At the 2014 IPR Research Symposium in New York City’s beautiful Yale Club, one of the discussions focused on the future of technology and how this affects the practice of public relations. One of the trends was automation – robots taking jobs from humans. Of course, we all have heard about robots replacing humans on the manufacturing floors of factories and plants, but what does it have to do with public relations?
It turns out robots are great writers, too. They are also great at collecting and scanning lots and lots of information. And, of course, when it comes to statistical analysis and populating reports with results, robots can beat humans, too. The discussion progressed to conclude that public relations jobs most in danger are the ones with a lot of numerical data – such as sports information and investor relations. Indeed, no human can compete with the speed of the computer calculating the batting average or on-base percentages. No human can compete with the computer calculating EBIDTA or earnings per share. In fact, most humans nowadays rely on computers for such calculations. So, why not cut the human out of the equation and have the computer put its calculations in the report it would write and then send to the readers?
The conversation felt very personal to me because I have spent the last 15 years in investor relations – first, as a practitioner, then as an academic. And based on my years of experience, I did not think investor relations job are in any real danger. Here is why.
Computers are great for financial reporting – they simplify the calculations, produce nice charts and graphs, and expedite delivery of information (no mailman can outrun the email!). But I remember very well how financial analysts would always call me to discuss the results right after they receive the quarterly reports. Even more, investors and financial analysts would always crave meetings with the CEO and CFO of the company, despite the fact that according to Regulation FD executives are not allowed to say any additional material information that had not been already disclosed in the quarterly releases earlier. Yet, I think Arthur W. Page realized the reasons for such meetings – “a company’s true character is expressed by its people” – so, investors want to see the people who stand behind all these numbers and no computer can be a substitute for that.
Investor relations has never been a purely financial function and has never been about the financial statement alone. Investor relations is about educating investors, outsiders to the company, on the vision of the company for the future. Investors care about the future changes in valuation not so much about the past performance. Yes, advances in financial reporting, specifically XBRL (eXtensible Business Reporting Language), make it possible for a company computer to communicate directly with investors’ computers and have the company’s financial report automatically populate the financial analysts’ valuation model and maybe even create an earnings’ forecast. But such forecast cannot take into account the strategy and vision of the company for the future; it has to assume the company will be doing the same things it did in the past and will react to the outside events the same way it did in the past. Often, this is not the case. People have “free will” and can change their strategies in response to the market changes. So, any forecast is only valid if the analysts take into account the company’s strategies for future action.
Plus, there is the intangible revolution. Steve Wallman (2003), a former SEC commissioner, claimed, “When historians look back at the turn of the century, they will note one of the most profound economic shifts of the era: The rise of Intangible Economy.” The value of many organizations today is in intangible assets – patents, brands, supply chains, access to data, etc.; yet, intangibles are notoriously difficult to evaluate. There are often no comparables, no agreed-upon market prices, and even the value of the similar intangible can be different for different companies. As a result, computers are not capable of estimating this value and even less capable of predicting how it will change in the future. It would be a mistake to evaluate Google based on the amount of servers it owns or plans to install – its value is its algorithms, which ate constantly changing, and its strategic application of the resources, something that is also being re-evaluated consistently. Thus, it requires investor relations professionals to educate investors on the fair value of the company.
So, I do not think computers will be taking over the investor relations job market any time soon. My colleague, a professor of sports journalism, assured me that computers are not really a threat to sports writers either. In the meantime, I am looking forward to more great discussions on the future of the public relations.
Alexander Laskin, Ph.D., is an associate professor of strategic communication at Quinnipiac University.
