■ Presenter Behavior: Defensive ■

Mark McGwire was, by any measure, an American hero. A handsome, muscular professional baseball star who set multiple home run records during his 17 years in the major leagues and was idolized by millions of fans—until he wasn’t. Four years after his retirement, McGwire was charged with having taken steroids to enhance his performance.

Those charges led to a subpoena to testify at a congressional hearing, where Representative William Lacy Clay (D–MO) asked him:

We are both fathers of young children, both my son and daughter love sports and they look up to stars like you. Can we look at those children with a straight face and tell them that great players like you play the game with honesty and integrity?

McGwire replied defensively:

I’m not gonna go into the past and talk about my past.

Clay pressed further:

As part of your training routine, in addition to andro [androstenedione], which was legal at the time that you used it, what other supplements did you use?

McGwire repeated his defense:

I’m not here to talk about the past.²

Every citizen has every right to avoid self-incrimination, but evasive answers appear defensive. As defensive as McGwire appeared as an individual, these tactics look even worse for the president of a very large banking organization.

John Stumpf was the modern embodiment of a Captain of Industry, a term originally applied to Andrew Carnegie, Henry Ford, and John D. Rockefeller.³ As the chair and CEO of the behemoth Wells Fargo Bank, the aristocratic, silver-haired Stumpf, who earned nearly $23 million a year, looked and acted the part—until he didn’t. The Consumer Financial Protection Bureau (CFPB) charged Wells Fargo with illegally opening two million unauthorized checking and credit-card bank accounts and fined the company $100 million.⁴

The CFPB fine was followed by a subpoena for Stumpf to testify at a Senate Banking Committee, where Senator Pat Toomey (R–PA) asked him:

Mr. Stumpf, do you acknowledge that the employees who engaged in this activity were committing fraud?

Stumpf replied defensively:

You know, I’m not a—uh—criminal—uh—ah—you know…

Echoing Richard Nixon’s infamous denial of guilt, Stumpf’s halting delivery made him sound as guilty as did Nixon.

Toomey challenged Stumpf further:

When did you begin to disclose in SEC filings that you had this potentially material adverse set of circumstances that could certainly have huge damage to your reputational value?

Confronted, Stumpf fell apart:

Well, I don’t—the—the—uh—I don’t—I can’t answer that, I’d have to get to our—our legal team. I don’t have that in front of me, but this was not a—a—ah—I just—I’d have to get back to you on that. I don’t know.⁵

Different people react differently to challenging questions. Some go 180 degrees in the opposite direction and fight back.

■ Presenter Behavior: Contentious ■

From its launch in 1999, BlackBerry was the mobile device of choice for secure communications for millions of users—until it wasn’t. The launch of Google’s Android operating system and Apple’s iPhone was a double whammy that sent the stock of BlackBerry’s parent company, Research in Motion (RIM), into free fall. Four years later, BlackBerry tried to make a comeback with a new tablet called PlayBook that Mike Lazaridis, its founder, co-chair, and co-CEO, decided to launch himself.

During what was intended to be a purely promotional interview with the BBC’s Rory Cellan-Jones, Lazaridis heard the technology correspondent suddenly ask:

Can I move on to the problems you’ve had in terms of security, your various arguments with the Indian government, and a number of governments in the Middle East? Is that anywhere near being sorted out?

Lazaridis looked away, shook his head, then looked up and said:

That’s just not fair. Cause, first of all, it’s not a sec—we have no security problems. We’ve got the most secure platform…

Interrupting, Cellan-Jones asked:

Why is that not a fair question to ask?

The reporter continued to thrust, and Lazaridis continued to parry for a few more exchanges until Cellan-Jones went in for the kill:

And you’re confident that—we’ve got a lot of listeners and viewers in the Middle East and in India—you can confidently tell them that they’re going to have no problems with being able to use their BlackBerrys, and you being able to give them assurance that everything is secure?

Trapped, Lazaridis lashed back:

Sorry, it’s not fair. We’ve dealt with this. Come on, this is a national security issue.

