Consciousness Physics? No, not a New Age religion, it’s the domain of scientists who believe that the conscious work of our brains - our thoughts, ideas and beliefs - can determine outcomes in the physical world. No longer content with explaining black holes, these physicists believe that perception influences reality in specific and concrete ways. Our thoughts, they report, can determine whether we sink that last-second foul shot or pick the desired card from a deck.

Some investment analysts, business consultants and academics are likewise discovering the power of perceptual reality and investing. They say that investor perceptions of corporate leadership can drive share price values. Indeed, some believe as much as 30 percent to 40 percent of a company's stock price is determined by intangible qualities such as: the ability to motivate and retain employees; accomplishing goals; innovation; managing complex political and regulatory systems; and communication skill. Studies like the Hidden Value Index published by Financial World Magazine and CBD Research & Consulting annually measure perceptions of these qualities.

Consciousness physics underscores what a lot of investor relations practitioners already know: the thoughts of leaders turned into language and actions significantly affect shareholder value. Investors know that evaluating the quality of management is a key part of the investment decision. Consequently, many large and influential investors request meetings with management to better understand executive actions and intentions. But many cannot.

These and other individual investors have an alternative meeting place: in the company’s letter to shareholders. Signed by the CEO, the letter is included in the company’s annual report, a document confirmed by 1,000 respondents in a recent Columbia University survey, to be the most credible source of investor information. Since the CEO letter offers management's view of the company's past and present performance as well as future prospects, it offers an unparalleled opportunity to inform, educate and build trust among all readers.

Unfortunately, many individual investors appear to share the view of Daryn Kagan, the anchor of CNN's investor education show, "In the Money." who confessed to her global audience, "I either put the annual report in the pile that never gets read or toss it in the trash can." Contrast this with the institutional investors and sell side analysts who not only read the letter to shareholder, but keep copies on file for several years to track management's consistency of message and performance.

How extensively do shareholder letters reveal leadership qualities? Over the years of analyzing shareholder letters, we've found descriptions of over 70 kinds of qualities which fit into a model based on five primary categories: accountability; vision; strategy; stakeholder relations, and candor. This model, LanguageWorks for business^SM, helps readers to analyze, score and compare shareholder letters across many industries. Why are shareholder letter scores significant? They highlight what management believes is important to communicate. They reveal the impression that management chooses to create. A high language score, for example, offers evidence of a communication that reflects detailed and relevant content, candor and imagination.

Is there a correlation between leadership language and stock price? In our 1998 LanguageWorks survey of 100 Fortune 500 companies, we discovered a probability of 95% or better that companies with high language scores were more likely to be correlated with higher stock price appreciation and low scoring companies were more likely to have low share price appreciation. The correlation of the top and bottom 25 companies in the survey is 97.5%. While we do not claim that high language scores cause higher stock price performance, we do believe that higher language scores are indicative of strong management consciousness and leadership capabilities that are more likely to produce superior performance over time.

What about the actual stock price performance of high and low scoring companies? The average price appreciation of the top scoring 25 companies in the 1998 LanguageWorks survey between the beginning of 1998 and the beginning of 1999 was 22.5% compared to a decline of 3% in average stock price of the bottom scoring companies. During this same period the S&P 500 Index increased 19.5%. Looking back a year from the period beginning in 1997 until the beginning of 1999, the average share price appreciation of this same group of top scoring LanguageWorks companies was 89.4% compared to 3.4% for the bottom scoring companies.

In today's fast-paced and changeable New Economy, we believe the qualities of conscious leadership will be even more critical to creating sustainable corporate futures -- leading employees and customers; candidly assessing corporate and personal strengths and weaknesses; and articulating and living the values that define corporate cultures. Evidence of these qualities are woven into the letters of New Economy companies and those transitioning from the Old to the New Economy. Looking ahead, exciting advances in New Economy technology will soon allow all existing and prospective investors to meet and evaluate management not just in print, but via Internet video voice and imaging.

By providing a global medium that offers ease, economy and intimacy in communicating thoughts and beliefs, the Internet is the engine of consciousness physics. It accelerates the creation and management of perceptions. While it promotes understanding, it can result in misunderstanding, either inadvertently or by cybersmearing, when false information is circulated deliberately. As a result, communicating on the Internet requires a higher standard of clarity, imagination and judgment than ever before.

Accessing global audiences means that many more people who visit company web sites will lack the background necessary to effectively evaluate company messages. This simple fact underscores the need to design Internet communications with the same kind of consciousness revealed in a good shareholder letter: the ability to understand and to step in the shoes of different audiences; the imagination to use stories to communicate specific messages and universal values; and the knowledge that clarity and candor are evidence of strength and not vulnerability. In fact, these skills are needed to build the trust of individual investors who continue to grow their share of large company ownership while institutional investment declines.