If you have ever leafed through a publicly traded company’s annual report you likely did not make it very far before your eyes starting getting heavy and soon you were soundly asleep. These documents have some of the most vital information you can find about a concern, but it is often presented in a manner that is simply too complex or too dry for the average investor.
The ability to concisely and clearly write means the difference between something being read or deleted summarily upon receipt. Berkshire Hathaway Inc. and its CEO Warren Buffett consistently illustrate the former with the company’s annual report. Buffett’s yearly letter to investors is so legendary and well-known that its yearly iteration has been compiled into a compendium available for sale on Amazon.com. Buffett’s money-making prowess is awe-inspiring to most. However, even though the company employs complex financial vehicles and Buffett himself is almost universally the smartest person in the room, his letter to investor’s is rooted in simplicity, which makes it far more accessible and, ultimately, valuable than those produced by 99 percent of his industry peers.
Here are a few passages from this past year’s letter:
- One thing of which you can be certain: Whatever Berkshire’s results, my partner Charlie Munger, the company’s Vice Chairman, and I will not change yardsticks. It’s our job to increase intrinsic business value – for which we use book value as a significantly understated proxy – at a faster rate than the market gains of the S&P. If we do so, Berkshire’s share price, though unpredictable from year to year, will itself outpace the S&P over time. If we fail, however, our management will bring no value to our investors, who themselves can earn S&P returns by buying a low-cost index fund. (p. 3)
- Our insurance operations shot the lights out last year. While giving Berkshire $73 billion of free money to invest, they also delivered a $1.6 billion underwriting gain, the tenth consecutive year of profitable underwriting. This is truly having your cake and eating it too. (p. 4)
- Above all, dividend policy should always be clear, consistent and rational. A capricious policy will confuse owners and drive away would-be investors. Phil Fisher put it wonderfully 54 years ago in Chapter 7 of his Common Stocks and Uncommon Profits, a book that ranks behind only The Intelligent Investor and the 1940 edition of Security Analysis in the all-time-best list for the serious investor. Phil explained that you can successfully run a restaurant that serves hamburgers or, alternatively, one that features Chinese food. But you can’t switch capriciously between the two and retain the fans of either. (p. 21)
For professional services companies, Buffett is providing a valuable tip – really consider how you deliver your content. His annual letter stands out from others because it takes a unique and refreshing approach. It is the right move to want to inform clients of major changes court decisions and legislative actions. However, when a prospective client receives multiple missives that are nearly identical, how are they to quickly deduce the right one to spend time reading?
Make no mistake; Buffett is not talking down to his readers in his writing, but rather speaking plainly while addressing the various – at times complex – engines that drive Berkshire Hathaway. If he can address acquisitions, derivatives, insurance, than surely issues such as estate tax changes, intellectual property and antitrust can be explained by professional services concerns in a straight-forward, clear, concise and accessible manner.
Strategic communications designed with the end-consumer in mind are vehicles to greater customer engagement and low-cost, high-impact marketing tools. By taking the time to really consider the content, packaging and delivery of corporate communications, professional services companies can be more like Buffett – standing out from the crowd and increasing the organic circulation of thought-leadership material.
(The author is an Extreme Minority Shareholder in Berkshire Hathaway.)