Chapter Twelve
The Quid Pro Quo Answer
Case Studies: Code of Hammurabi • Peter Rawlinson, Lucid Motors • Reed Hastings, Netflix • John Legere and Neville Ray, T-Mobile
An eye for an eye, and a tooth for a tooth.1
Code of Hammurabi
1792–1750 b.c.e.
According to the Oxford English Dictionary, the first known use of quid pro quo in about 1535 was a medical reference.2 Since then, the phrase, signifying a “what for what” or even exchange, has expanded to refer to legal documents, business negotiations, social exchanges, and even interpersonal relationships. Quid pro quo is also the perfect guideline for the next step of the Q&A cycle: answering questions. The correct way to answer any question is to tell your audience what they want to know.
After you open the floor—and yourself—to questions, your obligation is to respond in full. Other than questions to which you do not know the answer and the special circumstances in the previous chapter, you must provide an answer to any question from any audience member—the Yin for their Yang. Moreover, your answer must address the Roman Column directly.
But now, having developed a position for each of the Seven Universal Issues and related questions that are unique to your industry or company, you are ready to provide a specific answer to any variation of question you receive, as in Figure 4.4, repeated here for your convenience as Figure 12.1.
Figure 12.1 Match the Variation of the Question with a Variation of the Answer
■ Quid Pro Quo / Seven Universal Issues ■
Here are position statement options for each of the Seven Universal Issues from Chapter Four:
Price/Cost: “Too high?” “Too low?”
Position: Provide a rationale for your pricing; reference added value such as service, compatibility, or long-term cost of ownership.
Compete/Differentiate: “How do you compete?”
Position: Describe your competitive strategy; reference product quality, strong partnerships, intellectual property, or customer testimonials.
Qualifications/Capabilities: “Are you up to the task?”
Position: Cite your relevant experience, prior results, or the broad experience of the team.
Timing: “Too long?” “Too soon?”
Position: Discuss the reason for timing; reference market forces, trends, or company maturity.
Growth/Outlook: “How do you plan to get there from here?”
Position: Describe your roadmap and projected timeline.
Contingencies: “What are you going to do if…?”
Position: Discuss your Fail-Safe strategy.
Problems: “What keeps you up at night?”
Position: Be candid about challenges and add steps you are taking to avoid or correct.
Let’s now look at two examples of quid pro quo responses to valid challenges.
Quid Pro Quo in Action
(Video 35) Tesla Knows This Is a Technology Race: Lucid Motors CEO https://youtu.be/KTgkkawjT0U?t=17
Peter Rawlinson, the CEO and CTO of Lucid Motors, an electric vehicle company, provided direct quid answers to a series of challenging quo questions on CNBC’s Squawk on the Street. The first, by co-host Carl Quintanilla, was his version of the “What makes you think you can compete with the 800-pound gorilla?” question:
Where is Lucid’s place going to be in this industry, given a potential entrant from Apple years from now, but more specifically Tesla, obviously GM, committing so much to the industry, Ford, and even the luxury automakers in Europe, as well, starting to ramp things up. Where do you—where does your company fit in?
Rawlinson, an impeccably groomed English gentleman, standing in front of a glamour shot of a sleek white Lucid vehicle framed by a lush green palm frond, nodded knowingly and, in his crisp British accent, proceeded to describe precisely where Lucid fits:
Well, you see our very first vehicle, the Lucid Air, in the background behind me. And we’re aiming initially—unashamedly—at the luxury space. Luxury cars are dominated by the grandee marks: Mercedes, Audi, BMW, Porsche. They all have one thing in common: they’re all gasoline. So, there isn’t an electric luxury car available in the market.3
CNBC’s irrepressible gadfly Jim Cramer then joined the discussion and, with more than a little irony, asked:
I’m exploring the idea of reserving with a credit card the Air Dream Edition, 161 thousand dollars. Why am I doing that?…How many other people are reserving their various Lucid Airs right now? And can you give me a sense of the demand each day?
Rawlinson smiled at Cramer’s sarcasm and replied graciously:
Well, it’s overwhelming, Jim, and I’m really glad you have impeccable taste, Sir. We have a bulging order book, and it’s growing daily.
Cramer then fired off his variation of the “What makes you think you can compete with the 800-pound gorilla?” question, which he overlaid with a “Why do you charge so damned much?” question—all of it delivered with his characteristic high-pitched voice rising even higher as he implied incredulously that it was complete folly for Lucid to even think of competing with Tesla:
What makes me want to pay this much more than a Tesla? Everybody loves Tesla, don’t they? I mean high consumer satisfaction, that kind of thing!
