Investor relations is the art of managing relationships with your investors. It used to be easy: tell them whatever you felt like telling them. Shareholder activism, new regulations such as Sarbanes-Oxley, and the internet have dramatically changed the landscape, giving far more power to investors. A great example was the Save Disney campaign. Roy Disney was fighting to limit the powers of Michael Eisner, while the rest of the board was stonewalling. The SaveDisney.com website (now defunct) marshalled support and public opinion, while the Disney board and investor relations group ignored the issue and declined even to present their case. In this situation, pressure was significantly applied by individual investors to the managers of the mutual funds in which they had invested. Mutual funds can no longer ignore governance issues if they want to keep their customers on-side. So now companies are increasingly using the internet to present their side of the story. Chevron, which has been under attack from Amnesty International, among others, has set up a website called willyoujoinus.com, which gets people involved in thinking about the future of energy and environmental issues.

The next phase is blogging by corporate boards. IRWebReport, a company specializing in online investor relations issues, has written a couple of great pieces on Why Corporate Boards Should Blog and 10 Excuses for Boards NOT to Blog. Governance is all about transparency. Blogging is a fabulous tool for giving greater visibility to the governance process, and providing investors with a chance to provide their input and perspectives. Certainly the traditional annual meeting is completely ineffective as a system for getting investor participation and involvement. One of the initial objections you often get on implementing blogging on investor relations issues concerns regulations on corporate disclosure, such as Regulation FD (meaning Fair Disclosure. Regulation FD was established largely to stop large investors getting preferential access to information). Given that RSS feeds allow everyone to get immediate notification of anything released on a blog, blogging in fact provides far more egalitarian information flows than other forms of release. Significant disclosures can be tagged for concurrent release to stock exchanges. IBM is getting on board, offering investor relations information through RSS feeds and podcasting (also available on Odeo). General Motors vice-chairman Bob Lutz has his own blog, as does Carole Brown, chair of Chicago Transit Authority, and over 100 CEOs of primarily technology companies. I believe that in just the next twelve months, blogging for investor relations purposes will become commonplace. The difference between those boards that really do believe in communicating with their investors, and those that prefer to avoid any interference by pesky shareholders, will swiftly become evident.

Earlier this week I was fortunate to go along to an invitation-only FutureCommons meeting at The Institute for the Future (IFTF) in Palo Alto. IFTF is one of the earliest futures think-tanks, being founded in 1968, and having produced 10-year forecasts every year since 1978. Their blog provides some insight into their work. The FutureCommons group endeavors to take the IFTF more into an “open source” thinking space. At the meeting Rudy Rucker spoke about his new book The Lifebox, the Seashell, and the Soul, which examines the idea that the universe consists of cellular automata, in other words that it is a computation. His work is related to that of Stephen Wolfram, who wrote on similar themes in his highly influential book A New Kind of Science. It was a delight to meet Rudy. Back in my late teens I read two of his early books, Infinity and the Mind, and White Light, a fictional account of passing through the different levels of infinity, which were well-aligned with my state of mind at the time. The omnivorous Jerry Michalski then facilitated a discussion on theories of everything, ranging across thinkers including David Bohm, Edward O. Wilson, Ken Wilbur, The Dalai Lama, and far more. Unquestionably, there is much to learn in the pragmatic, specific present from thinking about everything.

The world of measuring intellectual capital has gone through some highs and lows over the last decade. Coming from a capital markets background, I was excited when in the mid-1990s significant attention began to be paid to the valuation of intangible assets, and I was involved in a number of initiatives of institutional investors to value intellectual capital. In a knowledge-based economy, the tangible assets of a company – which is all an accountant can assess – have little correlation to the worth of the firm. However I soon realized that a couple of decades of hard work would be required to get traction on the issues, and I was happy to leave that slog to others. Now some of the hard work is really starting to pay fruit. The GAP Congress on Knowledge Capital in Melbourne, Australia in early November has high-level government support, and will establish a “Melbourne Protocol” on developing and implementing intellectual capital reporting. The background reading provided for the conference provides a good overview of the current state of intellectual capital reporting. The current poster-child is Denmark, whose Ministry of Science, Technology, and Innovation provides guidelines to companies on how to implement intellectual capital reports, and where a broad array of companies provide supplements to their annual reports. Intellectual capital supplements will be where the real action will take place over the next years. The question is which of the major players in the reporting space: listed companies, investors, regulators, and third-parties (e.g. auditors), will drive the uptake?