Communicating Across Time

Investment professionals expect to be judged on the basis of their analytical capabilities, but skill at communicating their ideas clearly is often the deciding factor in terms of how successful they can be.

Of course, that generalization needs to be tempered by the clarification that the balance between analysis and communication varies widely by investment role — and the frequency and type of interactions with others depends on the structure of an organization and its culture (as well as the need to engage with external parties).

Common issues

Two basic problems come up over and over.

The first is a lack of editing, of telling more than should be told under the circumstances.  Whether in a report or a meeting or a presentation, excess detail — relating everything you know (or at least it seems that way to the intended audience) — is the most common trap.  Given the analytical effort it took to form your opinion and the desire to show a command of the material, it’s natural to want to paint an elaborate picture.

Along with that, the casual use of terminology and acronyms with those for whom that lingo is not typical inhibits understanding.  That should be obvious and easily avoidable in a situation where a deep specialist is speaking with someone outside of the investment world, but it happens surprisingly often even in that case.  The same principle applies with sophisticated clients and coworkers too, where the differences in knowledge aren’t as vast but are very real and often not appreciated.*

The passage of time

Just as markets evolve, the tapestry of information from which we draw does too.  Not very many people in the business today can say that they attended one of the annual gatherings known as the Predators’ Ball, although a larger subset lived through the era which it defined, and a greater number still would have read the Connie Bruck book that carried the same name and captured the age.  Using “the Predators’ Ball” without clarification in a presentation today would draw blank looks from most and perhaps a knowing glance here and there.

Language morphs over time too.  What did the people at those Predators’ Balls call the bonds that were fueling their activity?  Junk?  Low grade?  High yield?  All three terms were used widely then; the more respectable-sounding “high yield” has won out over time.  Similarly, “leveraged buyout” is most often now just “buyout,” in part because not all buyouts are leveraged, but mostly because it’s been nice to get that pesky word “leverage” out of the way.

Generational change

There also are broader cultural forces that are changing communication protocols in ways large and small.

To wit, Tim Hanson of Permanent Equity wrote a posting about communicating with someone using a “universally positive and reassuring gesture.”  Or so he thought.

It was the classic thumbs-up symbol.  In fact, he subsequently “learned that Gen Z views the thumbs up as ‘actively hostile’ and an unsettling ‘passive aggressive dig’ and that it’s rude to respond with one,” causing his message to be lost in translation.

To compound the confusion, he found that his lack of an exclamation point in a reply meant it was taken in a different way than he had intended.

Those seem like small things, but Hanson draws a larger conclusion:

Generational differences are real and if not explored in good faith together can be impediments to the growth and development of an organization.

Communication starts with awareness.

New rules

Ted Gioia, an astute observer of cultural developments, published a piece last week on “The 6 New Rules of Communicating,” which was subtitled “The era of teleprompters and talking points has come to an end.”

He wrote:

Western culture was built on one-way communication.  Leaders and experts speak — and the rest of us listen.

But Gioia sees a major shift, with hierarchies “toppling” and “even reversing.”  Consequently:

Here are the six new rules of engagement — for politicians, broadcasters, and all aspiring experts, decision-makers, and leaders.

1. You gain more trust when seated, not standing.

2. Don’t speak at people — speak with them.

3. An informal tone is more persuasive now.  Even leaders must adjust to this.

4. Conversations have more influence than speeches.

5. Spontaneous communications delivered from a personal standpoint are considered more “real” than a script created by a team or speechwriter.

6. Soundbites and talking points are less impactful than storytelling, humor, and off-the-cuff comments.

By and large, investment communication tends to be formulaic and risk averse.  Just look at quarterly updates, fact sheets, stock recommendations, and the like.  Or sit through a slate of meetings with asset managers.  Same old, same old.  Predictable, scripted, and boring.

Will the trends that Gioia foresees spread even into such a hidebound realm?  We’ll see.  Who wants to go first, at the risk of appearing to be “a dinosaur pretending that it’s a ballerina”?

Communicating across time presents real challenges, especially for those who have been around for a while and who are invested in the stories, idioms, usage patterns, and personal styles that have served them well.  But all of us need to consider whether our messages are heard, whether they resonate, and, yes, whether they blend with the zeitgeist.

 

*The Investment Ecosystem offers communication training for investment professionals (individuals and teams, onsite or virtually).  One effective exercise involves trying to explain a concept or a recommendation in different ways across a range of parties with varied levels of knowledge, interest, and authority.