Chapter Eight

The Power of the Buffer

Case Studies: General Sun Tzu • Dara Khosrowshahi, Uber • Reed Hastings, Netflix • Ngozi Okonjo-Iweala, WTO • Geoff Clapp, Better • Bruce Hasse, Extended Stay America • Wang Xiang, Xiaomi Corporation • Giulio Ranzo, Avio • Evan Spiegel, Snap • Chuck Robbins, Cisco • Elon Musk, Tesla

To subdue the enemy without fighting is the acme of skill.1

The Art of War

General Sun Tzu

Retake the Floor

Let’s return to that moment after you opened the floor to the person in the middle of the room. You listened to the long, rambling question and, either on your own or through the questioner’s restatement, have a full grasp the Roman Column in the question. As a results-driven person, you are eager to provide an answer when you Retake the Floor.

But suppose that first question comes at you like this:

Wait a minute! You tell me that your product is going to save us money, and then you give me sticker shock with a price that’s twice as much as your competition asks! That’s outrageous! Where do you get off charging so damned much?

Then suppose you were to give this answer:

When you consider the total cost of ownership of our solution, you’ll see that it will save you money in the long run.

At this critical juncture, the moment you step into the line of fire, in your very first answer to the very first question, you would be saying that your prospective buyer is wrong. After all, the clear inference in the question is that you are charging too much, and the clear inference in your answer is that you are not charging too much—that, in fact, your price is a bargain.

That response would peeve your questioner, as well as the rest of the audience, because they would perceive you as being contentious. In response, your audience—your prospective customers—would be unlikely to buy your product because your negative behavior would produce a negative perception. Just as the negative behavior of CEO Lourenco Goncalves—lashing out at the Goldman Sachs analyst—caused shares of Cleveland-Cliffs Inc. to fall more than 6%.2

Another approach, widely offered as conventional wisdom for Q&A sessions, is to repeat the question. However, if, after being asked “Where do you get off charging so damned much?” you were to repeat the question this way:

Where do we get off charging so damned much?

You would then validate the inference that you are overcharging. Your prospective buyer would perceive you as having admitted guilt. Or, in the words of the late-night television comics, “Nailed ’em!”

What’s worse, when you answer a question by repeating negative words, you are very likely to begin defensively by saying something like “When you consider the total cost of ownership…”—which implies that your questioner does not understand how business operates.

In each of those responses, you would be carrying forward a negative balance and starting a long, difficult slog up a very steep mountain.

Therefore, when you are asked a hostile question, do not answer, and do not repeat; instead, follow General Sun Tzu’s strategy in the epigraph.

The General’s Strategy

Many modern businesses have on their bookshelves a requisite copy of Sun Tzu’s 2,500-year-old treatise on combat—with good reason. Here in the twenty-first century, the soldier-philosopher’s ideas have become a recognized strategy for combat in business, if not a primer for any conflict in life. His premise of winning without fighting is a perfect analogue for handling tough questions.

Fighting is synonymous with the contentious and defensive behavior that you saw exhibited by Mark McGwire, John Stumpf, Mike Lazaridis, and Lourenco Goncalves. Each of them demonstrated negative behavior that produced negative perceptions in their audiences, and none of them won his engagement.

Contentiousness is the most damaging because it represents loss of control. To achieve a positive perception with your audience, never react to tough questions with anger; instead, always respond with firm but calm resolve—by deploying the Buffer.

The Buffer

Just as heavy machinery uses springs or other devices to cushion the impact of opposing parts or forces, you can use a rhetorical device to cushion the impact of a verbal challenge. In Q&A, that device is the Buffer, the one or two Key Words that identify the essence of the question, the heart of the matter—the very words you learned to extract from the long rambling question during the Active Listening lesson of the previous chapter. The Buffer is essentially a statement of the Roman Column, the ultimate distillation technique. By using only the one or two Key Words, you remove any negative words and neutralize the hostility. Here’s how to do that with the hostile question from the opening salvo of this chapter:

Wait a minute! You tell me that your product is going to save us money, and then you give me sticker shock with a price that’s twice as much as your competition asks! That’s outrageous! Where do you get off charging so damned much?

The Key Word is “price.” Just price, that’s all. Not “twice as much,” “sticker shock,” or “so damned much.” The Buffer is:

Our pricing rationale is…

Notice that the Buffer does not validate the questioner’s assertion that the price is too high, nor does it invalidate the questioner’s assertion by saying that the price is justified by the total cost of ownership.

