Category Archives: Strategy

Words That Work Dr Frank Luntz | Summary

The following is a quick summary of Words That Work by Luntz published in 2007. This summary is not an endorsement of Luntz or his partisanship. Professor Nerdster is intellectually free to explore ideas regardless of source. Being intellectually free is a precursor to problem solving, join the club.

Narrow the Gap Between What You Say and What Your Listener Hears

  • The fact is that people will misinterpret what you were saying and intentionally or accidentally project what they understand into your words. Just as in 1984, when Winston Smith is exposed to the one thing he fears the most….rats, listeners will shape whatever they are perceiving in their own unique way. So through a career of listening to what people say and focus groups Dr. Frank Luntz has come up with some overarching principles around what words work and which ones do not in the US. So in effect this book is actually about persuasion. However, it’s also to narrow the gap between what you say and what your readers or listeners interpret. Because it’s truly not what you say, it’s what people here.
  • Note there is partisanship in Frank Luntz’ thinking. Dr. Frank ‘s published a new article called American lexicon which laid out a pro-business right wing agenda in terminology that would be appealing to centrist voters. Luntz-Speak. And then Luntzy Award. Harsh and ideological people have railed against Luntz for years.
  • Luntz is always trying to get the support of centrists. He also seeks to listen then find language that works.
  • Manipulation is neither good or bad. It’s all manipulation. Artists know this well. Any parent, we know it.

Luntz’ 10 Rules

Listen to the public, emotional and rational and day to day interaction. It is what people say:

  1. Simplicity: Use simple words: average American doesn’t know the different between deficit and debt: MI3 is better than Mission Impossible 3
  2. Brevity: Never say 4 words when you can say it in three. Simple beats complex.
  3. Credibility: is as important as philosophy. Set expectations lower and the best expectations. So, expectations can sink a campaign. 
  4. Consistency: Do not have a bunch of different talking points and new campaign ideas during your campaign season. Repeat yourself, repeat your message, focus on the same lines over and over again to get your message through because people don’t really remember. You will get confused if you have a bunch of different tag lines.
  5. Novelty: We like truly new and different things. Brand new ideas that take on an old idea, have mass appeal.
  6. Sound and Texture of Language: Think Different. i’m lovin it. Are effective because of how they sound.  
  7. Go for the inspirational.
  8. Visualize: don’t tell, show! Draw pictures in people’s minds. Ask people to imagine. 
  9. Ask a Question: Ask the participant a rhetorical question. 
  10. Context: You have to provide context: you need to have relevance. 

The target, everyone can immediately remember you never leave home without it: American Express. 

Visual impact is the most important and striking power; speaking in front of your national flag, for example.

Language Is Often Used to Obscure

  • Beltway or insiders language is not appropriate for the general public: inside baseball is a big communication mistake.
  • For example, using terms like cloture. There is a reason that few senators make it to the presidency? They speak the language of the insider. How can you even talk about filibusters? The general public doesn’t care.
  • It’s about getting things done it’s not about the procedural rules of the subcommittee cloture filibusters all the technical deadlock components that impact the legislative process. People really just want you to get things done.
  • Language is frequently used as a tool to obscure rather than to enlighten to control and it has their influence on monster closed off group.

The Sequence of Information Matters

  • The order of presentation really matters if you have a background presentation and then some theory and then have the actual presenter talk can I actually be more effective than having the presenter talk and then provide the background this is what once found out during the Ross Perot campaign in 1992.
  • Using analogies like sports or war is a very male centric way of describing politics I just genuinely harmful especially one woman you’re such an active part of the democratic process. 
  • Women appreciate being listen to more than having the right questions asked. There’s also a strong FSS on not trash in the competition and according to Lance women typically respond better to storytelling anecdotes and metaphors where’s mom respond better to economics rational engineering I’m pretty sure this is already out of date. 
  • If you talk about a government program then the hostility is significant but if you describe welfare as assistance to the poor you’re going to get a very positive reaction. Atwater called them Welfare Queens. Assistance to the poor was supportive. 
  • Focus on results not the means for example crime reduction is way more popular than law-enforcement. Also note that crime reduction could have many variables input it into the outcome beyond the lawn Forsman a police officer interventions and as such it’s more catchall and more popular as a term.

