Leading out Loud by Terry Pearce - Coursework Example

Tell me a story: Language and leadership Name Grade course Tutor Institution Date Abstract As Terry Pearce notes in his ‘Leading out Loud’ discourse, concepts do not build resonance; stories do. Likewise, communication is an integral part of leadership. Leadership communication revolves around inspiring true commitment through by speaking genuinely from the heart (Buffett 2008). As individuals or group who direct, guide, inspire, and motivate others, leaders ought to have tremendous influence if they are to persuade employees, staff and management to pursue certain goals as defined. Over the years, the mode and means of organizational communication has evolved dramatically (Buffett 2008). Today, the transmission and dissemination of information has improved amid the dawn of the digital revolution making it easier for organizational leaders to enhance cohesion through timely communication of ideas. With e-mail, cell phones, text messaging, social networking among other recent phenomenon, leadership communication is as efficient today as it ever can be. The sheer amount of time leaders consume while communicating underscores how significant strong communication skills can be (McGrath 2002, p.49). Introduction Born August 1930 to Howard and Leila Buffet, Warren rose to become an investment genius widely considered the most intelligent investor of our times. As an American investor, business magnate, and philanthropist, Buffet’s story is quite inspirational and life changing. He gained the title Wizard of Omaha for his outstanding intelligence on Wall Street. His close friend Bill Gates reckons as much too. Gates gave Buffet the tag ‘Oracle of Omaha or the Sage of Omaha’ for his personal frugality in spite of his immense wealth not to mention his commitment to the value investing philosophy (Bass & Avolio, p.62). Besides being an investment guru, Buffet emerges as a proficient organizational leader. As the chair and CEO of Berkshire Hathaway, Buffet’s efforts in steering the company toward a path of progressive are quite remarkable. Looking at his milestone achievements at Berkshire Hathaway, an interested audience would beg the question: what makes Warren Buffett a proficient business leader? (Montana & Charnov 2008, p.37) How does his leadership style translate into such groundbreaking success? Forbes, Time and Wall Street as well as prominent individuals and corporation agree that Warren buffet is a true leader seeing as he is able to make a difference in the world through his exceptional leadership style (Zweifel 2008, p.73). Over the years, leaders have been tried and tested; some of them fail while others emerge victorious. According to Professor Miranda Lambert of the Harvard Business School, true leaders are determined by their ability to steer their organizations in the path of recovery during times of crisis and not by how they perform in times of sustainable growth. Leadership competency is evaluated in times of crises and not progress (Bennis 2009, p.48). The late 2000s financial crisis was the most challenging times in Warren Buffet’s 44-year tenure at Berkshire. It was a trying time that put the investment guru’s resilience to test. The CEO promised that he would restore the company’s ‘Gibraltar-like financial position’ come 2009. His vision was to retain robust amounts of modest near-term obligations, excess liquidity, and numerous of alternative earning sources (Buffett 2008). ‘Leading out Loud’ Terry Pearce, better known for his runaway success dubbed Leading Out Loud: Inspiring Change through Authentic Communication, reckons that concepts do not build resonance; stories do. Pearce’s viewpoint is that leadership communication revolves around growth and change. This is to say that leadership communications creates a story line i.e. a past, a present, and a future. According to Pearce, a leader is charged with editing the story of the organization either by altering the ending to create a climax or by infusing a novel plot into the story that has become fusty and lifeless (Zweifel 2008, p.53). Pearce underscores that leadership is not simply the matter of firing some people, adding some others and (or) rearranging the talent; it is about making informed choices and inspiring transformation to pave way for future progress. This is plausible through proper leadership communication frameworks (Pearce 2003, p.59) As the central concept in this study, leadership communication revolves around inspiring true commitment through by speaking genuinely from the heart (Montana & Charnov 2008, p.61). As a veteran communication consultant, Terry Pearce offers sage counsel on how organization leaders can inspire visionaries through what he terms ‘leading out loud.’ By analyzing speeches by prominent public figures such as Ben Graham, Hillary Clinton, and Peter Ueberroth, Pearce exemplifies his ideas on leadership communication in an attempt to inspire organizational progress by encouraging leaders to embrace his ‘leading out loud’ philosophy (Montana & Charnov 2008, p.93). Leading Out Loud: Inspiring Change through Authentic Communication is essentially a discourse on leadership communication, which underscores – among others – the need for leaders to learn how to deliver speeches that inspire true commitment amongst followers. Pearce’s idea of effective leadership is that which connects people with a vision by compelling them to make that vision their own. In this discursive analysis, he presents authoritative methods and techniques for composing and delivering speeches in a way that will persuade audiences and inspire them to act accordingly. Such advice is in order especially in a media-driven digital world marred sound bites of cynicism standing in the way of trust and genuine communication (Pearce 2003, p.17). Warren Edward Buffett Born August 1930 to Howard and Leila Buffet, Warren rose to become an investment genius widely considered the most intelligent investor of our times. As an American investor, business magnate, and philanthropist, Buffet’s story is quite inspirational and life changing (Montana & Charnov 2008, p.47). He is the chairperson, major shareholder, and CEO of Berkshire Hathaway. Buffet constantly dominates Forbes list of the world’s wealthiest people peaking at number 1 in 2008 drifting two spots and emerging the third wealthiest person on the planet in Forbes latest ranking (Zweifel 2008, p.31). Earlier in 2012, both Forbes and Time magazine ranked Buffett one of the most influential individuals in the world citing his exceptional ability to mobilize organizational progress through proper leadership. America recognizes him as the Wizard of Omaha. His close friend Bill Gates reckons as much too. Gates gave Buffet the tag ‘Oracle of Omaha or the Sage of Omaha’ for his personal frugality in spite of his immense wealth not to mention his commitment to the value investing philosophy. Buffett contribution to charitable causes is remarkable (Bass & Avolio 2005). He has pledged to donate 99 % of his fortune to humanitarian causes, primarily via the Bill and Melinda Gates Foundation (Zweifel 2008, p.52). Warren Buffet considers himself a sort of Fisher and Graham ‘compound.’ He says that he is 85% Benjamin Graham and 15 % Fisher (Montana & Charnov 2008, p.61). One of his most inspirational contentions on value investing states that the fundamental ideas of investing involves looking at stocks as business, using the market’s fluctuations to your advantage while seeking a margin of safety, which is what Ben Graham taught us in his book The Intelligent Investor (Brady 2011, p.39). Leadership Communication Terry Pearce reiterates the importance of communication as an integral part of his ‘leading out loud’ platform. It is understood that a leader must be able to communicate effectively within an organization (McGovern et al 2008, p.59). Without proper and effective communication, there emerge obstacles to organizational progress since various challenges become difficult to overcome. There is unanimous consensus amongst scholars that communication is crucial as a leadership aspect (Zweifel 2008, p.49). When CEOs, workers and other stakeholders in an organization are tasked to highlight the most vital skills a manager ought to possess, the response is consistent: good communication skills (O'Loughlin 2003, p.116). As organizational leaders, managers spend most of their time engaged in communication. Sources retrieved from the annals of American business diaries indicate that communication occupies close to 90 % of a leaders time. Over the years, the mode and means of organizational communication has evolved dramatically (Bass & Avolio 2005, p.41). Today, the transmission and dissemination of information has improved amid the dawn of the digital revolution making it easier for organizational leaders to enhance cohesion through timely communication of ideas (Zweifel 2008). With e-mail, cell phones, text messaging, social networking among other recent phenomenon, leadership communication is as efficient today as it ever can be. The sheer amount of time leaders consume while communicating underscores how significant strong communication skills can be. Therefore, proficient leaders set their priorities straight; mastering leadership communication ought to be a priority for leaders who desire to be considered effective by their organizations or the entire business community (Buffett 2008). As individuals or group who direct, guide, inspire, and motivate others, leaders ought to have tremendous influence if they are to persuade employees, staff and management to pursue certain goals as defined. Proficient leaders improve the performance of individual and groups within organizations (Montana & Charnov 2008, p.37). They get results. Effective leaders are known for their notorious ability to push buttons and commitment to results. Through effective communication, good leaders steer their organizations towards a path of progress (Bass & Avolio 2005, p.48). Likewise, good communication skills foster and build trust and understanding, which is the fundamental starting point of encouraging others to follow a leader. In the absence of effective communication, the integral aspect of leadership lacks. Early studies retrieved from the Harvard Business School indicates that leaders who gets ahead in business are those who are able to make sound decisions, communicate them, and – ultimately - get things done with and through people. (Buffett 2008) Warren Buffet, Berkshire Hathaway, and Leadership Communication Besides being an investment guru, Buffet emerges as a proficient organizational leader. As the chair and CEO of Berkshire Hathaway, Buffet’s efforts in steering