Corporate comms strategy should highlight innovation

A groundbreaking 2008 survey of R&D programs at 69 publicly traded companies concluded that the stock market rewards companies with stronger R&D investments, and tends to punish those that reduce R&D spending.

A groundbreaking 2008 survey of R&D programs at 69 publicly traded companies concluded that the stock market rewards companies with stronger R&D investments, and tends to punish those that reduce R&D spending. The survey, “Do innovations really pay off? Total stock market returns to innovation,” was conducted by marketing professors Gerard Tellis at the University of Southern California and Emory University's Ashish Sood.

The study found that the stock market rewards companies on average of 4.5 years before the actual product launch based on existing R&D efforts, and that the highest stock market returns are for the development, as opposed to the commercialization stage. In fact, the lowest returns come with the actual launch event because the market anticipates returns well ahead of the launch.

This study suggests that corporate communications pros should place a higher priority on communicating the strength of their company's R&D or innovation strategy to the investment community.

To develop an effective innovation positioning, begin with an innovation audit. Using a detailed questionnaire, interview the top R&D executives (scientists, engineers) at the corporate and key business-unit level to articulate the company's total innovation strategy, key innovation processes, and timetable for product launches. That “innovation positioning” should be communicated to analysts and investors via traditional IR, financial media relations, and influencer marketing programs.

New digital technologies offer the most exciting opportunities to articulate what is unique about your company's innovation positioning. With interactive tools, you can:

• Use Twitter to announce to stakeholder followers key R&D developments and other examples of innovation.

• Create a company Facebook page highlighting innovation.

• Start an innovation blog to provide a stream of commentary by several executives about your programs and case studies. Blogging, like Twitter and Facebook, opens up a dialogue with stakeholders, so your executives must be prepared to engage in that discussion.

Many corporate executives will think that a down economy is the worst time to launch an innovation-positioning program. The Tellis/Sood study suggests just the opposite. A failure to communicate innovation shortchanges your company's value to investors.

Andy Tannen is SVP and director of strategy and development for MS&L's corporate practice.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in