Be The Message

  • If you are known by your first name that’s a very strong compelling case that you have a brand. No kidding. Building your own brand is very challenging. Living by your values is very compelling.
  • John Kerry talked about his work in Vietnam War. The key is you have to show, don’t tell. George W. Bush never fought in any war but she used tough language that suggested he was tough on the topic. So it’s better to act and show them to tell that you are some thing or another.
  • Giuliani was someone who campaigned on his working class background, his work ethic and the ‘why’ behind all of his positions. He always provided that context.
  • And this is the case too with John McCain who was a maverick but basically was right wing however journalists got great news stories from him and he was entertaining.
  • When John McCain and George Bush were appearing on competing talk shows Jay Leno and David Letterman. George Bush just sat there and took all the criticism and giggled where as John McCain made a strong effort to try to be funny. Journalist thought John McCain had done a better job but in the truth of it, George W. Bush was more compelling by being folky and more authentic.
  • Words that work language alignment, product and derive, you should try to establish personalization. We buy the product that we have a brand association with. Language of Cheerios is a compelling 
  • How our language is said. 

The Words That We Remember

  • Memorable movie lines. Fiction is more Powerful for revealing truth than truth. 
  • “Bring it on” as if Bush was inviting violence. That was a mistake.

Contract with America

  • Most effective campaigning is about being sensitive to word choice, using focus groups to tease out what works and what does not. For example, the Contract with America. The ‘contract’ was more effective than the ‘covenant’ or the ‘new deal’.
  • So the contract with America was put into the TV guide the The first of the 10 items was important and the last of the 10 items was important because they figured that’s what people would read if they had to skim the list quickly. And it was contractual in the sense that it had the word contract in it but it didn’t obligate the legislators to not seek reelection if they fail to achieve that goal.
  • The 10 point list was easy and eye-catching. The Democrats felt that it was a mistake to provide concrete guarantees that they could then easily break down and attack. But folks were really cynical and tired of triangulation.
  • There’s a big difference between not giving and denying when it comes to healthcare. Newt Gingrich felt that the Republican Party should have define itself as the compassionate party. The other aspect of this that was interesting was that Franklin’s claims using the word promise as a politician is an absolutely horrendous mistake never promise anything. Never use the word promise.
  • There was a debate as to whether decreasing future spending on Medicare was considered a cut the public felt that it was not considered a cut.
  • Eisenhower came up with the sound bites, the ’30 second’ spot.
  • Retirement security is way more effective than Social Security. Everyone wants to be secure in their retirement.
  • It was successful politically liters find ways to get you to imagine. Sympathy, passion. You need to appeal to something far greater. 
  • Federal civil servants are viewed as having no accountability. Is there an enforcement clause in the Contract with America?
  • Customers are actually looking for simple answers to complex problems they wanna lose weight they want a solution for that. They want to have a ruthlessness if they are spending their money around what they’re going to get. They love to see the things are going to be specifically delivered.

More Words That Work

  • Imagine! 
  • Hassle-free!
  • Accountable!
  • US culture is driven by three major things: I can do attitude, self-reliance and optimism.
  • Rekindle renew revise reinstate refresh these are all calls to return to a prior default. Redesign rebuild restore revitalize reform and renew.
  • Efficiency and being efficient are also great however they might be closet words for cuts.
  • Having the right to choose is also a powerful communication approach.
  • Patient-centred resonates because it draws an unspoken conscious link with dollar centred or insurance centred medicine. The last thing you want to be concerned about when you’re dealing with one’s loved ones care is dollars and cents. All you care about at that point is your loved one. 
  • Casual elegance!
  • Independent! Independent candidates. You need to declare independence. 
  • Peace of mind!
  • Certified!
  • All-American!
  • Prosperity!
  • Better jobs! 
  • Spirituality! 
  • Financial security!
  • Balanced Approach! For the people, no need to a new civil war.
  • A culture of!!!! 
  • Straight talk express with John McCain!

