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Nov 25, 2015

Speculator: IRbots are coming for us

It is the wave of the future: IRbots will pitch to bankbots and reporterbots

How far can machines rise up the corporate ladder?

Activist bots now start social media campaigns, sifting for messages that contain key words. They could search for names like your company or industry. Surely it would be a small twitch from there for an IRbot to search out messages and sites mentioning investments in a particular industry, its own company or peer companies and to approach them with an investment pitch?

Obviously, some human touch is necessary; how, you ask yourself, could mere technology usurp irreplaceable IROs, whose distinctive nuance and instincts are honed by years of interpersonal contacts? I do not want to rain pink slips on the next NIRI conference, but these new technological developments can take human IRO capabilities closer to the next level – perhaps dangerously closer.

For example, another new app for ad firms gauges people’s reactions to what they are seeing and hearing, to the point that they can predict what people will buy. The algorithm detects the slight movements in people’s faces and can determine their reactions, positive and negative, to particular aspects of what they see and hear, not just the overall package.

Analysts always used to tell me they liked one-on-ones and small meetings with executives because they could ‘see them sweat’, and IR professionals similarly like personal meetings where they can gauge the reaction to their story. Good IROs always want to talk to their investors, so this could be a tool for savvy investor relations.

I foresee a winning strategy where proactive IRbots target investors and gauge their reaction to the companies and their IR story on camera. That would allow an IR department to refine the message for investors to provide individual pitches that match investor twitches, as it were.

In other fields the virtualization of communications has already begun. According to New Scientist, Russian bots targeted anti-Putin Twitter accounts during the conflict in Ukraine, and one group that tried pro-vaccination bots in Seattle found itself battling against anti-vaccination bots running rival Twitter accounts! 

With so much trading and investing being done by algorithms and computers, if most of your stock is bought by a computer bot, how do you communicate meaningfully, not least if the program with the checkbook has bought and sold you several times in a nanosecond? Can we apply the Turing Test to investors and executives? Alan Turing, the brilliant cryptographer who helped crack the Nazi codes in World War II and pretty much invented computer programming, devised a test for computers: if people talking to a computer could not tell that it was not a person, it had achieved artificial intelligence.

Indeed, as most economic models are based on the perfect market theory, it is almost counter-intuitive to allow frequently fallible humans to have too much influence in the financial markets. Super-computers would surely be more effective in processing the massive amount and variety of data necessary to make the informed decisions a perfect market needs to thrive. Numerous studies suggest that mere human money managers are all too fallible by comparison with exchange-traded funds derived from computer modeling, not to mention trading strategies.

It is the wave of the future: IRbots will pitch to bankbots and reporterbots, and investbots will make their decisions based on computer-generated product. Why involve messy human wetware at all? Perhaps our only hope is that the captains of industry call a halt when computerization climbs up the hierarchy toward them. Can it be long before algorithms claim stock options and their black boxes take up space in the C(omputer)-suite? Then the CEOs might call a halt!

This article appeared in the Winter 2015 issue of IR Magazine