the company toward a path of progressive are quite remarkable (Montana & Charnov 2008, p.51). Looking at his milestone achievements at Berkshire Hathaway, an interested audience would beg the question: what makes Warren Buffett a proficient business leader? How does his leadership style translate into such groundbreaking success? Forbes, Time and Wall Street as well as prominent individuals and corporation agree that Warren buffet is a true leader seeing as he is able to make a difference in the world through his exceptional leadership style. Leadership is closely related to change and Warren Buffett possesses the capabilities of leadership change that fit the rapidly changing world. He has constantly demonstrated the ability to map read in the uneven waters of change (Brady 2011, p.58). There is little evidence – from both research and experience – whether successful leaders are born or nurtured. Since the ‘how’ is not quite important, it is not reasonable to dwell on that for purposes of this study. The most important thing is how effective leaders take the falls that any other levelheaded leader would take (Montana & Charnov 2008, p.49). For instance, Warren Buffett learns from his mistakes by bringing something positive from them (Morgeson 2005, p.598). He practices his leadership at all organizational levels. According to sources close to the investment genius, Buffet often feels empowered to share leadership responsibilities (Morgeson 2005, p.601). The contemporary business world has in it numerous titles related to leadership roles and being the guru that he is, Warren Buffett wears those titles to make him valuable in multiple leadership positions at Berkshire Hathaway (Zweifel 2008, p.81). As discussed concisely earlier on, communication is a crucial aspect of leadership. Wall Street paints Warren Buffet as a skillful communicator in various aspects of life and especially so in business (Buffett 2008). Communication is the real deal. Expert communicators (business leaders) have an appreciation for positioning in the present-day business world as they did years ago. Warren Buffet falls in this category (Zweifel 2008, p.85). The man has gained tremendous experience at positioning himself at the right place and at the right time. In fact, he is notoriously known for his Wall Street catchphrase ‘success is all about timing.’ Proper communication grants him an understanding with stakeholders, stockholders, employees, management, staff, and all the people he reaches out to in routine business course. Warren Buffet’s knowledge of audiences’ needs grants him the ability to listen and convey his understanding. He has managed to command utmost respect; when he talks, people listen (Montana & Charnov 2008, p.27). People close to the man applaud his ability communicate through an open door without necessarily having to push his ideas through the wall. Such kind of leadership is very crucial to any successful business. Effective leadership is what Warren Buffett is all about; that is what makes him a successful investor (Graham 2009, p.29). Challenges: 2008 Recession Much has been said about leadership communication and the fact that effective communication strategies enhance organizational progress. However, leadership is not merely a theoretical phenomenon; it requires plausible implementation in times of crises. This is the only way that one would know for sure if there were practical leadership. Over the years, leaders have been tried and tested; some of them fail while others emerge victorious (Montana & Charnov 2008, p.73). According to Professor Miranda Lambert of the Harvard Business School, true leaders are determined by their ability to steer their organizations in the path of recovery during times of crisis and not by how they perform in times of sustainable growth. Leadership competency is evaluated in times of crises and not progress (Buffett, 2008). For instance, Warren Buffet found himself in sharp criticism in the wake of the 2008 sub-prime mortgage crises, which was part of the late 2000s recession. Apparently, Buffet had prematurely allocated capital, which in turn resulted in suboptimal deals. He had publicly declared on Wall Street that he would literary purchase Wall Street. In one of his journals, the investment guru wrote for an opinion piece, which was published recently in the New York Times that “Buy American. I am.” (Montana & Charnov 2008, p.74). Buffett termed the untimely late-2000s economic downturn in the financial sector as poetic justice; you get what you ask for. Berkshire Hathaway's earnings plummeted (an unprecedented 77% drop in earnings) during Q 3 2008 as some of the company's recent deals as well as his privately owned deals appeared to be dipping into large mark-to-market losses (Buffett 2008). Meanwhile, Berkshire Hathaway acquired 10 % perpetual preferred stock of Goldman Sachs. Buffett’s Index put options by the time were running at around $ 6.73 billion mark-to-market losses (Montana & Charnov 2008, p.42). This unprecedented scale of the potential loss drove the SEC to demand that the company produce, a more compelling disclosure of factors considered while valuing their contracts. CEO Warren Buffett also contributed funds to facilitate Dow Chemical’s takeover of Rohm & Haas estimated at $ 18.8 billion, which saw him become the single largest stakeholder in the