Consistent, coherent and clear
Corporate storytelling in a complex world
Storytelling has always been central to human progress. From the fireside tales of antiquity to the best-selling novels and political narratives of the twenty first century, good storytelling has underpinned every successful form of human communication. Even among senior corporate executives and shareholders, whose primary interests are bound up in P&L figures and financial data, the need and desire for a good story is paramount. As Alan Kay, the renowned US computer scientist and former Vice President of Research and Development at Disney, once observed: “Scratch the surface in a typical boardroom and we’re all just cavemen with briefcases, hungry for a wise person to tell us stories.”
And yet in annual reporting, the art of storytelling appears to have been lost – or at least, temporarily forgotten. Despite concerted efforts by industry bodies to improve narrative reporting and encourage joined-up report content, many companies still struggle to tell their story in a clear and compelling way. Despite ticking all the regulatory boxes, they’re still unable to articulate their investment proposition or their key points of differentiation.
In the first in a series of articles on the subject, we look at how images, graphics and text can work together to create transparent and coherent reports. Reports that help companies explain their value creation process and distinguish themselves from peers. Reports that engage, inform and inspire a wide range of stakeholders. Reports that rediscover the lost art of storytelling.
Losing the plot?
Joined-up corporate reporting is all about making links between content to create cohesive reports with unifying themes, relevant information and clear narrative structure. All the key components, in fact, of a good story. Those companies that ‘get it’ employ these storytelling principles in the articulation of their strategy and business model, and in the discussion of their core values, character, purpose and performance. Those that don’t tend to bury their story beneath copious amounts of disconnected material – inadvertently losing the plot and, in turn, their audience.
As long ago as 2000, IBM pushed the boundaries of corporate storytelling in an annual report designed, written and produced in the style of a nineteenth century novel. Divided into ‘chapters’, the report told “the no-holds-barred story of one year in the life of a company…the story of big battles, stinging defeats & gritty comebacks. Unexpected alliances, daring forays & game-changing discoveries.”
As an annual report, it was groundbreaking in its design, format and language. It included Q&A sections of the sort now prevalent in CEO statements, and combined corporate imagery and photographs with old fashioned illustrations, film stills and section dividers.
The question at the time was whether IBM’s first report of the new Millennium would usher in an era of bold and engaging corporate reporting. And the answer, sadly, was no. Sixteen years on, and analysis suggests that reports today are generally longer, baggier and more onerous to read than ever before. Of course, with increasing sources of guidance to follow and regulatory requirements to satisfy, piecing together a clear and compelling report that meets varying stakeholder demands is no easy undertaking. But even so, the figures paint a worrying picture.
Whereas in 2006 the average report was 85 pages long, today it is over 50% longer. What’s more, a recent survey of 290 investment professionals found that not only did 60% of them believe that financial reports contain too much irrelevant information, but 55% also believed that reports omit important material. And according to Deloitte, in 2015 only 10% of companies demonstrated comprehensively how all the various elements of a corporate report link together, not just in terms of cross-referencing but in terms of the underlying thought processes that shape the content itself.
That’s not to say all reporting is bad – in fact, broadly speaking corporate reporting in the UK has improved in the last decade. But there is still a long way to go. Indeed, recent initiatives and publications from industry bodies, such as the Financial Reporting Council’s (FRC) Towards Clear and Concise Reporting (2014), and the Global Reporting Initiative’s (GRI) G4 standards and their emphatic focus on ‘materiality’, suggest that companies still require considerable help and guidance in ‘cutting through the clutter’ of content irrelevance and excess.
So, in an increasingly complex reporting landscape, just how do companies – particularly those working in heavily regulated industries – make their voice and story heard?
The IGAS Annual Report 2015 – a case study in clarity
At CKD, we believe strongly that clarity of structure, message and design holds the key to rediscovering the lost art of storytelling in corporate reporting. And in 2015, we put our principles into practice for UK oil and gas company, IGas Energy.
