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Should You Listen to Your Customer

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Submitted By henry128
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EXPERIENCE

hbr.org

Case Study

Suraj Srinivasan is an associate professor at
Harvard Business School.

Terranola was everyone’s favorite company until an investor went on the attack. by Suraj Srinivasan

The Experts

A Short-Seller
Crashes the
Party

Guy Gresham, managing director, BNY Mellon

Illustration: Maria Raymondsdotter

Dan Mahoney, director of research, CFRA

HBR’s fictionalized case studies present dilemmas faced by leaders in real companies and offer solutions from experts. This one draws on the HBS Case Study “Trouble Brewing for Green Mountain Coffee Roasters” (case no.
113035), by Suraj Srinivasan and Michael Norris, which is available at hbr.org.

W

hen the well-known hedge fund manager and short-seller
Jeremiah Hughes first put Terranola in the spotlight, issuing ominous warnings about unsold products, a looming patent expiration, and flawed growth projections, the considered judgment of the company’s executive team was to do nothing. “I refuse to dignify this attack with a response,” said Henry Guillart, the CEO, after
Hughes gave his negative presentation at an investor conference in New York. That decision turned out to have serious consequences. Terranola’s stock began tanking that afternoon, precipitating a slide that took the Seattle-based company’s reputation, employee morale, and ability to raise capital along with it.
A month later, when Hughes spoke again about the company, everyone expected Terranola to counter. But behind closed doors, its leaders were torn: They

realized that responding this time might lead to even more trouble.

The Power of the Power Bar

First some background. Terranola is the company behind those granola bar machines you see on every kitchen counter nowadays. It’s hard to believe that little more than a decade ago people didn’t even think of making

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