enlarged group (Buffett 2008). Having provided $ 3 billion, this move underlined Buffett – and Berkshire Hathaway’s - instrumental role in the continuing crises in debt and equity markets (Montana & Charnov 2008, p.46). Amid the liquidity crisis, the Sage of Omaha recorded his most dismal financial performance since he took over operations at the renowned US investment company Berkshire Hathaway in 1965 (Montana & Charnov 2008, p.63). Berkshire’s net worth plummeted by $10.9 billion in the final quarter of 2008. Berkshire’s investments and broad mix of utility, manufacturing, insurance, and services businesses hardly broke even as quarterly net income sank 96 % to $117 million (Buffett 2008). In the annual address to shareholders, Warren Buffett apportioned blame to the $ 4.61 billion of pre-tax losses booked on fluctuations in the market value of 251 derivative contracts, which he had personally approved earlier on. These also included 15-20 year bets that the S&P 500 and FTSE 100 would likely recover recent losses (Montana & Charnov 2008, p.56). He described derivatives as dangerous. In his reasonable judgment, however, he was convinced that derivatives were a good bet. He believed that each contract the company owned was mispriced - sometimes dramatically so - at inception. He acknowledged as well that if they lost money by gambling with derivatives, it would be his fault, he wrote. Nineteen of Berkshire’s US portfolio top 20 stocks initially valued at $ 51.9 billion plummeted in 2008. Coca-Cola, Berkshire’s top holding plunged 26 % as American Express dipped a further 64 %. (Buffett 2008). This was the most challenging times in Warren Buffet’s 44-year tenure at Berkshire. It was a trying time that put the investment guru’s resilience to test. In a televised address, the CEO promised that he would restore the company’s ‘Gibraltar-like financial position’ come 2009 (Buffett 2008). His vision was to retain robust amounts of modest near-term obligations, excess liquidity, and numerous of alternative earning sources (Montana & Charnov 2008, p.66). Buffet however offered a murky outlook with his notion that the [US] economy would remain in shambles throughout the year 2009 and (most probably) for the remaining part of the decade and beyond. The Sage remained adamant in his instance on buying more shares and bonds. He strongly believed that purchasing stocks and merchandise at marked down prices was a wise thing to do in investment. He also articulated his idea of buying off companies that had prospective growth in the future at bargain prices. Buffett knew all too well that purchasing fairly-priced operating companies as wise as buying underpriced securities (Morgeson 2005, p.603). Notwithstanding his near-mythical iconic status, Warren Buffett readily admitted that he had his shortcomings in the decisions he made during the liquidity crisis. He admitted that his decision to increase Berkshire’s stake in ConocoPhillips – an oil and gas giant - at peak prices was quite ‘dumb’ since he had not anticipated the dramatic plunge in energy prices in the second half of the 2008. As a result, Berkshire shareholders suffered several billion dollars loss. Berkshire Class A shares plummeted 44 %. (Buffett 2008). Risk Mitigation Being the investment guru that he is, Warren Buffett responded to the challenges by adopting various risk mitigation strategies. With the help of a sound communication framework, he was able to implement various risk mitigation strategies. It is important to underscore the value of leadership communication in Buffett’s recovery plan. The CEO was able to persuade shareholders and major stakeholders that recovery was plausible even amid the credit crunch. As a leader, Warren Buffett was aggressive enough (Montana & Charnov 2008, p.61). He began by convening shareholders meeting where he articulated his plan. His message was strong, albeit risky. He held that there was no recession in 2008; he urged that it was time to invest and not to panic. By June, Berkshire was $ 31.2 billion liquid with all that cash staffed in their vaults. Meanwhile, Warren Buffett was investing a considerable fraction of Berkshire’s money in stocks to capitalizing on recent plunges in equity markets (Buffett 2008). The milestone target involved no high-risk securities; Buffet insisted on takeover and buy-offs of companies with solid fundamentals namely Goldman Sachs and General Electric in that order. Berkshire Hathaway subsequently signed $ 5 billion of shares in special Goldman Sachs and a further $ 3 billion in special measures General Electric that year (Montana & Charnov 2008, p.58). Though dubbed a risky move initially, Buffet stuck to it and today both Goldman and General Electric stocks provided an estimated 10% per annum in dividends. Not to mention it was a period of economic turmoil; huge capital appreciation is expected in years to come. As a good leader, Warren Buffett did not fear the recession. Instead, he set out to steer Berkshire back to the path of progress in an attempt to regain shareholder’s confidence and trust. He capitalized on the lack of liquidity to procure quality and fundamentally strong stocks at undervalued price (Panrolling 2004, p.51) Given the challenging decisions that the Sage of Omaha has had to make over his tenure, which is close to a half a century, the most trying times came amid the