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Bad news needs to travel the fastest

I had a great conversation this week with one of our community members, and something he said stuck with me; "bad news always needs to travel the fastest".

And I wholeheartedly agree. 

A couple of weeks ago, I mentioned that investors can become sceptical even with excellent news if they don't feel like they're in a position of equal information. 

When something sounds too good to be true, there must be something else they're missing. That's the effect of information asymmetry at play.

That's why even good news needs to be delivered via a well-crafted campaign, or else it will simply fade into the media void. 

The same principle applies to bad news, with one difference. 

A piece of bad news delivered the wrong way doesn't fade away but grows. 

And the last thing you want with bad news is to make it worse. 

 

Hold Your Phone

Let's reframe this as an example. 

Hold your phone to the side, with your arm parallel to the floor. 


Do that for a few seconds, and you're only going to register the initial action - you can feel it, but it's not an issue yet. 


Stretch that out for a few minutes, and you'll only be thinking about how tired your arm is - now it’s an issue! 


Remember, the phone's weight didn't change, but you're looking at two different outcomes.


And what started as a bit of exercise has compounded into a feat of endurance. 

Bad news works exactly the same way. Or as I like to think about it:

Impact = Mass * Time

The impact of bad news equals the weight, or mass, of that news, multiplied by the time spent handling it.

It's pretty difficult to change the underlying weight of your news; that's just fundamental to what the news is. 

Where you can make the most impact is the time spent handling or how you handle it. 

 

Treat bad news like a hot potato.

As the captain of the ship; it's your job to manage risks and downsize damage across the board. 

And the good news for you is you're already doing this in other parts of your business (product, staff, customers).

Whether it's a brilliant-jerk employee damaging your company culture or a project failing to deliver on expectations, you're already adept at minimising the impact by nipping problems swiftly in the bud.

So do the same with your investor newsflow, especially the bad news.  

  • Don't prevent bad news from reaching you.
    Be one of the first to know when there's a problem. This can be the most challenging hurdle to overcome. Ensure your team isn't hiding problems from you for fear of retribution or reaction.

  • Stay ahead of it.
    Ensure you are across how the company handles it, track its status, and ensure the matter is handled swiftly

  • Be proactive with your communications.
    Once you have the complete picture, make a plan to communicate to all necessary stakeholders, including investors, as quickly as possible. The rule of thumb here is that if there is a risk of rumour or speculation, then it's best to be on the front foot.

  • Don't dramatise it.
    It is still bad news; you need to keep people informed - quickly - but don't talk it up or drag it on

  • Move on.
    This goes without saying: don't revisit the bad news! Move on and refer to your statement or release if investors or media ask questions in the future.

Spend as much effort (if not more) as you would on a piece of good news because bad news can be that much more impactful on an investor's sentiment towards your company.

Do you have any bad news you have been sitting on? Sort it out and communicate it before your arm falls off!

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I had a great conversation this week with one of our community members, and something he said stuck with me; "bad news always needs to travel the fastest".

And I wholeheartedly agree. 

A couple of weeks ago, I mentioned that investors can become sceptical even with excellent news if they don't feel like they're in a position of equal information. 

When something sounds too good to be true, there must be something else they're missing. That's the effect of information asymmetry at play.

That's why even good news needs to be delivered via a well-crafted campaign, or else it will simply fade into the media void. 

The same principle applies to bad news, with one difference. 

A piece of bad news delivered the wrong way doesn't fade away but grows. 

And the last thing you want with bad news is to make it worse. 

 

Hold Your Phone

Let's reframe this as an example. 

Hold your phone to the side, with your arm parallel to the floor. 


Do that for a few seconds, and you're only going to register the initial action - you can feel it, but it's not an issue yet. 


Stretch that out for a few minutes, and you'll only be thinking about how tired your arm is - now it’s an issue! 


Remember, the phone's weight didn't change, but you're looking at two different outcomes.


And what started as a bit of exercise has compounded into a feat of endurance. 

Bad news works exactly the same way. Or as I like to think about it:

Impact = Mass * Time

The impact of bad news equals the weight, or mass, of that news, multiplied by the time spent handling it.

It's pretty difficult to change the underlying weight of your news; that's just fundamental to what the news is. 

Where you can make the most impact is the time spent handling or how you handle it. 

 

Treat bad news like a hot potato.

As the captain of the ship; it's your job to manage risks and downsize damage across the board. 

And the good news for you is you're already doing this in other parts of your business (product, staff, customers).

Whether it's a brilliant-jerk employee damaging your company culture or a project failing to deliver on expectations, you're already adept at minimising the impact by nipping problems swiftly in the bud.

So do the same with your investor newsflow, especially the bad news.  

  • Don't prevent bad news from reaching you.
    Be one of the first to know when there's a problem. This can be the most challenging hurdle to overcome. Ensure your team isn't hiding problems from you for fear of retribution or reaction.

  • Stay ahead of it.
    Ensure you are across how the company handles it, track its status, and ensure the matter is handled swiftly

  • Be proactive with your communications.
    Once you have the complete picture, make a plan to communicate to all necessary stakeholders, including investors, as quickly as possible. The rule of thumb here is that if there is a risk of rumour or speculation, then it's best to be on the front foot.

  • Don't dramatise it.
    It is still bad news; you need to keep people informed - quickly - but don't talk it up or drag it on

  • Move on.
    This goes without saying: don't revisit the bad news! Move on and refer to your statement or release if investors or media ask questions in the future.

Spend as much effort (if not more) as you would on a piece of good news because bad news can be that much more impactful on an investor's sentiment towards your company.

Do you have any bad news you have been sitting on? Sort it out and communicate it before your arm falls off!

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