Adrian Parker looks at how developments in communication styles – particularly in the area of digital technology – are affecting the way in which Annual reports are conceived and delivered.
Corporate reporting has transformed significantly and irrevocably in terms of both content and delivery over the past 10 years or so. This has been driven by changing audience needs, technological, developments, market conditions, legislative expansion and many other factors.
Those responsible for reporting within organisations are being pulled in many different directions and now have the unenviable task of producing something that (if you listen to all the advice) is transparent, online, integrated, not just for investors, real time, interesting, and the list goes on.
So where should you concentrate your efforts and where are we going next?
There is a danger that with all the ever changing factors and demands, those with the responsibility to produce corporate reporting within organisations could well drown in a sea of interference and chatter (much of it generated by agencies), resulting in lots of tactical, low quality and short-term changes rather than a few, considered reporting essentials done well over a period of time.
For us that's the key. It's vital to understand the core elements of ongoing communication demands, what's really important and where reporting could be heading to concentrate your efforts where you will get most value from your efforts both now in future.
There are two areas that stand out: continuing audience needs and developing digital and technological developments.
Firstly understanding the needs of the crucial audience of analysts and investors is vital and our regular research over the last six years demonstrates some interesting (if slightly predictable) trends.
On content, despite changes in statutory reporting requirements over the last few years and the view of that audience that generally reporting has improved during this time (in the most recent survey only 11% said that reporting had not improved in any way over the last few years), there are still some gaps.
The same responses tend to crop up again and again in answer to the question'what would make reporting more useful?' Namely elements such as progress against objectives, clear articulation of strategy, market overview and peer analysis. This won't come as any surprise to many, but it does underline the fact that appetite for this kind of basic information continues to be the key to keeping this crucial audience satisfied. The fact is that clarity is sought after but not necessarily being delivered with over 65% of analysts and investors still stating in our last survey that reporting tends to provide lots of information but very little insight.
If there are these kinds of gaps, then there is a very valid argument for those companies that are slightly deficient in these areas to keep focused on those priority issues rather than becoming distracted by other matters. For example, if your growth strategy isn't clear and isn't measurable, then no app, hybrid annual report or mobile-enabled website is going meet that very basic need for quality content. This is even before you come on to addressing the challenge of the often evident disconnect between integrated reporting and integrated thinking within your business.
That said, turning our attention from content to delivery preferences, unsurprisingly sustained investment online is key.
The majority of the current generation of analysts and investors live their lives online and consequently our research shows all digital channels - corporate sites, webcasts, presentations, HTML and PDF annual reports (or a combination of both) - are all well used.
With the emergence of new technologies and platforms, this could well be the point where expectations and demands step a gear.
This brings me to the second area of focus, digital and technological developments.
There's no doubt that the digital landscape in the last two to three years has changed massively and this presents huge opportunities. Broadband speeds and wireless connections are becoming quicker and more widespread. Video online is everywhere and changing our expectations of what digital channels will deliver. Finally smartphone and tablet usage is massive and growing year-on-year.
Our research shows this generation of analysts and investors remain online for reasons of speed and convenience and therefore as know-how and platforms evolve, there is every possibility that they will be early adopters of any useful and relevant technology that emerges.
In the next few years I believe that best practice communication in digital reporting channels through video and other rich media will move on from a few talking heads to full blown investor films or animated, information-driven narratives. Analysts will be quick to engage with these kinds of easily digestible channels because they will provide extra insight over and above financial modeling but will not require copious amounts of reading and analysis.
Put simply, for those companies who are ready, who are getting the basic elements right (i.e. are already providing the right level and quality of information and insight) these additional communication opportunities will only deepen understanding of - and engagement with - their businesses.
Analysts and investors will increasingly expect reporting channels to be available to them 'live' and on the move as a matter of course as tablet and mobile computing becomes the norm.
As Dr Mark Dean one of the inventors of PCs at IBM thirty years ago recently blogged, discussing the merits of traditional computing and the ideas they generate:"PCs are no longer at the leading edge of computing. They're going the way of the vacuum tube, typewriter, vinyl records, CRT and incandescent light bulbs."
Tablet computing will provide users with a more cinematic, more interactive and in the case of reporting, less linear experiences. The challenge won't be to produce an iPad app product that allows you to browse a report from front to back as many do now, it will be to provide a platform-neutral, fully interactive digital experience where the user can multitask and cherry pick from a mixture of 'live' information, rich media and historical data that seamlessly and automatically updates. A recent early example of the direction things are moving is the FT's web-based app that is downloaded directly from their site (not iTunes, the Blackberry app store or other native source).
In conclusion, there is no doubt that the role of corporate reporting is transforming from a statutory vehicle for financial results to a 'live', media rich and engaging channel for corporate communication to a range of stakeholders.
That said it's vital that those who are responsible for producing reports to keep their focus on the quality of the content first and then when they ready, begin to consider how new technological developments can help communicate their investment story.
Featured in Informed - the Investor Relations Society's member ship publication in Autumn 2011
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