Without missing a beat, the debonair Rawlinson, with perfect aplomb and his continuing dry assurance, accepted Cramer’s status quo:
You’re absolutely right! I mean, Tesla’s done an ama-a-a-zing job. And that’s what’s placed it in its preeminent position. But Tesla recognizes this is a technology play, this is a technology race. That’s why Tesla enjoys such a high market cap.
Then Rawlinson pivoted to the quid for Lucid:
I don’t really see us as a direct competitor to Tesla in the product. But it is a very valid comparison to compare us with Tesla in terms of our technology.…That’s what differentiates Lucid: in-house technology, world-class electric vehicle tech.4
Although I’ve never had the privilege of meeting the estimable Peter Rawlinson, I have no doubt that he was fully forewarned and forearmed to do battle with Goliath-Tesla questions and to counter them with successful David slingshots.
(Video 36) Netflix Q2 2018 Earnings Interview https://youtu.be/xZN_PwZdsLA?t=335
In Chapter Eight, you read a variation of the David and Goliath match in which the powerful Walt Disney Company, a Goliath in its own right, announced its decision to enter the online entertainment space where Netflix was already a Goliath. When an analyst asked Netflix CEO Reed Hastings about the competitive threat, Reed first Buffered:
There’s a lot of new and strengthening competition…
Then he continued on to a candid quid pro quo acknowledgment of the threat:
…with Disney entering the market—HBO getting additional funding, the different French broadcasters coming together—so that’s all normal and expected. So, it is what it is, we’re not going to be able to change it.
Then asserting Netflix’s position, Reed added:
Our focus is on doing the best content we’ve ever done, having the best user interface, the best recommendations, the best marketing—all the things that we’ve been doing for many years in the past…
Reed then concluded his response by affirming his confidence that Netflix would compete effectively:
…and we’ll keep doing for many years in the future.5
Although Disney represented a genuine challenge to Netflix, and Tesla an even greater threat to Lucid Motors, their respective CEOs acknowledged the issue, and each went on to position his company’s ability to compete effectively.
■ Manage the Time ■
Resist the common temptation to introduce new, tangential information during your Q&A session. Far too many presenters veer off into another presentation after their presentation. Instead, proceed on the assumption that you told a complete story and the only purpose in opening the floor to questions is to clarify or elaborate on the material you’ve already discussed. Unless the audience asks for new material, proceed under that assumption and provide clarifications or elaborations upon request.
Under that same assumption, keep all your answers succinct. Resist the other common temptation to launch into oratory, wax eloquent, or boil the ocean.
Manage the Time in Action
(Video 37) T-Mobile Q4 2019 Earnings Call: Behind-the-Scenes Livestream https://youtu.be/CHPuI289U-Q?t=2303
During a quarterly earnings call with T-Mobile, ten members of the company’s executive team assembled side-by-side at a long table facing a bank of video monitors to field questions from analysts. One of them, Phil Cusick of J.P. Morgan, addressed a question to Neville Ray, the company’s president of technology:
Neville, what do you see an average 5G versus 4G experience for customers so far? Can you talk about utilization of the 5G network today and how customer experience should change as that network fills up?
T-Mobile’s CEO at the time, John Legere, who was stage managing the calls, looked at Ray and, before handing off to him, said:
And now we dare to turn to Neville Ray to discuss the comparative 5G experiences that he sees. And for those of you that need a short break, I would suggest now.
All the executives erupted in laughter, including Ray, who good-naturedly said:
I’ll be brief…I’ll be super quick…6
…and proceeded to give an answer that lasted two minutes and fifteen seconds.
As the head of technology responding to a detail-oriented analyst, that amount of detail was appropriate, but the general laughter was a clear indication of business audiences’ aversion to long answers.
A simple rule of thumb that will serve for most questions in most settings is to keep your answers to a maximum of 60 seconds.
■ The First Three Steps of Q&A Cycle ■
To summarize all that you have learned up to this point:
Listen until you identify the Roman Column.
Buffer with the Roman Column in your Key Word(s) and look for the head nods.
Answer with a succinct quid pro quo.
With these techniques, you’ll be able the control all the Universal Issues and questions specific to your industry or company—as well as the six special types of questions that require special handling in the next chapter.