65. Breaking into Jail

The Elephant IS in the Room

Jail break films have long been a staple offering of Hollywood, but in a real life reversal of form, the Los Angeles Times reported that a former prisoner of the California State Prison in Sacramento, one Marvin Ussery, attempted to break into the jail. Although Mr. Ussery claimed that he was only “reminiscing,” prison authorities suspected that he was trying to smuggle in drugs, tobacco, or mobile phones to sell to the inmates. However, a search didn’t find any contraband on him, so his motive remains a mystery.¹

In business, “breaking into jail” has a different connotation: offering negative information voluntarily. Revealing a liability raises doubts in the audience’s minds about a company’s viability. However, there is a very good reason for such revelations: accountability. In presentations, unlike awkward social situations, the elephant in the room cannot and must not be ignored.

In some cases, accountability is mandatory. The Securities and Exchange Commission requires that a company selling stock to the public for the first time must include a “Risk Factors” section in the Prospectus for their Initial Public Offering. But the road show presentation of the offering isn’t required to use the Draconian language of the prospectus. Nor is there such a requirement for countless other routine types of business presentations. Yet all presentations must be forthcoming about bad news, or the presenter will be perceived of as having something to hide.

The challenge is when and how to handle the revelation. The “when” has two options:

• Be preemptive. Include the negative information in the body of your presentation.

• Be reactive. Wait until a question comes from the audience and have a prepared response ready.

Each option has a risk. Offering negative information is “breaking into jail,” or admitting guilt, and raises an issue that the audience may not have considered. Waiting until a question is asked can appear evasive or concealing.

Regardless of which option you choose—and the choice is a judgment call that depends on the situation, the audience, and/or the presenter—you must then make full disclosure by acknowledging the negative. But, as soon as you do, follow up immediately with the actions that you and your company are taking to rectify the problem or to prevent its recurrence.

If your bad news is about

• A down quarter, describe your extra efforts to stimulate new sales

• The loss of a key customer, explain your efforts to win a new customer

• The resignation of a key executive, talk about your search outreach

• A delayed product release, lay out your accelerated production schedule

• A failed product trial, list the corrections you are making

• A critical comment by an important thought leader, find a more positive opinion and quote that person.

This strategy is a variation of the correct method for handling the ritual “What keeps you up at night?” question. Be candid about what keeps you up at night, but immediately follow up with what you are doing about it. Be candid about your company’s bad news, but immediately follow up with what you are doing about it.

Acknowledge that the elephant is in the room, and then lead it out.