Never Say…

  • Never say entrepreneur say small business owner;
  • Never say tax reform say tax simplification;
  • Never say foreign companies say international companies;
  • Never say undocumented when you mean illegal immigrants;
  • Never say drilling for oil say exploring for energy;
  • Never never deny something just do not give;
  • Never say global economy globalization or capitalism talk about free market economy;
  • Never say vouchers say school choice;
  • Never say outsourcing talk about taxation regulation litigation innovation education and legislation;
  • Never say inheritance tax or estate tax call it a death tax;
  • Never say crime or criminals talk about public safety;
  • Never say interpretation when you mean analysis;
  • Never say capital markets what you you mean investor public interest;
  • Your schools, your hospitals, your taxes. our schools, our hospitals, our taxes. 
  • Optimism sells, pessimism dwells.

Labour Disputes

  • Don’t say peace of mind being rewarded compassion commitment listen to employees find common ground comprehensive contract balance instead say security being valued fairness respect responsibility keeping promises respecting employees negotiating in good faith long-term contracts fairness and common ground
  • Don’t say the union is biased objective union leader should not hold local employees hostage over national issues when are union strikes against a company it isn’t just hurting the company if the union chooses to strike have a legitimate right to stay open it is the unions fault not ours if that workers have to walk a picket line instead say full disclosure you have a right to hear all sides accurate local problems require local solutions no one wins in a strike we won’t do whatever we can to avoid a stroke if there is a stroke will do whatever we can refill our responsibility to a customers.
  • Never say corporate accountability say corporate responsibility. 
  • Scum literally means a used condom I did not know that.
  • Important truths about politics voters pick their candidate based on the issues or the policy. Definitely not the case in fact voters look at the attributes the personality image vibe of the candidate more so. The candidates brand.
  • Nostalgia doesn’t really sell in the political arena you should be looking forward not to a bygone era that feel remembeedr.
  • People read books? No people don’t read, people don’t read newspapers, people watch Netflix. If you want to get your ideas disseminated then you should try to get your content converted into a format that people consume. YouTube visual storytelling.
  • People are educated? No most people actually aren’t educated so you better simplify your messaging otherwise you’re not gonna get it and then you’ll have the educated people as gatekeepers to try to explain your policies or ideas through them.
  • Want a promotion? Use Imagine in sentences

Value(s) by Mark Carney: Chapter 14: Values in Companies: Key Takeaways / Analysis / Citations

Chapter 14: Values in Companies

Key Takeaways

Carney starts out with the history of companies as a concept and what asks what is the purpose companies? It is not simply to make a profit, but rather to create value which is only partly quantified in the form of profit. For Carney, purpose requires balancing dynamism, fairness(?), solidarity (with employees and community), sustainability (across generations) and responsibility.

As John Kay put it…“Profit is no more the purpose of business than breathing is the purpose of living.” And so you need to make a profit to operate just as you need to breath. But it is not the purpose of business. Who owns the company? Shareholders do not own the companies to which they hold stock

Wedgwood as the Model of a Modern Major Capitalist:

  • What is the company for? Carney suggests it’s more than profits. Josiah Wedgwood is the example of a capitalist that made life better for customers by democratizing.
  • He was born as the industrial revolution was taking off.
  • He tracked 5,000 changes in experimentation to understand how to make the perfect pottery.
  • He was an abolitionist icon.
  • He built a town with amenities to support his growing factory.
  • He was an ardent economic nationalist, admits Ricardian Carney.

