Tim Geithner is having a bad week. Not only has the stock market tanked after he announced Treasury's new plan, but people are coming down on his public speaking style in delivering that announcement. Craig Shirley of Shirley and Banister Public Affairs wrote at Politico that Geithner gave a new meaning to the phrase "deer in the headlights."
This isn't just a problem for people trying to present trillion-dollar bailout plans. Entrepreneurs trying to win over investors for a new start-up might wonder: how important is the style of my pitch, compared to the substance? A new article in the Academy of Management Journal finds that a passionate delivery is not very important for investors' perceptions compared to the overall preparedness of one's business plan.
Here's a summary of the findings:
The research finds that "facial expressions, body movement, tone of voice, and other nonverbal cues" make little, if any, difference, even as they convey the presenter's passion for the enterprise in question.
"In the context of business-plan presentation, there were two distinct but related components...passion and preparedness," explain the report's co-authors, Xiao-Ping Chen and Suresh Kotha of the University of Washington and Xin Yao of Wichita State University. "We found preparedness to be positively related to [investors'] funding decisions, whereas the effects of the perceived passion were statistically insignificant."
The management professors acknowledge that their findings came as a surprise. "Actually, there were two surprises," comments Prof. Chen. "One was that presentation style seemed to matter so little in gaining support -- a finding that may apply not just to venture-capital decisions but to other business contexts, such as job interviews or report presentations in corporate settings.
"And perhaps even more surprising was that the perception of entrepreneurs' passion seemed to count for so little. After all, passion is widely viewed as critical to the success of new enterprises. It is viewed as an indicator of how motivated entrepreneurs are, how determined they are to succeed, and how able they are to convey a vision to employees and motivate them to realize it. Yet, a presentation style that was perceived as conveying passion was virtually a negligible factor in investors' funding decisions."
One of the studies used in the article looked at how 126 MBA students graded two business plans as delivered by a professional actor. One was a business plan that received first-prize at a competition, while the other received eighth. The actor performed each plan two different ways: with passion, and with a flat, monotone voice. Some students saw the former performance, others saw the latter. Overall, the style of delivery did not make a difference in how the students rated the business plans, regardless of the quality of the plan.
Public speaking skills certainly can't hurt an entrepreneur, but this study would suggest that simply hammering out the details of your business plan and being more prepared to discuss it are more important than improving your style.
So Tim Geithner: don't blame your "deer in the headlights" appearance for your plan's cool reception. Wall Street is reeling because of the lack of details.
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