A man is travelling abroad when he takes a call from his sister: their father has passed away. He can’t return in time for the funeral, so he asks her to take care of the arrangements and send him the bill.
When he returns, he receives a bill for several thousand pounds – which he promptly pays. The following month another bill arrives for £50, and an identical one the month after. When a third bill for £50 is presented, the man asks his sister what’s going on. ‘Oh,’ she says. ‘Didn’t I tell you? We buried Dad in a rented suit.’
Funny, but what’s more amusing is where I read it: in Warren Buffett’s annual letter to Berkshire Hathaway shareholders. Believe it or not, this gag was attached to an essay on long-tail liabilities and reserving errors in the insurance and reinsurance sector.
The annual report of a $360bn (£233bn) international conglomerate might seem like a surprising place for comedy, but not if you’ve followed Warren Buffett’s style of communication over the years. He’s perfected the art of explaining difficult concepts in a simple way, without dumbing them down.
Tomorrow, February 28, Buffett will release his 50th annual letter to shareholders. As usual, investors will scrutinise its predictions. But smart leaders will pay attention to the style rather than the substance – because the folksy, humble way Buffet writes is a rare master class in business communication.
I trawled through half a million of his words over the years to identify the signature techniques that the rest of us can use to write like the billionaire ‘Sage of Omaha’.
Technique #1: The ‘Clarity Kick’
Many leaders think they have to choose between telling the truth and dumbing down. Buffett has found a way to do both: it’s a technique I call the ‘clarity kick’. It’s simple, too. Whenever he dips into drawn-out, complex commentary he usually finishes with a dazzling one-liner:
…several large insurers opted in 1982 for obscure accounting and reserving maneuvers that masked significant deterioration in their underlying businesses. In insurance, as elsewhere, the reaction of weak managements to weak operations is often weak accounting. (‘It’s difficult for an empty sack to stand upright.’)
…our directors are all major shareholders of Berkshire Hathaway. In the case of at least four of the five, over 50% of family net worth is represented by holdings of Berkshire. We eat our own cooking.
The ‘clarity kick’ is a signature of Buffett’s writing. It sews a bow on whatever point he’s making and has the marvellous effect of nobody being left behind. If you don’t understand the essay, you’ll still get the folksy idiom at the end.
Technique #2: Metaphor
Another of Buffett’s communication calling-cards is his love of metaphor. Every page has a creative image that breathes life into a complex financial concept.
Here he explains that, while he doesn’t have any large acquisitions in mind right now, he wants to keep enough capital handy for when an opportunity does show up:
‘Our basic principle is that if you want to shoot rare, fast-moving elephants, you should always carry a loaded gun.’
Below, he’s explaining why he just pulled out of a large acquisition purchase:
‘The empire would have been larger, but the citizenry would have been poorer’
And, finally, here’s an appeal for patience:
‘No matter how great the talent or effort, some things just take time: you can’t produce a baby in one month by getting nine women pregnant.’
Technique #3: Simple Syntax
Senior leaders often tell me that they have to use long words and business jargon - it’s expected of them.
But what’s interesting is if you study Warren Buffett’s writing over 50 years, there’s a correlation between success and simplicity. Basically, the richer he becomes the simpler his writing.
• From 1974 to 2013, the average words per sentence falls from 17.4 to 13.4.
• The age you’d need to be to understand his writing falls from 17 years old in 1974, to just 12 years old in 2013.
Despite all this evidence, I still meet people who are scared to make their writing simple. They say, ‘It's all very well for you, but I have to sound professional. We don't talk like that in my business.’
Usually all I do is tell them: if plain English is good enough for Warren Buffett, it’s good enough for you.
Ian Harris is associate director of communication agency Gatehouse. Download a free copy of his ‘Hooked On You – The Genius Way to Make Anybody Read Anything’ here.