Five things that change us in a crisis;

1)      Triggers a revaluation of what we value…

2)      Triggers a shift in what we value…

3)      Triggers an improvement in reporting…

4) Triggers cause resilience…

5) Triggers embed responsibility…

1st for Carney, a crisis triggers a reevaluation of what we value. In prior chapters, showed that the crisis was caused partly by:

·         the underpricing in risk and the lack of supervising and off-loading responsibility to the wisdom of the market in Chapter 7’s breakdown of the Financial Crisis;

·         the years of undervaluing resilience, with states failing to protect citizens despite ample warnings in Chapter 9’s breakdown during Covid;

·         the tragedy of the commons where we aren’t pricing pollution as the producers problem (externality)

2nd for Carney, a crisis changes our appraisal of value and values. Who benefits from these shifts? Shareholder, stakeholders are disrupted through change….

The Covid crisis caused:

·         a reappraisal of value and values

·         a reset by companies

·         a social resets by countries

·         accelerated move to e-commerce,

·         accelerated shift to e-learning

·         accelerated shift to e-health

·         a reorientation of supply chains from ‘just-in-time’ to ‘just-in-case’

·         greater consumer caution

·         widespread financial restructuring (sees a stretched)

3rd for Carney, crises are a catalyst for new reporting of systematic risk.

·         1929 Wall Street Crash (crazy speculation by everyday people using loan money) + Roosevelt’s New Deal = creation of the Securities and Exchange Commission to protect the investors and  efficient markets. The SEC then also triggered the creation in 1936 of GAAP (generally accepted accounting principles) which became the global standard to ensure financial data could be reliably counted on.

·         2008 Financial Crisis = reporting for OTC derivatives, reduce the influence of shadown banking, new rules for securitization, accounting standards such as IFRS 9 was developed. IRFS includes what the expected losses are which provides more clarity.

·         The Climate Crisis, Carney is (hoping?) to bring about TCFD for consistent, standardized disclosures on climate-related financial risk.

4th for Carney, crises increased resilience, they make us tougher. Global banks have a buffer 10x the size prior. Trading has been reduced 1/2 , interbank leading is declined 1/3rd and cloistering of divisions within banks, with deep separation aims to prevent a systematic collapse.

Again, Carney argues the Climate Crisis has a valid target of net-zero. ¾ of the world’s coal reserves…

5th for Carney, embedding responsibility. Having purpose, Carney suggests might have prevented the financial crisis. In the aftermath, regulations, rules and compensation provide the teeth for a better future.

The Firm A Series of Contracts versus Purpose-Driven Companies at the Heart of an Ecosystem:

Carney goes through the history of company formation. The coordination of employees, investors, suppliers, buyers. He notes that corporations are indeed people both legally and in reality. For Carney, the company is not the sum of a bunch of contracts, however.

Shareholder & Purpose:

East India Company (the 1st publicly traded company in the UK) was incorporated with the purpose of protecting a monopoly on in Asia. The concept of the shareholder was buy shares of a company with the agreement that that capital would be used to advance the purpose of the firm, a larger goal. But during the industrial revolution, in 1844, the UK government passed a law that allowed incorporate without an express purpose and it made registration much easier. By the 19th century the focus on public purpose shifted to private purpose.

Shareholder Primacy:

Ford Motor Company challenged the idea further when in 1916, there was a $112 million surplus on their balance sheet. Shareholders wanted a dividend by Henry Ford wanted to direct those profits into creating more innovation and to democratize cars for more people. The Michigan Supreme Court sided with shareholders but the amount doled out was much smaller through managerial discretion. This case Dodge v. Ford is central to the idea that shareholders own the company they have shares in. The UK Companies Act in 2006 and the Delaware Supreme Court in 2015 re-asserted that the purpose of ‘directors must make stockholder welfare their sole end.’ So, in the UK and the US, it is to maximize shareholder value. But there is disagreement, Wachtell, Lipton, Rosen & Ktaz LLP says shareholder primacy is not exactly what is going on….

Carney shows through legal examples in Canada and France that shareholder aren’t even owners of the company and thus the maxim of maximizing shareholder value is flawed. It is ture that shareholders do get paid after everyone else: creditors, bond holders, employees, suppliers and governments via taxation both in the UK and the US. But employees cannot diversify their risk to a company as Martin Wolf has argued so shareholders may not really be taking the most risk, aren’t really owners and certainly a poor shareholder who put their life-savings in is taking more risk than Warren Buffett in the owning of a given share of any company. Shareholders do not have much downsize risk either. So, for Carney shareholder primacy is flawed.

