There are many reasons why businesses may need to change direction. Consumer preferences, disruptive technologies, and new regulations change can all feel like a meteor comes to you. When it's time for a basic strategy change, you'll definitely consider the potential impact on the company, its employees and customers. Equally important, investor strategies need to be rethinked.
Explaining pivots to investors, for example, from fossil fuels to renewable energy or digital, can have a difficult conversation. If you are cautious about developing a long-term roadmap and communicating your strategy to the most important investors, that discussion will become much easier. Established dialogue with the investment community provides a strong foundation to explain the need to readjust strategies and gives credibility to the need for new capital allocations to support pivots.
Below are some pro tips for companies that change direction.
Acknowledge any previous strategy issues or issues
“When facts change, I change my mind. What do you do, teacher?” Words often stem from John Maynard Keynes, one of the most prominent economists of the 20th century. (Keynes himself was a keen investor. He managed King's College's Cambridge contribution fund for difficult decades, with impressive results.)
CEOs often hate to say they have changed their minds. Meanwhile, in the face of new information, investors have no problem changing their minds, forecasts, ratings and holdings. This flexibility is key to investor thinking. Accept a ripe argument to change direction, especially if you show that you are ahead of the problem.
Listen to investors, but not very careful
Investors analyze securities and make buy and sell decisions (they can often be reversed), but most of them have never led a large group of people or have had to meet their pay. They are not facing anything you deal with every day. It's the kind of decision that has a big impact on your customers, employees, suppliers and communities, and is often difficult to reverse.
Most investment decisions are two-way decisions. If they buy stocks, investors can turn around and sell if necessary, even if they lose their money. Most major companies' decisions are one-way decisions. For example, if you sell a division with the advice of an investor, you cannot buy it back. Investor investment. They don't run the company. So listen to their advice and then make your own decision.
I will share your outlook, but I will stay in the message
Convey new strategies with confidence and keep your story simple. Investors are trying to fill the model. They don't need to understand the nuances of your challenges or decision-making process. You can get lots of feedback from your customers, employers, suppliers, or community, but investors aren't too worried about the impact of other stakeholders. They care about numbers and the likelihood that they will meet those numbers.
Important planets on this journey
If your company is hit by a meteor shower and you need to change courses, the key planets in the investment universe are different from companies that start with clear weather. You need to focus:
- Financial reporting. The media can stir investors' opinions. Quietly implementing long-term strategies is not very interesting to the media, but it is a controversial pivot. In this situation you are funny. Use it to your advantage with a carefully crafted PR strategy.
- Activists. If they see a weakness, these “investors with megaphones” will take advantage of it and not quietly. Before you start pivoting your strategy, do your own external activist-like analysis. Pretend you are an activist looking at your own company. What would you do if you had their incentives? Do your best to predict what they are saying before they do it. You can't choose to follow activist-type strategies as they may not be the best in the long run, but understanding where activists can challenge you will give you a great advantage if you set your sights on your company.
- Active and index managers. In this scenario, your corner needs what we call anchor shareholders: big long-term friends. These can be active managers, index managers, or even large asset owners when they hold inventory directly. This means that activists rely on large investors' support. This means that fighting or empowering activist ambitions is within the power of these anchor shareholders. Strong support for strategy changes from some large and respected investors will give other investors the confidence to ride with you.
Your company needs enough time and capital to strategically change direction. Focus on those who can provide that time and capital, and influence others to do so.
Excerpted with permission from publisher Wiley CEO's Guide to Investment Galaxy: Navigate the Market and Build Great Companies Sarah Keohane Williamson. Copyright©2025 by Sarak K. Williamson. Unauthorized reproduction is prohibited. This book is available anywhere books and e-books are on sale.
