OOBEY.com

Slide 15: Intelligence: How do Investors get their ‘INFO’? (2/2) Employee Newsletter Customer Bloggers s Public Gov./ Politics Analysts Events Annua Mgmt Action Retail Relatives l Report s Pasar Media Malam Internet* Economic s Ads AGM Fund Managers Employees Friends www.myCNI.com.my www.OOBEY.com

Slide 16: Intelligence: How to Communicate? Self Reliant Need Help Seek Searchers Collaborators Change Seek Streamliners Delegators Stability www.myCNI.com.my www.OOBEY.com

Slide 17: Investor Intelligence: What? Examples… 2. Record feedback and questions 3. Competitors’ IR communications 4. Top 10 Analysts’ views on Company 5. Top 10 Analysts’ views on Industry www.myCNI.com.my www.OOBEY.com

Slide 18: Investor Intelligence: Why? 1. Broad view of market 2. Less optimistic/review own assumptions 3. Upgrade IR function to be strategic 4. Feed Management discussions 5. Better and more relevant IR communications 6. Support (buy-in) www.myCNI.com.my www.OOBEY.com

Slide 19: Investor Intelligence: Why? Financial Revenue Growth Productivity Market Value Customers Base Share Gain Positioning Adjacent New Retention Market Business Internal Process Operational Product Customer Investment Excellence Leadership Intimacy Strategy Learning & Growth Competencies Information Motivation, Systems empowerment, alignment www.myCNI.com.my www.OOBEY.com

Slide 20: Dangers of Intelligence… Also known as ‘Beware of Benchmarking’: 2. Big vs. Small company 3. Selective success stories 4. Correlation vs. Causal 5. Survey problems 6. Actionable vs. For-fun www.myCNI.com.my www.OOBEY.com

Slide 21: Intelligence: Survey Problems… “In business after business, 60% to 80% of lost customers reported on a survey just prior to defecting that they were satisfied or very satisfied.” HBR March/April 1996 www.myCNI.com.my www.OOBEY.com

Slide 22: IR and Customer- Shareholders Retail Affect Investor- Customer- Sales Shareholders Shareholders Employee- Distributor- Shareholders Shareholders Management- Distributor- Shareholders Entrepreneurs www.myCNI.com.my www.OOBEY.com

Slide 23: Is Investor Relations important? 1. Funds 2. Brand 3. Intelligence 4. Customer-shareholders www.myCNI.com.my www.OOBEY.com

Slide 24: Obstacles to Growth of Investor Relations If IR is so important, why is it not growing? www.myCNI.com.my www.OOBEY.com

Slide 25: Challenges of Investor Relations 1. Stake- vs. Share-holder* 1. Superficial changes vs. 2. Public Opinions Fundamental Changes 3. Global operations – 2. Investors depend on difficult to explain ‘hearsay’ vs. ‘facts’ 4. Increasing focus on 3. Share Price ≠ Market ecological, social, ethical 4. R&D/M.S./HR vs. issues Investor Expectations 5. Diverged expectations for 5. Opposing ‘Expert’ views same issue 6. What to do with Excessive Cash? www.myCNI.com.my www.OOBEY.com

Slide 26: IR Challenges “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

Slide 27: Principles of Investor Relations to counter Challenges 1. Long-term relationship 2. Consistent and Proactive 3. Performance vs. Controllability 4. Aligned with operating/strategy position* 5. One message, Different Emphasis www.myCNI.com.my www.OOBEY.com

Slide 28: Good News vs. Controllability Can Control Cannot Control Internal Attribution   External Attribution ?  www.myCNI.com.my www.OOBEY.com

Slide 29: Bad News vs. Controllability Can Control Cannot Control Internal Attribution   External Attribution   www.myCNI.com.my www.OOBEY.com

Slide 30: Obstacles to IR growth How is IR not maximized? 1.Because I can - Competency problem 2.Poor business value – Ignorance problem* 3. No Budget lah - Alignment problem 4.Not exciting lah – Glamour problem* 5.Idealistic Theories – Practical-ness problem*

Slide 31: 2. Aligning IR to Business Priorities USP Business Model Market Profit Model Discipline www.myCNI.com.my www.OOBEY.com

Slide 32: 2. Aligning IR to Business Priorities Product Leadership (best product) Operational Excellence Customer Intimacy (low cost producer) (best total solution) www.myCNI.com.my Leaders, Michael Treacy & Fred Wiersema; 1995 Ref: The Discipline of Market www.OOBEY.com

Slide 33: 2. Aligning IR to Business Priorities Operational Excellence Product Leadership Customer Intimacy • Competitive price • New, state of the • Management by art products or Fact • Error free, reliable services • Easy to do business • Fast (on demand) with • Risk takers • Simple • Have it your way • Responsive • Meet volatile (customization) customer needs • Consistent • Market segments of information for all • Fast concept-to- one counter • Transactional • Proactive, flexible • Never satisfied - • Relationship and • 'Once and Done' obsolete own and consultative selling competitors' products • Cross selling • Learning organization www.myCNI.com.my www.OOBEY.com

