By John Millen
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.
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.
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 today. Give him a birthday wish this week by taking a step to becoming a more effective communicator.
John Millen is an author and communications coach who writes a thoughtful post such as this every Sunday morning. You can subscribe at JohnMillen.com and follow him @JohnMillen.