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Warren Buffett

How 3 Billionaires Make Money with Communication

If you can’t communicate and talk to other people and get across your ideas, you’re giving up your potential. You have to learn to communicate in life – it’s enormously important.

–– Warren Buffett

 
Many people are curious as to how wealthy, celebrated leaders – such as self-made billionaires – achieved their success. While there may be untold secrets of the rich and famous, one of their secrets is on display in the public realm: a focus on clear, effective communication.
 
Warren Buffett, widely regarded as one of the most successful investors in history – currently the third-richest person in the world – considers communication skills priceless. 
 
Speaking to Columbia Business School students in 2009, Buffett made a semi-serious offer to invest in the students’ careers for 10 percent of their projected lifetime earnings. He told them he believed they could increase their lifetime earnings by 50 percent through learning effective communication skills.
 
One way to improve your own communication skills is to study the communication styles of successful leaders.
 
Let’s take a look at three billionaires at the top of their games in business and examine their perspectives on communication. All three, Buffett, Elon Musk, and Jeff Bezos, clearly value communication and its role in business leadership. By examining their personal philosophies and techniques, we can gain insight into how their communication as leaders brought their visions to life. 
 
Warren Buffett: Be clear and transparent
Buffett is an advocate of using plain, clear language to explain finance to everyday investors and anyone wanting to understand the financial marketplace. Many industries, from finance to medicine, remain obtuse and confusing in their wording; often it seems to mask the truth. 
 
It can also be plain laziness that prevents succinct writing. If you’ve ever tried to compress a long document into a few hundred words, you know that simplicity takes hard work. 
 
Tell the truth
In 1998, Buffett wrote the preface to A Plain English Handbook: How to Create Clear SEC Disclosure Documents: "I've studied the documents that public companies file. Too often, I've been unable to decipher what is being said or, worse yet, had to conclude that nothing was being said."
 
He added, “In some cases, moreover, I suspect that a less-than-scrupulous issuer doesn’t want us to understand a subject it feels legally obligated to touch upon.” 
 
Buffett is renowned for writing frank and entertaining annual letters to shareholders that document successes but also prominently highlight investment failures by Buffett and his team.
 
Buffett lives his message of clarity and transparency in business communication.

Elon Musk: Kill the bureaucracy
Elon Musk is the revolutionary thinker and leader behind SpaceX and Tesla. I consider him our modern day Thomas Edison. From promoting sustainable energy to pursuing a human colony on Mars, he is a man of vision and action.
 
Musk believes that bureaucracy stifles action. In a memo to all Tesla employees a few years ago, Musk decried the corporate hierarchy that slows progress in most big companies, and encouraged employees to buck the chain of command at Tesla:
 
Instead of a problem getting solved quickly, where a person in one dept talks to a person in another dept and makes the right thing happen, people are forced to talk to their manager who talks to their manager who talks to the manager in the other dept who talks to someone on his team. Then the info has to flow back the other way again. This is incredibly dumb. Any manager who allows this to happen, let alone encourages it, will soon find themselves working at another company. No kidding.
 
Musk said this archaic approach enhances the power of the manager but degrades the power of the company to serve its customers. So Musk declared that:
 
Anyone at Tesla can and should email/talk to anyone else according to what they think is the fastest way to solve a problem for the benefit of the whole company. You can talk to your manager's manager without his permission, you can talk directly to a VP in another dept, you can talk to me, you can talk to anyone without anyone else's permission.
 
Like Buffett, Musk also believes that plain, precise language is critical for success. Musk urges employees to avoid the jargon that prevents straightforward communication.
 
Drop the jargon
In a recent email to Tesla employees about plans to improve Model 3 production, Musk cautioned, “Don’t use acronyms or nonsense words for objects, software, or processes at Tesla. In general, anything that requires an explanation inhibits communication. We don’t want people to have to memorize a glossary just to function at Tesla.”  
 
Jeff Bezos: Stop the PowerPoint
Jeff Bezos is the founder and CEO of the world’s largest online retailer, Amazon.  While a New York Times article recently referred to him as “a brilliant but mysterious and cold-blooded corporate titan,” it is evident that there is a method to his madness, making him currently the richest man in the world.
 