The Buffer accomplishes General Sun Tzu’s strategy—based on a foundational principle of martial arts: rather than try to counter force with force, deflect force.

By neutralizing the challenge, you can move into your answer without agreeing or defending. You will only have to address the price itself, not whether it is too high or too low. You won’t be learning the answering techniques until Chapter Twelve, but first let’s take a deeper look at Buffering in Figure 8.1.

Figure 8.1   Buffer Positioning

The light area in the center of the horizontal bar is the safe zone, and the outer dark areas at either end are danger zones. Your objective is to position the Roman Column in the safe zone.

If you were to reverse the challenging question in your response—“When you consider the total cost of ownership…”—you would land in the danger zone on the right because you would be invalidating the questioner’s concern by implying that your solution is worth twice the price. Your audience would then perceive you as being contentious and resist doing business with you.

If you were to repeat the challenging question—“Where do we get off charging so much?”—you would land in the danger zone on the left because you would be validating that your charge is excessive. Your audience would then perceive you as admitting guilt.

By Buffering to only the price, you can explain your rationale in your answer without having to deal with whether the price is too high or worth twice as much.

Two other important benefits of the Buffer are that it distills the long ramble into a clearly identified concept for the rest of the audience, and for you, it tees up your answer.

You’ll note that the hostile question above happens to be the first of the Seven Universal Issues you saw in Chapter Four, repeated here for your convenience:

  1. Price/Cost

  2. Compete/Differentiate

  3. Qualifications/Capabilities

  4. Timing

  5. Growth/Outlook

  6. Contingencies

  7. Problems

The first four represent the most frequently asked types of hostile questions; the latter three are challenging as well, but they are usually worded less aggressively than the first four.

Let’s look at how to Buffer the Seven Universal Issues, starting with the hostile types.

Buffers for the Seven Universal Issues

1. Price/Cost

The question we’ve been considering is one a prospective customer might ask a sales representative:

Wait a minute! You tell me that your product is going to save us money, and then you give me sticker shock with a price that’s twice as much as your competition asks! That’s outrageous! Where do you get off charging so damned much?

You’ll note that I exaggerated the verbiage in the question to underscore the hostility, to raise the bar. Remember, you are preparing for the worst-case scenario. As we address the other Universal Issues, I will turn up the heat on them, too.

The Buffer in this case is:

Our pricing rationale is…

2. Compete/Differentiate

If you were the CEO of a startup company, a venture capitalist might ask you:

There are dozens of startups doing exactly what you’re doing! And then there are all those big companies with their entrenched market share. It’s a jungle out there filled with 800-pound gorillas, and you’re only just getting off the ground! What on Earth makes you think that you can survive?

As with the first question, if you were to answer that you have a competitive advantage or, as some presenters say presumptuously, “The reason we win…,” you would be saying that your questioner is wrong. If you were to repeat the question with the word “survive,” you would be validating the inference that your survival is in doubt.

The Key Word is “compete” or “differentiate.” That’s all. Not “survive” or “competitive advantage.” Deal with only how you compete, not whether you can or cannot.

The Buffer is:

The way we compete/differentiate is…

3. Qualifications/Capabilities

If you were a CEO on an IPO roadshow, an institutional investor might ask you:

You’ve done a great job taking your company from a struggling startup to a profitable player. And your previous experiences with both Microsoft and Amazon are mint. But what you haven’t done is run a public company, and that’s a whole different ball game with a different set of rules. What makes you think you can be any good at that when you’ve never done it before?

If you were to answer that you are fully confident that you can do the job flawlessly, you would be saying that your questioner is wrong. If you were to repeat the question with “What makes me think,” you would be carrying forward the doubt and validating the inference that you are not qualified.

The Key Word is “capabilities” or “qualifications.” That’s all. Not “never done it before.”

The Buffer is:

My qualifications include…

4. Timing

If you were the COO of a startup company, a business reporter might ask you:

Every other player in this space has gone out and raised financing to beef up their sales efforts to bring their products to market. You’ve been operating on a shoestring budget all this time and are only just getting around to seeking financing now. Looks like you may have missed the boat. What’s taken you so long to go out and ask for the order?

If you were to answer that this is the right time to seek financing, you would be saying that the questioner is wrong. If you were to repeat the question with “What’s taken us so long,” you would be validating the inference that you are too late.

The Key Word is “time.” That’s all. Not “missed the boat,” “too late,” or “so long,” because those words are all admissions of guilt.