In 2015, IGas approached us with a unique challenge: to produce an annual report that would help to reinforce the need for shale gas as part of the UK’s energy mix, while showcasing the company’s continued commitment to delivering positive social and environmental impact. In short, a report that would tackle the complex and highly sensitive issue of natural gas exploration in the UK – i.e. fracking – while creating a strong value creation story from both an investor and local community perspective.
Rising to the challenge, the report we produced not only met the client’s brief, but also won Gold in the Best Printed Report AIM/small cap category at the Corporate & Financial Awards (CFA) 2016.
Here’s what the CFA judges had to say about the finished publication:
“In creating its annual report, British oil and gas company, IGas, convincingly realised its goal of helping people understand why gas is still an important resource. In doing so, it positioned itself at the forefront of the market. To demonstrate this, IGas and agency partner, Carr Kamasa Design, crafted a report that focused on IGas’ competitive differences as well as its community spirit, endearing it not just to shareholders and investors, but to local stakeholders as well… The report was a resounding success, not only demonstrating the worth of IGas’ business model, but also powerfully reconnecting readers to the energy industry, its more personal impacts, and the positive beneﬁts to people.”
As we see it, the core elements underpinning the success of the IGas report were:
Clear and accessible messaging
The energy debate in the UK is complex, and the discussions around natural gas exploration in particular are highly sensitive. In order to simplify and personalise this debate, we produced an introductory double-page spread featuring an engaging and user-friendly graphic illustration entitled ‘what natural gas means to you’.
Demonstrating the role of natural gas in our daily routine, the spread explains how natural gas is used to provide heat, electricity and manufacturing feedstock, and how it powers transport and food production. Through clear and accessible images and text, it shows how ‘from the moment we wake up in the morning to the moment we turn off the lights at night’, natural gas plays a key part in our everyday lives. The spread also clearly juxtaposes the cost of imported gas to the UK (£11 million per day) and the potential of shale gas to meet 41% of our gas requirements. Such messaging subsequently runs throughout the report, gently reinforcing the case for natural gas as part of the national energy mix, and as part of the UK’s efforts to ensure energy independence and security in the future.
“Clear and simple articulation of the messaging was key. We didn’t want stakeholders – particularly those who might be instinctively wary of natural gas exploration – to feel in any way disenfranchised by overly technical graphs or language. By producing clear and accessible spreads like this, we were able to make the whole issue more ‘approachable’ – not so much about a big national debate, but about personal, everyday decisions and benefits. It was also important to communicate that the term ‘fracking’ isn’t representative of the whole story. Indeed, the fracturing of rock is only a small part of the natural gas exploration process, and it was really important to articulate this point throughout the report.”
Rosie Moreno, CKD
Aware that many companies struggle to set themselves apart in their annual reports, we decided to position the IGas business model, strategy and value-creation process upfront under the heading ‘what makes us different’.
Echoing a simple USP statement on the inside front cover, we laid out IGas’ strategic commitments across the report’s opening pages and spreads. In this way, we were able to show how IGas’ focus on operational excellence, local and national support and engagement, disciplined asset portfolio management, development of potential resources, prudent financial management and optimisation of assets provide a tangible competitive difference within the UK energy sector. Within each section, we also provided clear page references for further information on that aspect of the company’s strategy.
“We wanted to demonstrate very clearly how IGas stands out from other energy firms, and how each aspect of its strategy and business model provides a strong competitive differentiator. Too many companies seem to assume that their defining story will be implicitly understood by readers, but such an approach can lead to key messages getting lost. We wanted to set out IGas’ differentiating features very clearly from the beginning, to create a clear narrative that would frame the rest of the report.”
