These three words are very familiar to our ears, and become the motto of many corporate leaders. Many people take up innovation as the key of leadership in market penetration, but they are still wondering about the impact of innovation on the leadership in the capital market.
Dow may be one of interesting examples in this regard. In 2009, The Dow Chemical Company (Dow) was facing various great challenges. Globally, chemical industries were facing declining demand, margin pressure, and price volatility. Besides, the cancellation of the joint venture plan that was worth billion of dollars and the litigation case were considered disruptive to the company’s image in that year. Dow was forced to perform an integrated transformation to build the corporate image as a leader in science and innovation in the chemical industry.
A research in early 2010 showed that capital markets were skeptical of Dow’s growth potential amid the crisis that hit the chemical industry. The research also showed that to rebuild trust, investors want to get direct access to middle management and certain business units. Moreover, the research managed to open Dow’s executive eyes that building the trust of sell-side analysts on Dow’s growth prospects was crucial if Dow wanted to attract the capital market as a whole.
Based on the research results, Dow planned a series of activities that include:
1.Increasing the depth and transparency in investor communications.
Dow particularly emphasized on the aspect of innovation and sustainability as the key to success of each business unit. Dow also used new distribution channels, such as digital newsletter, website that was rejuvenated to suit the investors’ needs, and videos through Dow World News. These non-traditional channels provided deeper corporate information and attracted more than threefold increase in the number of investors without having to add staff to serve.
2. Giving priority to sell-side and buy-side analysts interaction.
Increasing focus on primary targets, roadshows and access to middle management through field visits and global facilities generate more than 5.641 points of interaction with the investors. Dow also participated in 14 international roadshows in 2010. The buy-side analysts’visit was conducted for American and global investors to Shanghai Dow Center, the largest and most sophisticated Dow’s research and development facility.
Breakfast meeting with the sell-side analysts was arranged. London was chosen to be the meeting point with sell-side analysts considering the big concentration of sell-side analysts there and the position of London as financial center in Europe.
Dow prepared a special investment presentation for Europe market to accommodate varying levels of knowledge of the target audience in Europe.
Advanced Materials Division (AMD) Sector Day held in Philadelphia for analysts, investors, and media raised the company’s innovation and growth. In addition to presentation of the CEO and other business leaders, Interactive Innovation Experience provided direct experience and engagement on Dow’s innovation. Investor Day 2010 held in Michigan, Dow’s headquarter city, with the theme “The Right Formula”, demonstrated how Dow would achieve its financial goals through three pillars: 1. Strong geographic presence, 2.Tough innovation, 3.Competitiveness of the business portfolio. Investors were given the opportunity to interact with the leaders of Dow in small groups or face-to-face discussion.
3. Utilizing financial and business media to communicate the growth momentum.
CEO of Dow, Andrew Liver is, became the key source in communicating the transformation experienced by Dow and its impact on its performance. In communicating financial performance, media and investor relations team collaborated to raise Dow’s sales growth in emerging markets, the launching of new products and the performance of its subsidiaries.
4. Advanced Manufacturing Platform (AMP)
Through AMP as a forum that encourages the growth of domestic manufacture and job creation, Liver is attempted to build Dow’s position as a leader in the discussion of this platform. The programs implemented to support the effort include opinion columns in the mainstream media, book writing, and events featuring Dow’s excellence in innovation which were attended by high-ranking officials such as U.S. Vice President, Joe Biden.
Through a series of events that highlighted many advantages of the innovation, Dow managed to improve the performance of the stock: the stock price rose rapidly to nearly 7 times as much.
• Advanced Materials Division (AMD) Sector Day and Investor Day got extraordinary welcoming response since the events were attended by 200 investors, analysts and media. Research shows that both events successfully built positive perception towards Dow as an investment target that is promising and prospective in terms of profit and innovation. Dow also managed to expand the focus from buy-side analysts to sell-side analysts.
• Dow also received a very positive response from the event with sell-side analysts in London.
• The success story and the excellence of Dow managed to be the coverage and writing materials of the major business and finance media such as Fortune.com, Financial Times, Barron’s, The Wall Street Journal, Smart Money and Forbes.
Well, Dow has succeeded to demonstrate that innovation is considered important and influential in industry leadership as seen from the perspective of the consumers as well as the capital market analysts and investors. This success story illustrates how important it is for an issuer to build the innovation excellence and to reach out to financial analysts and media that become the main agent to influence the opinion of the capital market community. With the innovation strategy and effective corporate communications, surely Indonesian issuers can also build industry leadership just like Dow.
When will you appear to establish your position of innovation leadership in the industry?
picture sources: http://www.macrobusiness.com.au; http://www.challenge.gov.sg