The Buffer is:

The reason we’re seeking finance at this time is…

A variation of this question is one a prospective investor might ask you if you were the CEO of a company on an IPO roadshow:

Your company has done very well very quickly, and now you’re rushing out the door to go public. But investors like to see a consistent track record. Furthermore, the stock market is experiencing dipsy-doodle, triple-digit swings right now, and investors are laying low. Why don’t you wait until you get a few more quarters of revenue under your belt and see the stock market settle down?

Again, if you were to answer that this is the right time to go public, you would be saying that the questioner is wrong. If you were to repeat the question with “Why don’t we wait,” you would be validating the inference that you are too early.

The Key Word is “timing.” That’s all. If you were to say, “Why don’t we wait,” you would be agreeing that you acted too hastily.

The Buffer is:

The reason we’re going public at this time is…

Note that the Buffers for all the hostile questions distilled and neutralized the essence into single-word nouns or verbs:

  • “Price”

  • “Competition”

  • “Qualifications”

  • “Time”

Now let’s look at Buffers for each of the other three Universal Issues:

5. Growth/Outlook

If you were the EVP of sales, a board member might ask you:

How do you plan to meet your new stretch goals?

Because this is a question that seeks a plan, the Buffer is:

Our roadmap is…

A more challenging form of this question is one a VP might ask you if you were a product manager whose release was late to market:

What are you going to do to make sure that this doesn’t happen again?

The Buffer is the same as the previous but now serves to neutralize the delay and tee up a solution:

Our roadmap is…

6. Contingencies

If you were a VP of strategy, an analyst might ask you:

What are you going to do if your product is late?

The Buffer is:

Our backup plan is to…

A variation of this question is one a board member might ask you if you were a CEO of a startup company:

What are you going to do if you don’t get the financing?

The Buffer is:

Our alternative plan is to…

7. Problems

When audiences are asked to respond to a presenter’s call to action, they always want to know about the risks, the downside, the potential traps, or the problems. Over time, the way such questions are posed has evolved into this particular wording:

What keeps you up at night?

Listen for it in your next Q&A session. Odds are you will hear someone use those very words.

In Chapter Four, I described my recommendation that, in preparing for an IPO roadshow, the company’s management team should solicit a list of questions from diverse groups, including investment bankers, attorneys, auditors, public relations consultants, and investment advisors. Inevitably, the collected lists contain the perennial “What keeps you up at night?” question.

Custom aside, you must answer this question directly by acknowledging any problems, or you will appear to be evasive. Every business has a potential downside. But you can neutralize the downside with this Buffer:

What I think about most is…

Here, too, as with the hostile questions, each of the Buffers for the other Universal Issues was a single word noun or verb:

  • “Roadmap”

  • “Plan”

  • “Think”

Let’s now look at role models of effective Buffering for each of the Seven Universal Issues:

Buffers for the Seven Universal Issues in Action

1. Price/Cost

(Video 13) Watch CNBC’s Full Interview with Uber CEO Dara Khosrowshahi Ahead of Its IPO (0:45) https://www.cnbc.com/video/2019/05/10/watch-cnbcs-full-interview-with-uber-ceo-dara-khosrowshahi-ahead-of-its-ipo.html

When Uber Technologies, the ride-hailing and delivery company, went public, CEO Dara Khosrowshahi sat down for an interview with CNBC’s Andrew Ross Sorkin. After a warm-up softball question, Sorkin’s very next question clearly implied that the IPO was priced too low:

Tell us, in terms of the pricing, $45 a share—which is at the lower end of things—how do you think about that, how do you think about that in terms of your ratings—raising about $8.1 billion is probably less than you wanted to raise.…How do you think about that?

Khosrowshahi did not carry forward Sorkin’s “lower end” or “less than.” He just Buffered to the Key Word:

Pricing a deal is an art, not a science.3

2. Compete/Differentiate

(Video 14) Netflix Q2 2018 Earnings Interview https://youtu.be/xZN_PwZdsLA?t=337

Netflix, the giant content platform and production company, was a pioneer in the now enormous online entertainment space. The company was also among the early pioneers of a new approach to public company earnings calls: converting from the traditional telephone format to a live video discussion—even before the COVID-19 pandemic made Zoom calls the new normal. As another innovation, Netflix arranged for the calls to be moderated by a research analyst rather than the standard practice of “being chaperoned by a company official.”4

In one such call, Sanford C. Bernstein analyst Todd Juenger asked Reed Hastings, Netflix’s founder, chair, and co-CEO, an 800-pound gorilla question about the powerful Walt Disney Company —which Juenger characterized as an elephant—and Disney’s intent to invade Netflix’s turf:

Moving to the other elephant that was already in the room, just checking a bit on the competitive landscape. Obviously, a lot going on between Disney and Comcast and Fox and Sky, so need to check in and—and hear what you’re thinking in terms of what impact on Netflix however that result turns out—and if there’s any particular result better or worse for your own competitive fortunes.