Slide 34: 2. Aligning IR to Business Priorities Upturn Flat Downturn Fight Complacency Innovation Sales Sharpen Edge Acquire Cash Flow Keep Momentum Profits Conquer Build momentum ‘Change’ mgmt Talent Mgmt Top Talent focus Reduce Fat Innovation/R&D Sales, Sales, Sales Continuity Early wins Increase attrition Everyone Happy Slow Down HR Costs www.myCNI.com.my www.OOBEY.com

Slide 35: 4. Glamour vs. Hardwork • Durian Party • Wisma Tour • Hampers • Umrah • China Factory Visit • Large Events • Donations to Media • Jakim visit www.myCNI.com.my www.OOBEY.com

Slide 36: 5. Idealistic Theories Manifestation of Correlation vs. Causal problem Transparency Right Information at the Right Time Integrity Integrity + Care towards Individuals Managerial Managerial (Internal) vs. Competence Technical (External) Build Trust Manage conflicting ‘Trust’ agendas www.myCNI.com.my www.OOBEY.com

Slide 37: IR vs. Communications Maximizing the value of IR www.myCNI.com.my www.OOBEY.com

Slide 38: • How do we maximize the value of IR to the organization? www.myCNI.com.my www.OOBEY.com

Slide 39: IR in Communications Communications Internal External Media Associations Mgmt Distributors Government Universities Public NGOs Suppliers Employees Authorities Investors Proactive Reactive Proactive Reactive COMM Tools COMM Tools www.myCNI.com.my www.OOBEY.com

Slide 40: Revisit – IR’s Key Roles 1. Funds 2. Brand Communication to bring in the 3. Intelligence Funds 4. Customer- shareholders www.myCNI.com.my www.OOBEY.com

Slide 41: Revisit – IR’s Key Roles 1. Funds 2. Brand Communication to bring in the 3. Intelligence Sales 4. Customer- shareholders www.myCNI.com.my www.OOBEY.com

Slide 42: Communications to bring in the Funds 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

Slide 43: Communications to bring in the Sales Ultimate Objective of Marketing: “Get more people, to buy more things, more frequently, at higher prices.” “Retention and Loyalty are useless if No Conversion is happening.” Sergio Zyman www.myCNI.com.my www.OOBEY.com

Slide 44: Communications to bring in the Sales “Retention and Loyalty are useless if No Conversion is happening.” “Comm (IR) is useless if No Conversion is happening.” www.myCNI.com.my www.OOBEY.com

Slide 45: Communications to bring in the Sales Loyalty is Useless… • Virtual Consumption vs. Real Consumption www.myCNI.com.my www.OOBEY.com

Slide 46: Communications to bring in the Sales Loyalty is misleading… • Heavy Consumption ≠ Loyalty • Loyalty ≠ Heavy Consumption www.myCNI.com.my www.OOBEY.com

Slide 47: Communications to bring in the Sales 1.Comm = Relationship (something like Dating) 2.Comm ≠ Media glitz 3.Comm ≠ ATL/BTL/BwTL/ArTL/FTL 4.Comm ≠ CSR 5.Comm = Get more people, to buy more, more frequently, at higher prices www.myCNI.com.my www.OOBEY.com

Slide 48: Virtuous Cycle to Maximize IR and Communications Feed Internal External Feed www.myCNI.com.my www.OOBEY.com

Slide 49: Summary www.myCNI.com.my www.OOBEY.com

Slide 50: Importance of Investor Relations 1. Funds 2. Brand 3. Intelligence 4. Customer-shareholders www.myCNI.com.my www.OOBEY.com

Slide 51: Obstacles to IR growth How is IR not maximized? 1.Because I can - Competency problem 2.Poor business value – Ignorance problem* 3. No Budget lah - Alignment problem 4.Not exciting lah – Glamour problem* 5.Idealistic Theories – Practical-ness problem* www.myCNI.com.my www.OOBEY.com

Slide 52: Maximizing IR in Communications Communications Internal External Media Associations Mgmt Distributors Government Universities Public NGOs Suppliers Employees Authorities Investors Proactive Reactive Proactive Reactive COMM Tools COMM Tools www.myCNI.com.my www.OOBEY.com

Slide 53: “…in the past 18 months, we have heard that profit is more important than revenue, quality is more important that profit, people are more important than profit, customers are more important than our people, big customers are more important than small customers, and that growth is the key to our success. No wonder our performance is inconsistent" CEO, Anonymous www.myCNI.com.my www.OOBEY.com

Slide 54: Don’t forget… “The business of business is Business, not Investor Relations” www.myCNI.com.my www.OOBEY.com

Slide 55: Thank You. soft copy of slides: http://totallyunrelatedrandomanddebatable.b logspot.com/