Bezos is known for his annual letter to shareholders as well as Amazon's innovative leadership principles. In his 20th anniversary letter published this year, Bezos shared his preferred method of communication during meetings: well-reasoned memos. But they aren’t just any memos, they are narrative essays.
 
Write your narrative
In fact, Bezos has banned PowerPoint and slide presentations at Amazon meetings. Instead of relying on the crutch of slides, an executive must create a six-page “narratively structured” document spelling out a proposal or issue. The memos are read silently at the beginning of executive meetings as a type of “study hall” for 30 minutes before beginning the discussion. Not surprisingly, some of the memos are excellent, while others are lackluster. 
 
After acknowledging the difficulty of pinpointing the exact details that create an exceptional memo, Bezos came to an interesting conclusion:
 
Often, when a memo isn’t great, it’s not the writer’s inability to recognize the high standard, but instead a wrong expectation on scope: they mistakenly believe a high-standards, six-page memo can be written in one or two days or even a few hours, when really it might take a week or more!
 
As with any thoughtful communication, a great narrative requires a concerted effort. It’s like the story from Mark Twain – he apologized to his friend for writing a long letter because he “didn’t have the time to write a short one.”
 
It takes writing, rewriting, and more editing to create an effective narrative.
 
Excellent communication also takes time, effort and focus. I’ve worked with CEO’s and other senior leaders who put communication at the bottom of their priority list as they pursue activities with what they perceive as a “higher ROI (return on investment).”
 
Yet the truly enlightened and successful leaders I work with realize that communication is fundamental to the success of their businesses and their careers. As the president of one company said to me recently, “We can have the perfect strategy but if no one understands it, it’s worthless.”
 
So true. Bezos, Buffett, and Musk illustrate the importance of continuous improvement in your leadership communication.
 
Your communication
How about you?
 
Do you recall a time when you heard yourself saying, at work or at home, “that’s not what I meant!”?
 
Do you and your team use clear language or do you tend to use jargon? 
 
Do people in your organization maintain the hierarchy, or are they free to communicate with anyone that can help to solve a problem?
 
Your answers to these questions might not make you a billionaire, but you’ll be on your way to better results through clearer, more effective communication.

Just use our contact form to let me know what communication obstacle you run into in your organization.

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Warren Buffett’s 5 Secrets of Communication

In my work with CEOs and other C-suite leaders, I sometimes have executives question the work required to prepare for presentations. They ask, “What’s the ROI [return on investment] of communication?”

Not being glib, I like to tell them that effective communication is priceless.

That's because without communication there's no leadership, no sales, no investments and no results. Try to think of a function or relationship that works without communication. If you come up with one, please hit reply and let me know.

Communication is at the heart of everything in business and life, which brings us to Warren Buffett.

“Warren Buffett is an investment genius, folksy entrepreneur, and committed philanthropist with deep convictions and integrity.”

I put that in quotes because that’s my view of Warren Buffett’s brand, which the iconic investor has built and reinforced through his actions and approach over his lifetime. 

(The book  Tap Dancing to Work, is a great compilation written by a Fortune Magazine reporter who has covered Buffett since 1966 and became a friend.)

While Buffett’s investment acumen is well known, making him the second richest person in the world, less attention has been paid to his secret weapon: a skillful commitment to effective communication.

Buffett believes so strongly in the importance of leaders being effective communicators that he offered his own return-on-investment estimate for effective communication:

1. Realize Your Return on Investment

In a televised talk with Columbia Business School students in 2009, Buffett made a semi-serious offer to invest in the students’ careers for 10 percent of their projected lifetime earnings. He told them he believed they could increase their lifetime earnings by 50 percent by learning effective communication skills.

"Right now, I would pay a hundred thousand dollars for 10 percent of the future earnings of any of you. So, if anyone wants to see me after this is over ... (laughter and applause). If that's true, you're a million-dollar asset right now, right? If 10 percent of you is worth a hundred thousand?

