“The business grapevine is a remarkable thing. It is amazing what an accurate picture of the relative points of strength and weakness of each company in an industry can be obtained from a representative cross-section of the opinions of those who, in one way or another, are concerned with any particular company”

Phil Fisher, Common Stocks and Uncommon Profits

Over the last six years, we have conducted over 2,500 hours of primary research interviews with former C-Level executives and senior managers. Speaking to people who have years of direct, practical experience can be deeply valuable to develop an accurate understanding of a company. Experienced operators typically know their industry and business better than anyone. Speaking to business operators can also be a source of differentiated insight.

Phil Fisher popularised ‘scuttlebutt’ as a process to build knowledge on industries and businesses by collecting facts and opinions about industries and businesses from a variety of independent sources including competitors, customers, suppliers and former employees. This research process is crucial to building a balanced and holistic picture of any given situation. Ultimately, this is a journey in search of truth, harnessing the experience of people who know the industry and business deeply.

After thousands of interviews, we believe we have made pretty much every conceivable mistake one can make interviewing executives. Our process is borne out of years of trial and error. We are in the process of publishing the In Practise Primary Research Handbook that walks through each stage in our process highlighting some of the most common mistakes made and how to avoid them. In the coming weeks, we will publish separate posts on each stage in the process. This post is the first in the series and a full checklist to complete before conducting any primary research interviews.

Please send any feedback or areas for improvement to hello@inpractise.com.

Pre-interview

Business Analysis

  • Do I understand how this business fits into the wider value chain? Who has power in the value chain?
  • Have I written down in simple sentences what I believe are the core drivers of intrinsic value for the company? What else do I think is important?
  • Do I understand what I don’t know?
  • What information and metrics are reported?
  • What is missing from the company filings that would be helpful? Have I read the competitors’ filings to find similar metrics as a reference?
  • Do I understand the economics of one unit? CLTV? Revenue, fixed and variable costs per unit?
  • Do I understand the bull and bear arguments for the company?

Executive Analysis

  • Do I know exactly how the executive spent their day-to-day at the company? What was the executive paid to do?
  • What were their key responsibilities and who did they report to?
  • How does the executive’s role at X company align with their previous and current roles? Are the roles in a similar industry or function? If not, why?
  • What exactly is the executive’s circle of competence?
  • How did they rise through the ranks of the business?
  • What kind of operator is this executive? Does the executive understand the company from a shareholder’s perspective or is their understanding limited to their specific role within the company?
  • What is the executive’s worldview? Through which lens does the executive look at the business and industry?
  • On what terms is the executive with current management? Still a shareholder? Fired?

Interview

Building trust

  • Have I sent the executive questions and required materials in advance to prepare for the interview?
  • Does the executive understand who I am? Have I been clear about what I’m trying to achieve?
  • How do I build trust and respect with this particular executive? How can I quickly build a sense of kinship? What can I share with this executive to increase the mutuality of the exchange?
  • Which questions do I think the executive will be least comfortable addressing and why?
  • How do I sequence the questions most effectively to make the executive comfortable?
  • How could I get a sense of the integrity of the executive’s opinions?

Asking questions

  • Why does this question really matter?
  • What assumptions am I making by asking this question?
  • What is the most effective line of questioning ? Open-ended, indirect, direct, or a ‘dumb’ question?
  • Am I pushing my own agenda with this question? What do I really think about the company? Can I put this to the side and be guided by the executive?
  • Is there a simpler way to ask the question?
  • How am I structuring the question? Framing? Is it closed? How could it be more open?
  • How can the speaker answer this question? What would be an effective follow up? Do I know an effective counterpoint to a potential answer?
  • If the executive answers X to Y question, what are the second and third-order effects of X?

Post interview

Synthesis

  • How does my assumptions of the core drivers align with what the executive thinks really matters?
  • What new information or facts about the company did I learn? Does any of this new information cross-check with other comments from executives?
  • What opinions did the executive have about the core drivers? How do these opinions compare with consensus?
  • How could the biases of the executive influence their view? Do they have a certain worldview that distorts their answers?
  • How should I handicap the opinions of the executive after considering their biases?

Further research

  • Do I know what is important and not important?
  • How do I gather insight on what I know is important but I still don’t know?
  • Am I looking in the right place for insight on the key drivers? Would a supplier, customer, or else be more interesting for insight?
  • What opinions or views do I need to sense-check?
  • Which type of person could sense-check or provide a different perspective to the executive?