Communicating Bad News in Biotech
Good Communication Builds Respect, Poor Communication Impairs Credibility
In the high-risk world of biotech and life sciences, communicating bad news comes with the territory. Data missing expectations, revenue coming in light or an important member of your leadership team departing suddenly are common occurrences in our industry. The forthright handling of these difficult events is critical to maintaining leadership team credibility - both in the moment and in the future – and reassures analysts and investors that your team is equipped to handle the stress of challenging developments and make the correct strategic decisions under fire.
Here are some tips on how to communicate bad news.
Proactively Scenario Plan before the Fact. All companies, especially public companies, should have an ongoing, multi scenario communications plan in place to help navigate various event outcomes. These plans ensure a rapid and thorough corporate response that will quickly instill confidence that management has the situation under control and is taking the required actions.
Lead with the News and Avoid Spin. Always start with clear and concise messaging about the news you are communicating. Avoid downplaying negative developments, “sugar coating” or spin. Provide straightforward context, and relevant details that analysts and investors can then use to inform their perspectives.
Address Impact and Next Steps. It is important to be transparent around the impact difficult news has on your company, strategic direction or business model. You want to control the narrative – not have the market draw conclusions for you. It is also important to communicate what business decisions have been or will be made because of this news. If additional updates are needed or expected in the future, it is good to communicate what and when.
Anticipate the Tough Questions. Companies can do a good job at messaging news, only to be caught off guard by challenging questions for which they fumble on answers. As part of your messaging preparation, you should be thinking about what questions or details analysts and investors will want addressed. Prepare talking points for your team on difficult topics and practice your answers.
Listen to Negative Feedback. Analysts and investors may express frustration or even anger around certain updates. Maintain a professional, respectful demeanor even if conversations become emotionally charged. Listen to feedback and concerns. Take accountability where appropriate but maintain good boundaries and do not take blame for outcomes on which you have little influence or control.
All companies deal with setbacks at some point in their evolution and investors accept that there is risk involved when investing in the biotech and life sciences sectors - it is part of the game. However, investors have certain expectations about how bad news will be handled and will most certainly be assessing a separate grade on how leadership teams communicate in tough times. Strong leadership teams do not shrink from these moments, instead they lean into them to build confidence, credibility and trust for the road ahead.
Communicating Bad News Effectively Instills Confidence and Can Differentiate your Team. See how we’ve helped shape our clients' messging and drive their IR strategy in our latest case study.