Clear communications lessons from Warren Buffett, Satya Nadella
Clarity is key.
Renee Sieli is founder of ERPR Group.
Effective communication hinges on audience comprehension. This is increasingly crucial as technology advances and new terms emerge regularly. When organizations address complex topics, simplification is key to ensuring their points are well received and properly understood. Here are some effective examples of simple and clear communications even on obtuse topics.
Avoid assumptions
A common pitfall among executives is assuming that external communication should mirror internal discussions. Industry thought leaders often use acronyms and industry-specific terms when communicating externally, which can obscure their message and diminish its impact. Just because internal stakeholders understand a topic does not mean diverse, external audiences will digest the same information in the same way.
Avoiding jargon is essential when executives address topics they deal with daily. What is familiar to an industry expert is likely unfamiliar to a broader audience. If jargon is necessary, it must be clearly defined.
Warren Buffett exemplifies this in his communications. The annual Berkshire Hathaway meeting serves audiences of both institutional and retail investors, with varying levels of market knowledge. Buffett’s remarks are always straightforward and easy to understand.
Rather than diving into complex details of positions and trading strategies, relying on jargon like “leverage” and “liquidity,” Buffett opts for simple language, as illustrated in this response: “We will have Apple as our largest investment, but I don’t mind at all under current conditions building the cash position.”
Adopt a ‘101’ approach
The best communicators address their audience based on the person with the least amount of knowledge on the topic. Media coverage can serve as a great resource for this approach. Take Matt Levine’s recent coverage of bank transfers in his Bloomberg newsletter, “Money Stuff”:
“Banks have a fundamentally risky business model, borrowing short (by taking deposits) and lending long. In some ways, it would be nice if, instead of banks with risky short-term deposits, somebody else, somebody with long-term funding, did all the risky lending. Banks could take deposits (a risky funding model), and then invest them very safely; other investors could raise long-term equity funding (a safe funding model), and use it to make risky loans and investments. Loosely speaking, this is called ‘narrow banking.'”
Levine’s description of narrow banking is straightforward and makes no assumptions about his audience’s familiarity with the term. He clearly defines “narrow banking” and provides cues for the operations he describes. This approach ensures that his entire audience understands the point he is making.
Spokespeople are most effective when taking this approach in their communication style. One should err on the side of caution, starting with an elementary perspective, akin to an introductory college course. In some instances, topics can be expanded upon to dissect complexities, but the starting point should always be the basics.
Use analogies and examples
Analogies and examples can bridge the gap between complex ideas and audience understanding. Relating new information to familiar concepts makes it more comprehensible, particularly when topics are new or convoluted.
For instance, the proliferation of robotics is akin to the introduction of the computer, and the impact that new technology had on the workplace and productivity in the 1980s and 1990s. Using a historical comparison can be an effective way of communicating a new topic through a scenario that has already come to fruition.
Satya Nadella, Microsoft’s CEO, often uses analogies and examples to describe the journey of digital transformation for businesses. For example, he’s been quoted saying: “If all I’m doing is jumping into this new paradigm to essentially regain the business I already have…then it’s sort of an impossible task. But just imagine a railroad company in the 1930s. If it had conceptualized itself as, ‘we’re in the transportation business’ versus ‘we’re in the railroad business,’ then it probably would have seen the ability to line extend or jump into new businesses.”.”
By avoiding jargon, adopting a “101” approach, starting with the basics, reinforcing your message and using analogies and examples, executives can ensure their points are both understood and impactful. Effective communication not only clarifies understanding but also builds stronger connections with your audience, fostering trust and engagement.
