Book Review: Power Questions

Ian Cassel Blog, Book Reviews 3 Comments

Great questions have the power to build immediate connections and deeper relationships in our personal and business lives. A common thread with people that ask great questions is they spend more time listening than talking. I was recently interviewed by Patrick O’Shaughnessy and the last question he always asks his guests is: What is the kindest thing anyone has ever done for you? It’s such a great final question because it ends the podcast with a spirit of kindness and gratitude which humanizes the guest.

As a full-time microcap investor, I talk to a lot of management teams. What you ask, how you ask it, and when you ask it, can mean the difference between acquiring useful differential insights or just wasting time. Chip Maloney wrote a great article on – The Art of Interviewing Management.

Power Questions by Andrew Sobel and Jerold Panas is an excellent book that highlights over 300 essential questions that can lead to deeper meaningful answers. In each short chapter, they highlight a question(s) using their real life professional experiences consulting with hundreds of management teams. They go into detail on 44 of these questions and give a list of 293 more in the back to use in different situations.

Quite often I’ve been on the phone with a CEO or management team and you can sense they want to say more. A simple question the authors talk about which I’d like to use more effectively is “Can you tell me more?” Or when someone is complaining about someone and you need to refocus them on fixing the problem, “What do you wish they would do more of?”

Let me give you an example of a bad question [the authors agree] to ask in a first-time meeting with management:

“What Keeps You Up At Night?”

Early in my investing career I used to ask this question, until one day I asked it to an executive and he replied, “Son, do you expect me to tell you the truth? I don’t even know you”.

He was right. It was a stupid question to ask him, and I immediately took it out of my question set. Don’t expect a personal and real answer from a person you don’t have a personal and real relationship with. “What keeps you up at night?” is an impersonal lazy question to ask someone you barely know.

The first step to asking great questions is listening more and talking less. Power questions can be very potent and influential. Add them to your life.

You will enjoy Power Questions: Build Relationships, Win New Business, and Influence Others

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About the MicroCap Expert Author

Ian Cassel

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Ian is a full-time microcap investor and founder of MicroCapClub, the MicroCap Leadership Summit, and co-founder of the Intelligent Fanatics Project. Ian started investing as a teenager and learned from losing his money over and over again. Today he is a full-time private investor that supports himself and his family by investing in microcaps. Microcap companies are the smallest public companies that exist, representing 48% of all public companies in North America. Berkshire Hathaway, Wal-Mart, Amgen, Netflix, and many others started as small microcap companies. Ian’s belief is the key to outsized returns is finding great companies early because all great companies started as small companies.

Comments 3

  1. I’ve begun a series of interviews of portfolio managers with five year performance in the top 1% of all US portfolio managers. Yesterday I interviewed Jerome Dodson, founder and CEO of Parnassus Funds and did ask the “wake up in the middle of the night” question, and he did his best to answer it and all went well.

    First I asked him what position in his portfolio he felt best about, then which one he worried most about. Then I asked him what he enjoyed most about investing, then what he found most challenging — what he worried about most if he woke up in the middle of the night thinking about a position, if he did that. Of course, talking to management is different than talking to a highly-successful portfolio manager whose skill and thirty year track record are widely recognized, whose position is very secure.

    I’d like to add two thoughts. One is if I anticipate a 1 hour interview I spend about six hours preparing, reading articles about the interview subject, doing an in-depth analysis of their portfolio, and preparing questions.

    Second, I tell them before the interview that the objective is to find subjects (in this case subjects about investing) that most interest THEM. I’ve developed computer software that allows me to comb through their portfolio — hundreds of ratios over the last fifteen years of annual reports and eight quarters of quarterly reports — identifying which companies are improving and which are deteriorating, and which appear undervalued and which are overvalued. I tell them that the objective is to be thought-provoking, to stimulate thought in reader’s minds who are thoughtful about investing. Then I list the companies in their portfolios, according to my analysis, that fall into one of four categories:

    – improving, undervalued
    – best overall improvers whether overvalued or not
    – most undervalued
    – deteriorating

    So going in, the interview subject has a clear idea of what I’m going to ask and why, particularly the most challenging questions. That is a respectful way of treating interview subject I think, so that I’m not springing questions on them that appear like I’m trying to trap them. And I tell them again that:

    (1) I want to talk about what interests them most about investing
    (2) What they’d most like to read in an interview of one of America’s best-performing portfolio managers, including what challenges them most about what they do, and how they do it.
    (3) What they’ve learned from their winners and what they’ve learned from their losers.

  2. I forgot to mention another thing that is crucial and that probably has applicability to interviewing management, but in a slightly different way.

    It is the times that the interview subject has a different opinion, a different tact or perspective, than me that I find the process most valuable. I study the numbers — I’ve put huge thought into detecting trends in the numbers and what those trends mean about competitive advantage (moat), quality of management, risk tolerance of management, etc.. The portfolio manager, or corporate executive, has a much different perspective than me, a deeper, although more biased perspective.

    Said another way, what is most valuable about an interview is where the subject disagrees with me.

    In that way I think it is like the Microcap forum and other forums involving people who think and care about a particular subject matter. Where we disagree with each other, we learn most from each other, provided it all evolves in a more or less respectful way.

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      Author

      Great thoughts Rod. I agree when it relates to business and stock discussion it’s the comments from investors that disagree that are the most valuable, not necessarily the cheerleaders. Continuing to hammer in the same beliefs can be unproductive. Of course the hardest part is thinking about another persons differing opinion in a constructive way and deciding if it does impact your own thought process.

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