The Agency Problem:

The separation of ownership of shareholders and control via the management which have their own self-interest (perks, pet projects, empire building) mixed in with meeting shareholder interests, triggered the Milton Friedman doctrine that:

a)    an executive is an employee of the owners of the business;

b)    the executive is responsible for maximizing shareholder value;

c)    shareholders (probably want) profits therefore that is the value in question;

d)    as long as the firm conforms to rules of society in terms of customs and law, they are good.

Carney sees Friedman’s ideas as useful but deeply flawed. Shareholder primacy is problematic and the proof is that Friedman gives himself an out in two ways:

1)    saying that money making should conform with customers and laws of their day. As Carney has shown, values are subject to their time therefore, Friedman has an out when there is disembodiment between the market and shareholders. Friedman claims any charity to employees is merely window-dressing. But Carney has shown in this book that there are times where there is deep corrosion in financial markets.

2)    saying that shareholders have primacy is flaws because shareholders merely have a ownership of the shares in a limited legal way. there is strain in how the wealthy treat the poor and how pay  

Companies have Command and Control Dynamics so Models of an Economic is a Matter of Degrees:

For Coase in The Nature of the Firm, the firm is defined by costs difference of providing goods and services through the market. Transactions in the market hold the costs of gathering information, bargaining, and enforcement. These transactions bear costs that the firm save but the expense is the span of control, complexity and diseconomies of scale. The activities performed more efficiently in a Command and Control system within the firm with the rest completed through the market.

Stakeholder Value:

Carney argues that instead of Shareholder Value there ought to be Stakeholder Value, which also happens to be the latest trend in business school literature. Profit is essential but it is not the only thing. Many CEOs reject the notion that there is a single purpose to a firm. For Carney, a successful firm must deliver a balance of competing interests amongst stakeholders (which Carney neglects to define), but this is analogue to the individual who pursues the good life. Competitive advantage, for Carney includes, having an attractive purpose as Chapter 15 will show.

Other Thoughts from Chapter 14:

·         For a better tomorrow, we need companies that are motivated by profit and empowered through purpose;

·         Profit and purpose are both necessary and re-enforce each other;

·         Firms should embed purpose is what they do;

·         Corporate purpose reduces risks, inspires employees, provides guidance in uncertainty and attracts and drives innovation;

·         Non-financial metrics should matter even if they are notoriously hard to measure;

·         The challenge falls with turning a purpose into practice (actions, outputs);

·         Maximizing shareholder value (short-term) is not the sole aim of corporations, full stop;

·         Environmental, Social and Governance (ESG) can contribute to profits and also purpose;

·         The make up of boards and their focus on purpose is critical;

·         Board-level reforms need to include purpose-oriented reform;

·         Patagonia, Unilever have institutionalized purpose;

·         B Corp certification reward companies that meet social and environmental metrics;

·         Danone is a company that embraces a entreprise a mission designation;

·         Executive level compensation needs to be connected to ESG factors and needs to be re-configured to align incentives that are longer term;

·         Companies need to consider future generations;

·         Companies should be engaged in improving communities;

·         Reporting is Key: two-way flow of information between stakeholders, shareholders and companies;

·         Good and bad ideas need to be tested and then good ideas scaled, and bad thrown away;

·         There is more and more evidence that suggest that companies that perform well on ESG also tend to have better financial performance, 63% report a positive co-variation, increased ESG leads to increased financial performance, Chapter 15 will address the counter-arguments.  

