I’ve just been writing a précis of an interesting report contrasting the analyst relations performance of super-sized technology businesses. While the findings are useful for any large $10bn-plus business with multiple divisions, the report uses desk research to estimate the strategies of firms like General Electric; IBM; Microsoft; Philips and Siemens (the report’s author had no contact with, or special insight into, any of those firms). While this limitation is significant, the key observations are worth sharing.
- AR makes a difference. I often hear people argue that profile in search is correlated with revenue. That is certainly true, but I’d argue that’s because AR resourcing drives vendor profile in analyst research, and that AR resourcing is correlated with company size. The report shows that the profile of the largest tech firms in analyst research is almost inverse to their revenues, showing that analyst relations strategies produce substantial differences. Large firms with low profile in research are investing little in AR.
- The firms with the best AR have the better global spread. There’s a large regional difference in the report’s data: The larger US firms actually have a higher share of their analyst profile outside the US than do European firms. The suggests that the US firms have a better understanding of the impact of local analysts than do the European giants.
- Giants are shown as both users and as providers. These companies are, of course, massive organisations in which change is driven by technology. AR managers at these organisations often take two bites of the apple, in tha they are providing analysts with case studies to show how they are using technology internally. This builds rapport with the analysts, makes the vendors seem more open and spotlights the suppliers’ growing abilities to execute their strategies.
- Giants ca usefully compare their report and their competitors’ in analyst research with their profile in equity research. The profile of IBM, for example, is the most similar in these two audiences; that suggests that its analyst relations effectiveness is roughly in line with its investor relations effort. Those vendors who have very different profile in those two research streams are disclosing, perhaps unconsciously, their internal preferences and resourcing.
- Even giants change over time. A look over historical data shows that even in these large firms, profile changes substantially over time. IBM’s AR effort seems to have become much more coherent in 2000; and Microsoft’s has also stepped up since 2003.
- A major challenge is centralisation of ideas. Some of these firms have attempted to impose coherence by focussing their communications on a small set of their solutions. This eases communication but reduced overall profile and an introverted discussion, in which the vendor defines the world through its own solutions. Other have attempted to develop a central narrative about the trends of technology use over time, and to locate their work in that context. The latter strategy seems to be most effective.
- Centralisation of resources is the final major difference. In some organisations, the profile of individual business units varies greatly because AR is the sole responsibility of each division. Some of these organisations have centralised AR; others have a federal structure in which an internally-oriented group of central AR coaches work with an externally-oriented chain of analyst interacting groups.
The report itself makes interesting reading. We share some of the findings at our intermediate course on analyst relations: Building Analyst Relations Momentum.