I had the privilege of coaching Reed for his roadshow when Netflix went public in 2002, and he clearly remembered the importance of Buffering:

There’s a lot of new and strengthening competition…5

With this direct Buffer, Reed clearly positioned Netflix as ready to take on all comers.

3. Qualifications/Capabilities

(Video 15) WTO: I Am The Most Qualified for the Job—Okonjo-Iweala [FULL VIDEO] https://youtu.be/XZcVUPaMbnA?t=141

When Dr. Ngozi Okonjo-Iweala was one of eight candidates contending for the coveted role of Director-General of the World Trade Organization (WTO), she was asked a question about her qualifications by Laurent Sierro, a reporter with the Swiss News Agency:

We raised already the question about the fact that there were three candidates for Africa. Was there any question from member states during that session, and could you feel any sense of concern regarding that divide?

Dr. Ngozi went right to the Key Word in her reply:

I hope I’m the candidate that is chosen and is backed because I think I have the qualifications and the leadership characteristics to do the job, and I’m sure Africa will come behind my candidacy.6

The WTO member states agreed with Dr. Ngozi and made her the first woman and the first African Director-General.7

4. Timing

A Forbes article with the subtitle, “Being Too Early Is the Same As Being Wrong…” discussed the failure of a promising mobile health service startup company called Better for “flying too close to the sun.” The article also described CEO Geoff Clapp as “a highly-regarded entrepreneur and mensch”8 who was able to secure support from the prestigious Mayo Clinic and backing from the deep pockets of The Social+Capital Fund. Unfortunately, despite a conspicuous launch of his company at the high-profile Wall Street Journal D:Mobile event in New York City,9 Better never gained traction and shut down three years later.

Tech Tonic podcast host David Shaywitz, looking to provide a lesson for his listeners, invited Clapp for a postmortem about what went wrong with Better. During the discussion, Shaywitz asked a timing question:

Have the timeframes for companies accelerated now? Did you not really have the time to pivot or to hone in on one of those areas?

Clapp Buffered directly to timing and rolled into a candid answer:

I think that—I don’t think it was time. I don’t know. In retrospect, it’s easy to say, “Oh, if we had more time, more money, more whatever…”10

You’ll note that Dara Khosrowshahi, Reed Hastings, Ngozi Okonjo-Iweala, and Geoff Clapp all used single-word Buffers: “pricing,” “competition,” “qualifications,” and “time.”

Each Buffer was a noun. They could also have been verbs, but they should never be adjectives and adverbs. Those parts of speech are value judgments or opinions that carry a bias forward into the answer. Nouns and verbs are clean, neutral descriptors. The goal of a Buffer, like a shock absorber, is to neutralize any negative impact—a vital function in handling hostile questions.

Once you Buffer, you have removed any inherent negativity and can proceed into your answer in full control.

5. Growth/Outlook

Bruce Hasse, the CEO of Extended Stay America, a publicly traded economy apartment hotel chain, announced a new higher-price offering during a quarterly earnings call—and was promptly challenged by Citigroup analyst Smedes Rose, who asked a “How do you plan to get there from here?” question:

We’ve seen in the past, it’s easy for—easier for brands to kind of work down into offering lower price point products. And it’s more difficult to offer higher price point products when you’re coming from a lower base. And just kind of, you talked a lot about the customer research, but I guess what kind of gives you confidence that you can introduce a product at such a significant premium to where you are now?

In the first words of his response, Haase Buffered directly to the company’s upmarket roadmap:

Yes. Well, I think, what we’ve already seen with some of the highly renovated product and the new builds that we have, they’re going to position into the brand.11

6. Contingencies

During a quarterly earnings call by Xiaomi Corporation, the large publicly traded Chinese electronics manufacturer, President Wang Xiang got a contingency question from CITIC (China International Trust Investment Corporation) Group analyst Yingbo Xu, who wanted to know how Xiaomi planned to handle emerging competition in the Artificial Intelligence of Things (AIoT) space:

We noticed that some third-party AIoT part companies [are] trying to enlarge their exposure in AIoT area to empower or enable more home appliance companies to be connected in this area. So how do you see this kind of competition with our AIoT? Considering the competition will we be more ambitious in the AIoT area?

