Do World Class Communications and Market Intelligence Have Impact on Financial Performance?
Finding out whether effective communications and information management really pay off has always been my passion. In fact, the whole M-Brain business started because I jumped off the PR domain and founded a company to be able to study reputation management and its impact on companies’ financial performance. Now I have picked up the subject again, and I am preparing my doctoral thesis on this issue. However, the way I am looking at it has changed a bit from earlier years.
What Is Intellectual Capital?
Let’s look at communications and information management. They are both parts of what is called ‘intangible asset management’.
In my opinion, one of the best definitions of intangible assets or intellectual capital is to call them “a language for thinking, talking and doing something about the drivers of companies’ future earnings”. We speak about three types of intellectual capital: structural, which stands for organizational structure and processes, human, which is about people and talent in the company, and relational capital, which covers all the contacts, networks and relationships the company has externally and internally.
Latest research focuses on a dynamic perspective of intellectual capital. Not only what you possess, but how to manage and make use of it, makes a difference.
Assessing the Importance of Good Reputation Management and Strong Brands
There is a huge amount of evidence on that good reputation and strong brands correlate with financial success. We also know that companies that take care of their market intelligence, grow shareholder value faster than the global market, and their overall financial performance indicators are substantially better than average. The exact processes leading to this excellence in communications, marketing and information management are less explored, and this exactly is the reason for my being interested in those processes.
I am also convinced that reputation management and information management depend on each other, and if handled well, a company ends up with excellent two-way communications, which has been defined as the ultimate and best World Class Communications. In other words, I believe that if a company invests in World Class Communications, they perform better than a company only investing in one-way communications or only gathering information.
Linking Financial Performance to Reputation and Brand Building
Of course financial performance depends on a number of factors. One cannot claim that reputation building or market intelligence have a straightforward causal effect on finances, because companies are not isolated from their environment and external factors like general market development etc. However, reputation has not been researched as part of IC research so far, although many other potential theories have been tested. Neither has anyone combined the two disciplines: communications and information management.
Now that we have moved into the knowledge-intensive business era of ours, the concept of external reputation has gained a relevance never seen before, and reputation has to be taken seriously because we know that it has a huge impact on corporate performance. Most probably there is a correlation between reputation building and corporate competitiveness, and the link to financial performance needs to be verified through competitiveness.
My aim is to produce a work that offers business executives new concrete tools for managing reputation and market intelligence activities. The study should produce knowledge that allows practitioners to make better decisions and improve the effectiveness of their work.
By Marjukka Nyberg
Marketing & Communications