Key communications learnings from David Riddiford of Apriva.
What would you say is the biggest communications challenge you have faced? How did you overcome it? What did you learn from it?
A big communication challenge was when first I joined a public company as the chief financial officer. They had already been through a difficult year financially and had missed earnings expectations several times, losing credibility with the investor community and shareholders. Too much of the prior investor communications was spin – little acknowledgement of missed targets and promises of better days just around the corner. On earnings calls, the Company would only take analyst questions from those perceived to be “friendly” to the Company, shutting out analysts who wrote negative opinions.
I believed that it was critical to give the investment community a sober and thorough assessment of the issues facing the Company and our strategy for dealing with them. I considered it the investor relations equivalent of a 12-step program: you can’t recover until you recognize you have a problem. I proposed that our first earnings call be a brutally honest and direct assessment of the Company’s issues. As somebody new to the Company, it was easy for me to be objective about the situation – but to the CEO and other executives there, I was asking them to make what was a public admission of failure. It was a difficult sales job internally – at one point the CEO (and founder of the Company) shook his head and said that this would make the stock go down 40 percent. At the same time, I knew the CEO hated being hounded by the investment community and the constant barrage of questions. I ultimately sold the approach as one that would buy him time to concentrate on the business rather than “Wall Street.” He reluctantly agreed. We did the earnings call before the market opened that day and took questions from any analyst who had them. When the market opened, the stock opened 20 percent higher and stayed there.
The lesson learned was that people can handle bad news – as long as they believe you have plan on how to handle it. The only thing worse than bad news is trying to make bad news look like good news: doing that is the quickest way to destroy your credibility.
When handling delicate topics what are the most important things to keep in mind as a communicator?
I’ll reference the above story but add that uncertainty caused by no news, or incomplete new is worse than bad news. People tend to fill in information gaps with the worst possible scenarios – people can take bad news if you give it to them straight.
What experience in your career have you learned the most from?
While not a specific experience, I have found that it was difficult times and challenges that spurred my greatest growth and learning. So – they aren’t fun at the time, but they are valuable to go through.
What do you to unwind?
Things outdoors – I really enjoy fly fishing and backpacking, and the best places to do that are often remote and high in the mountains.
If you had a million dollars, what would you do and why?
I’m a CPA by training – so most would go in a low expense ratio ETF. Sorry!
– David Riddiford, President, Apriva