With his Buffer, Wang Xiang made it clear that Xiaomi was ready for any and all competition:

In terms of the AIoT competition, I mean obviously, I think our success has certainly led to many of our competitors wanting to get into this area. I think we are differentiated in a couple of ways…12

7. Problems

(Video 16) Avio CEO: Our Market Is Very Dynamic, Competitive https://www.cnbc.com/video/2017/04/10/avio-ceo-our-market-is-very-dynamic-competitive.html

When Giulio Ranzo, the CEO of Avio, an Italian aerospace company, appeared on CNBC’s Squawk Box Europe, anchor Karen Tso asked him the “What keeps you up at night?” question, but she phrased it this way:

What are the biggest challenges that you see ahead for your company?

Ranzo Buffered in the first words of his reply:

The big challenge is that our market—our reference market, the market of space launchers—is becoming very dynamic, very competitive around the world—and so if we want to compete successfully, we need to be able to go faster, mobilize financial resources to invest.13

In every case above, the Buffer not only neutralized the challenge in the question but teed up an assertive answer.

You’ll recall that, in addition to these Seven Universal Issues, there are variations that are unique to a particular industry or company. Let’s look at three such examples and three role models who Buffered them effectively.

Industry- or Company-Specific Buffers

(Video 17) Snap CEO Evan Spiegel | Full Interview | 2018 Code Conference https://youtu.be/SQYBLeV6sbM?t=32

Although Kara Swisher is a veteran journalist, having reported for the Washington Post, the Wall Street Journal, and now for the New York Times, she asks lengthy questions. Her intent, as it is for any journalist, is to set a context for the question, but the length creates a challenge for interviewees. Here’s such a question Swisher asked Evan Spiegel, the CEO of Snap, the social media company, in an interview at the Code technology conference:

My kids are on Snapchat a lot, especially my 16-year-old, he grew up with Snapchat. I hate to do anecdotal things, but I watch him use it a lot, and he was mad about the redesign, like furious, he was like, “Tell Evan I’m very upset about this.” And I’m like, “I think I won’t,” but he had a whole long list of issues and yet he uses it almost continuously. He’s always on it, he uses it for communication, he uses it, and he does it in such a facile way. So, talk a little bit about this redesign ‘cause it was very controversial, it had an impact on your business, so talk about—walk us through what you think happened and the mistakes you made and what you were trying to do to fix it.

Spiegel extracted “redesign” (a variation of Snap’s product roadmap or plan) from Swisher’s ramble and Buffered to it at the very beginning of his response:

Well, first please thank him for using the service despite the redesign.14

Poppy Harlow is also a veteran journalist, with stops at CBS, NY1 News, and Forbes.com Video Network before her current role at CNN. Harlow posed a question that was only slightly shorter than Swisher’s in an interview with Cisco CEO Chuck Robbins:

Salesforce CEO Mark Benioff told me just last week he has mandated—he has basically put quotas in place—you have to have X amount of women in executive leadership meetings—you have to have X amount of women speaking at these events. Is that what we need, is to make a conscious effort from the top, say, so they’re in the position to get those jobs?

Harlow’s reference to “quotas” was about equal opportunities for women (a variation of Cisco’s roadmap or plan for diversity), but Robbins’s Buffer was one synonymous word, “parity”:

We’ve done all the same work on the parity side.

Then, as he continued on into his answer, Robbins, repeated the Key Word.

We’ve actually invested in the analysis to make sure we understand not only for women but all—all different diverse groups that we have balance and parity in place and we’re doing the same things.15

(Video 18) Elon Musk on Tesla’s Auto Pilot and Legal Liability https://youtu.be/60-b09XsyqU?t=66

During an interview with Tesla CEO Elon Musk, Bloomberg Television News anchor Betty Liu asked him this question about autonomous driving:

Let’s say it’s on autopilot, so it’s not autonomous—ah—but if it’s on autopilot and the driver says, “Hey, you know this was supposed to change lanes for me and instead it hit this barrier. I want, you know, I want Tesla to be responsible for this.”

In the first sentence of his response to Liu’s question (a variation of a contingency issue), Musk Buffered directly to “responsibility”:

I think we’re—we’re going to be quite clear with customers that the responsibility remains with the driver.16

Swisher, Harlow, and Liu—all experienced journalists—intending to establish context, often ask long questions. Spiegel, Robbins, and Musk—all prominent CEOs—must cut through the word salads to appear perceptive and prepared. This ability is particularly important when the issue is a challenge.

The Buffer is also useful in handling another set of questions, which are more challenging in their style and structure than in their substance, as you’ll see in the next chapter.

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