Then, turning to look directly at the camera and poking his finger at the lens, Lazaridis snapped:

Turn that off!⁶

No matter how high broadcast reporters turn up the heat on unsuspecting interviewees, it pales in comparison to the questions investment analysts ask. The Securities and Exchange Commission (SEC) requires public companies to file periodic earnings reports, which they can deliver via teleconference, videoconference, or live webcast. During those calls, analysts and investors get to ask senior management questions about their company’s results. As the Investopedia website puts it:

Most analysts and investors agree this is probably the most important part of the entire conference call, as analysts are able to pose questions to management about any area of the company’s performance that wasn’t clear or that requires elaboration.⁷

These well-informed financial professionals must make critical—and costly—buy or sell recommendations, and so their questions are very demanding.

Just prior to an earnings call by Cleveland-Cliffs, a publicly traded iron ore mining company, the Goldman Sachs analyst who covers the company found its outlook uncertain and gave it “an $11 price target—just below both the Wall Street estimate and where shares were trading at the time.”⁸ During the call, Lourenco Goncalves, the chair, president, and CEO of the company, was infuriated by the downgrade and took out his anger on the analyst:

You are a disaster! You are an embarrassment to your parents! With this being said, we are going to use money to reward the long-term shareholders. So, if the stock continues to go down based on these kids that play with computers and somebody else’s money, we are going to buy back stock. We’re going to screw these guys so badly that I don’t believe that they will be able to only resign. They will have to commit suicide…You are messing with the wrong guy.⁹

In a clear case of cause and effect, shares of Cleveland-Cliffs Inc. fell more than six percent after Goncalves’ outburst.¹⁰

■ Audience Perception ■

In further validation of the Presenter Behavior/Audience Perception dynamic, a similar fate befell the causes of Mark McGwire, John Stumpf, and Mike Lazaridis.

After his playing career ended, McGwire continued as a coach for several major league teams but, despite multiple annual ballots, he was never elected to the National Baseball Hall of Fame. His outstanding batting record would ordinarily have made him a shoo-in for admission.

Less than a month after Stumpf’s testimony at the Senate hearings, he resigned from Wells Fargo. A little more than three years after that, the Treasury Department banned him from the banking industry for life and fined him $17.5 million personally.¹¹

RIM’s BlackBerry PlayBook tablet was outshone, outsold, and overwhelmed by Apple’s iPad and Amazon’s Kindle Fire. This, along with a delay in releasing a new BlackBerry operating system, caused RIM’s stock price to lose more than three-quarters of its value. A year later, Lazaridis and his co-CEO Jim Balsillie resigned.¹²

Undoubtedly, the primary factors in the downfalls of McGwire, Stumpf, Lazaridis, and Goncalves were business fundamentals and performance, but their flawed responses to their interrogators’ charged questions clearly played a significant role.

The downside of Stumpf’s defensive behavior was perfectly summarized by Jeffrey Sonnenfeld, a senior associate dean and professor at the Yale School of Management. In an interview on CNBC’s Squawk Box, Sonnenfeld delivered this blunt critique:

He went in there completely unprepared. He had a flat, drafted public relations script that he read off that was contrite and seemed authentic—then was melted in the easiest of questions that came his way; questions that should have been anticipated: When did he know? What did he know? And who knew what, when? He wasn’t prepared.¹³

Stumpf’s “melt,” along with McGwire’s stonewall and Lazaridis’s and Goncalves’s belligerence are negative behaviors that produced negative perceptions—not only of themselves but also of their messages. If your response to a challenging question is defensive or contentious, you lose credibility—and, with it, the likelihood of attaining your objective.

If instead, your response to a challenge is prompt, assured, and to the point, you will be far more likely to emerge unscathed, if not fully victorious.

In the previous chapter, David Bellet told us that what investors look for is that “the presenter has thought about the question; been candid, thorough, and direct.” You can readily extend David’s observation about investor audiences to all other audiences, including customers, partners, managers, and even employees.

Therefore, what you are about to learn is not only how to respond with the right answers but how to establish a positive perception by giving your audience the confidence that you have thought about the question and that, when you respond, you are candid, thorough, and direct.

The learning process begins in the next chapter, at the point where John Stumpf, in Professor Sonnenfeld’s view, failed: preparation.