recent financial crisis perpetuated by the subprime mortgage crisis of 2007–2008 (Montana & Charnov 2008, p.41). Buffett demonstrated enviable leadership by focusing on the need to address long-term interests of Berkshire Hathaway. Meanwhile, Buffett was still addressing some short-term problems such as decline in dividend for Berkshire shareholders as well as the need to mitigate the loss suffered by 77% drop in earnings during Q3 2008 (Montana & Charnov 2008, p.63). The most articulate aspect of Buffett’s leadership is that he emerges as a risk taker. His ability to push doors and his aggressive nature while doing so makes him a good leader. With no risk, there is no return; this is the cardinal rule of investment. Wall Street has it that the higher the risk, the higher the return too. This had prompted Buffett to gamble on the U.S. economy February setting aside $ 27 billion to purchase railroad Burlington Northern Santa Fe Corp (Buffett 2008). Later in March, Warren Buffett was quoted in the media saying that by any common-sense definition, the United States – or the whole world for that matter – was undergoing a period of recession and concurrent liquidity, debt and equity market crises. Amid the economic turmoil, Buffet recommended buying stocks for the long term (Montana & Charnov 2008, p.59). After the CEO made his recommendation public, shareholders and investors who chose to stay and endure the ensuing 26 % plunge in Berkshire stocks now gain up to 39 % in dividends (Montana & Charnov 2008, p.31). Though a section of stocks registered dismal performance in the bear markets, Buffett’s contribution in mitigating the damage of the financial crisis was nothing short of outstanding. He demonstrated his undying commitment to revive Berkshire’s position on Wall Street while ensuring that shareholder and stakeholders’ interests – both long-term and short-term – were addressed in the estimation of a reasonable investor (Buffett, 2008). In an extensive interview with CNBC, Warren Buffet underscored his long-term optimism about the gradual recovery of the US economy, which had informed some of his choices. As it turned out, the stock market went from the verge of collapse and gained momentum, rallying broadly. On Wall Street, prices registered significant recovery in an unprecedented eight successive sessions of gaining. The Standard & Poor’s 500 Index rose 1.3 % from the previous quarter. (Craig 2011, p.65) Conclusion As a veteran communication consultant, Terry Pearce offers sage counsel on how organization leaders can inspire visionaries through what he terms ‘leading out loud.’ By analyzing speeches by prominent public figures such as Ben Graham, Hillary Clinton, and Peter Ueberroth, Pearce exemplifies his ideas on leadership communication in an attempt to inspire organizational progress by encouraging leaders to embrace his ‘leading out loud’ philosophy. Leading Out Loud: Inspiring Change through Authentic Communication is essentially a discourse on leadership communication, which underscores – among others – the need for leaders to learn how to deliver speeches that inspire true commitment amongst followers. Pearce’s idea of effective leadership is that which connects people with a vision by compelling them to make that vision their own (Renesch 2004, p.32). Besides being an investment guru, Buffet emerges as a proficient organizational leader. As the chair and CEO of Berkshire Hathaway, Buffet’s efforts in steering the company toward a path of progressive are quite remarkable. Looking at his milestone achievements at Berkshire Hathaway, an interested audience would beg the question: what makes Warren Buffett a proficient business leader? How does his leadership style translate into such groundbreaking success? His ability to inspire true commitment through speaking genuinely from the heart makes him a credible leader. Going by the manner in which he handled the company’s affair amid the financial turmoil of the year 2008, it becomes evident that Warren Buffet is indeed a visionary – perhaps the most intelligent one of our times (Zweifel 2008, p.73). Steering a multibillion-dollar company back to the path of progress could only have been plausible through sound leadership and constant aggression on the leader’s part (Montana & Charnov 2008, p.75). Just like Steve Jobs, Warren Buffet was farsighted, as he remained steadfast in making some of the most challenging decisions during his tenure at Berkshire Hathaway. This was a close call and he proved his worth. References Bass, B & Avolio, B 2005, ‘MLQ Multifactor Leadership Questionnaire for Research: Permission Set’, Mindgarden, Redwood City, CA. Bennis, W 2009, ‘On Becoming a Leader’, Addison Wesley, New York. Brady, D 2011, ‘Warren Buffett Chose a Favorite, Not a Successor’, BusinessWeek, McGraw-Hill, New York. Buffett, W 2008, "Chairman's letter" Berkshire Hathaway 2008 Annual Report. Craig, S 2011, ‘Goldman Sachs Gives Blankfein a Big Raise’ New York Times. Graham, B 2009, ‘The Intelligent Investor: The Classic Text on Value Investing,’ Columbia Business School, New York. McGovern, G. et al 2008, ‘Leadership and Service: An Introduction’, Kendall/Hunt Publishing, New York. 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Zweifel, T 2008, ‘The Rabbi and the CEO: The Ten Commandments for 21st-Century Leaders’ SelectBooks, Inc, New York. Read More