·         Employees who know their employers purpose also have better financial performance;

·         Patagonia give 1% of its revenue and they get 9000 applicants per post;

Introduction: Humanity Distilled Chapter 1 Objective Value
 Chapter 2 Subjective Value Chapter 3 Money & Gold
 Chapter 4 Magna Carta  Chapter 5 Future of Money
 Chapter 6 Market Society Chapter 7 Financial Crisis
 Chapter 8 Safer FinanceChapter 9 Covid Crisis
 Chapter 10 Covid Recovery Chapter 11 Climate Crisis
 Chapter 12 Climate Horizon Chapter 13 Your Values
 Chapter 14 Values in Companies Chapter 15 ESG
  

Analysis Part 3 Chapter 14

Ø  Chapter’s message in a nutshell: You get more with honey then you do with vinegar, be nice and have better outcomes in good and bad times.

Ø  The Covid crisis has accelerated a shift, but for how long? What is the reasonable band-width for which human’s recalibrate? Carney seems to be have a view that change is more permanent than might myself.

Ø  “During thee [Covid] crisis, we have acted as interdependent communities not independent individuals, with the values of economic dynamism and efficiency, joined by those of solidarity, fairness, responsibility and compassion.” (386, Value(s). This is not quite what is happening or happened or has it? How does Carney know from publications, statistical research or the people he hangs out with. People aren’t, pre-determined. There is speculation and sales in his statement that  

Ø  If Carney is so certain of the benefits of a crisis, then logically should triggering a crisis not be an aim of effecting change? From 9/11 to detonating a nuclear weapon in the Antarctic, causing a crisis is perhaps a logically implication of his breakdown of how the financial crisis has progressed finance forward. Carney seems to imply that all the Dodd-Frank legislation was a major success, whatever has been implemented deserves a thumbs up, however the process of providing new safe-guards was very contentious and as Obama points out in my blog post, it wasn’t always that great.

Ø  An inverted view might be that the financial crisis brought on regulations that are a mixed bag of efficacy and punishment. Instead of weeding out the incompetent, regulations have cause a retrenchment of those most passionate about financed which has the effect of

Ø  Perhaps this will be addressed in Chapter 15, but how do you really objectively measure ESG performance, if the measures are game-able, they will be gamed, just a fun fact of human nature. Humans are cunning. Get used to it.

Ø  Carney took the Patagonia “9,000” applications example in two funny ways. 1) that Patagonia didn’t plant this story as a PR stunt, 2) that Patagonia has those high number of applicants because of their purpose (single causation is flawed thinking or perhaps Carney is simply trying to persuade).

Ø  Senator Elizabeth Warren’s 2018 proposed Accountable Capitalism Act requires directors in firms making more than $1 billion to ‘consider’ stakeholders, not simply shareholders, when making choices.

Citations Worth Noting for Part 3: Chapter 14:

v  Andrea Sella, ‘Wedgwood’s Pyrometer’ Chemistry World, 19 December 2012.

v  Derek Lidow, ‘How Steve Jobs Scores on Wedgwood Innovation Scale’, Forbes, 3 June 2019.

v  US Securities and Exchange Commission, ‘What We Do’, 10 June 2013.

v  John Kay, ‘Shareholders Think They Own the Company – They Are Wrong’, Financial Times, 11 November 2015.

v  Martin Wolf, ‘Shareholders Alone Should Not Decide on AstraZeneca’, Financial Times, 9 May 2014.

v  Lynn A Stout, ‘The Shareholder Value Myth’, Cornell Law Faculty Publications, Paper 771 (2013).

v  John Kay, The Truth About markets: Their Genius, their Limits,  their Follies (London: Penguin, 2003).

v  https://bcorporation.net/

v  https://www.blackrock.com/corporate/investors-relations/2018-larry-fink-ceo-letter

v  Bank of England, HM Treasury and Financial Conduct Authority ‘Fiar and Effective Markets Review: Final Report’ (June 2015).

v  Nell Derick Debevoise, ‘Why Patagonia Gets 9,000 Applications for an Opportunity to Join their Team’, Fortune, 25 February 2020.

v  ‘The Business Case for Purpose’, Harvard Business Review Analytic Services Report (2015).v  Marc Andreesen, ‘It’s Time to Build’, Andreessen Horowitz, 18 April 2020, https://a16z.com/2020/04/18/its-time-to-build/