Adam Hindmarsh, CKD
Clear navigation and strategic intersections
At every point within the IGas annual report, we were keen for readers to be able to navigate their way easily through different sections and pieces of content. While the ‘what makes us different’ spread guides readers to more detailed information, we also devised a system of clean and simple visual icons. These icons represent key strands of the IGas strategy, different regulatory stakeholders, and different aspects of the asset optimisation process, and show where the strategy intersects with the company’s principal risks and uncertainties.
Through repeat use of these icons, we provided readers with a clear visual pathway through the report, showing how IGas interacts with and influences the energy production process.
“The icons provide visual links and connectives between sections, helping us to tell a cohesive and easily navigable story,” explains Adam Hindmarsh. “Throughout the report we also signpost readers to other relevant sections or to external online resources, providing a more interactive and dynamic reading experience.”
Clear discussion of the regulatory process
For IGas, one of the main barriers to narrative clarity and coherence is the volume and complexity of regulation within the sector. To help explain the issues the company faces in this area, we produced a ‘regulatory and operational roadmap’. Covering a double-page spread, the roadmap encompasses the entire process from pre-planning through to consultation and approval, and shows how IGas engages at critical junctures with regulatory bodies and local communities.
“We wanted to explain the regulatory process as simply as possible,” says Rosie Moreno. “Our feeling was that readers would really benefit from knowing who’s involved in this process and how IGas interacts with these stakeholders at key points along the way. For local communities in particular, we wanted to demonstrate visually how empowered and involved they are, and how their views really help to influence project outcomes.”
Multifaceted stakeholder approach
Above all else, the IGas story had to appeal to a multifaceted stakeholder audience, from retail and institutional shareholders and bondholders, through to regulatory, governmental and political bodies and local communities. To this end, we ensured there was clear commentary around strategic, financial and operational performance for investors and industry analysts, while also using consumer-friendly illustrations, graphics and text to help engage wider stakeholder groups.
In particular, non-specialist, everyday people were a crucial demographic in our content planning, and we worked hard to ensure their voices were captured and recorded as part of our focus on community engagement. In this way, the report made headway in enfranchising those known to be most sceptical about fracking and natural gas.
“There’s something here for everyone. We were really impressed with the way the report presented the regulation, the facts and the need for gas in an easy-to-digest way. Whilst IGas is a B2B company, given the high-profile nature of onshore shale gas exploration in the UK, we wanted to embrace a more consumer-facing look and feel. And CKD did just that; in terms of the visuals and the educational aspect, the report enables anyone reading it to be clear about the details, and clear about the decisions we can make – as individuals and as a country – to be more energy independent in the future.”
Director of Corporate Affairs, IGas Plc
Coherence through integration: the way forward?
As discussed, the background to the IGas story is a complicated one. The company operates in a heavily regulated industry and interacts with multiple stakeholder groups. It also comprises two parts which are complementary but have very different profiles: one an established business that has been in operation for over 30 years; the other a nascent shale gas exploration entity whose principal focus has become a highly emotive subject among the British public.
Given these contextual complexities, producing a clear and coherent narrative was no easy undertaking. To achieve our goals, we embraced the principles of connectedness and integration that have gained traction during the recent shift towards Integrated Reporting. These principles were key to simplifying and strengthening the IGas story, and involved putting the company’s strategy and business model at the heart of the report. Following the Integrated Reporting model – but without producing an official Integrated Report – we showed how these critical components are linked to one another and how they link to and underpin other key aspects of IGas’s operations.
Indeed, as described by the International Integrated Reporting Council (IIRC), one of the key benefits of integration is that it “enables companies to tell a more joined-up story and produce a more cohesive and compelling company narrative.” In an increasingly complex world, companies like IGas need to respond to change in order to remain competitive, and the broader approach taken to the measurement and management of business performance – as seen in the 2016 annual report – demonstrates a strong commitment to meeting multiple stakeholder needs. By showing how the core elements of an organisation’s strategy, governance, performance and prospects link together, companies can clearly articulate how they create value. And in the process, they may find they have the basic ingredients for a memorable corporate story.