“You could improve on that.… If you improve your value 50 percent by having better communication skills, it's another $500,000 in terms of capital value. See me after the class and I'll pay you $150,000. (Laughter and applause.)"

He’s said the same thing more seriously in other interviews and student talks since then.

With this in mind, here are a few tips for you, which I derive from Warren Buffett’s life and approach to communication:

2. Fight Your Fear of Public Speaking

Buffett, who speaks to thousands of shareholders who attend his company’s annual meetings, was “terrified” of public speaking in high school and college. He said he arranged his classes so he wouldn’t have to speak in front of people.

While at Columbia Business School he even signed up for a Dale Carnegie Course for $100, then lost his nerve and canceled payment on the check.

But when he moved to Omaha and started in the securities business at age 21, he knew it was time to face his fears and enrolled in a Carnegie course.  “If you can’t communicate and talk to other people … you’re giving up your potential,” he realized. So Buffett sat with 30 other people who were “terrified of getting up and saying our names.

“Schools, to some extent, underemphasize that. If you can’t communicate and talk to other people and get across your ideas, you’re giving up your potential. You have to learn to communicate in life—it’s enormously important,” Buffett says.

3. Force Yourself to Start Early

Buffett said it’s also important to develop solid communication skills as early as possible. In an interview with a career website for young women, Levo League, Buffett said that to overcome fear you need to put yourself out there, “You have to do it. And the sooner you do it, the better. It’s so much easier to learn the right habits when you’re young.

“If you have a fear of associating with people, you have to go out there and do it, and it’s painful… When I was young and completed the [public speaking] course, I was worried I would lapse back … so I started teaching a class at night and, you know, you’ve got to force yourself to do some things sometimes.”

The bottom line, said Buffett, is to “just get yourself out there and force yourself to get into situations with people. Most of them don’t bite!”

4. Be Transparent

Buffett is well known for his Berkshire Hathaway annual shareholder letters, which are instructive, easy to understand, and, for me and my fellow nerds, fun to read. They are also blunt about failings—both the company’s and his.

For example, while other CEOs run from mistakes, Buffett owns up to his. As in this 2013 Annual Letter:

Don’t you wish upon a star: Your chairman has not been free of this sin. In Berkshire’s 1986 annual report, I described how twenty years of management effort and capital improvements in our original textile business were an exercise in futility. I wanted the business to succeed and wished my way into a series of bad decisions (I even bought another New England textile company). But wishing makes dreams come true only in Disney movies; it’s poison in business.

You can read or download any of Buffett’s Annual Letters all the way back to 1977 on Berkshire’s website. On Amazon, you can also check out this book of Buffett’s compiled annual letters.

5. Use Plain English

Related to transparency is using simple, clear language to explain things. Many industries, including financial services, hide behind obscure language and jargon to mask the truth of their situations. Or, they’re too lazy to do the work to simplify their messages.

Buffett has long been a public advocate for using simpler language to give everyday investors and anyone involved in the financial marketplace a clearer understanding of business and finance.

In 1998, he wrote the preface to A Plain English Handbook: How to Create Clear SEC Disclosure Documents: "I've studied the documents that public companies file. Too often, I've been unable to decipher what is being said or, worse yet, had to conclude that nothing was being said."

Buffett added, “In some cases, moreover, I suspect that a less-than-scrupulous issuer doesn’t want us to understand a subject it feels legally obligated to touch upon.”

For the close of his preface, Buffett offers advice that is useful for any writing or speaking you do:

One unoriginal but useful tip: Write with a specific person in mind. When writing Berkshire Hathaway’s annual report, I pretend that I’m talking to my sisters. I have no trouble picturing them: Though highly intelligent, they are not experts in accounting or finance. They will understand plain English, but jargon may puzzle them.

My goal is simply to give them the information I would wish them to supply me if our positions were reversed. To succeed, I don’t need to be Shakespeare; I must, though, have a sincere desire to inform. No siblings to write to? Borrow mine: Just begin with “Dear Doris and Bertie.”

This is sage advice from a communication expert, who happens to manage money.

Warren Buffett turns 86 this Tuesday. Give him a birthday wish this week by taking a step to becoming a more effective communicator.