Writing That Works, 3e_ How to Communicate Effectively in Business - Kenneth Roman [39]
The audience for the prose part of the annual report, as opposed to the financials, is seldom the sophisticated investor or the financial community. Often used as a general purpose corporate brochure (“a good merchandising tool”), the annual report is an opportunity for the chief executive to report on the organization’s performance, its strategy, and its potential.
In recent years, two of the largest and best-established companies in the world, IBM and General Electric, have both used their reports to position themselves as possessing the vigor of vibrant start-up companies.
IBM is working to change its historic perception from conservative and stuffy (“Big Blue”) to fresh and exciting (“New Blue”). The 1998 Report doesn’t say “IBM” or “1998” on the cover — the only words are “Start up,” followed by this from CEO Lou Gerstner.
What makes 1999 different … is that a historic shift — something IBM began talking about three years ago — is taking hold, and it’s reshaping everything: how we work, how we shop, how we interact with our governments, how we learn, what we do at home. Every day it becomes more certain that the Internet will take its place alongside the other great transformational technologies that first challenged, and then fundamentally changed, the way things are done in the world.
Jack Welch described the kind of company he wanted General Electric to become, in a GE annual report several years ago.
We want GE to become a company where people come to work every day in a rush to try something they woke up thinking about the night before. We want them to go home from work wanting to talk about what they did that day, rather than trying to forget about it. We want factories where the whistle blows and everyone wonders where the time went, and someone suddenly wonders aloud why we need a whistle. We want a company where people find a better way, every day, of doing things; and where by shaping their own work experience, they make their lives better and your company best.
Far fetched? Fuzzy? Soft? Naive? Not a bit. This is the type of liberated, involved, excited, boundary-less culture that is present in successful start-up enterprises. It is unheard of in an institution our size; but we want it, and we are determined we will have it.
We like what Welch says, and we especially admire the plain way he says it. The Economist now matter-of-factly refers to General Electric as “the world’s most admired company.”
The founder of an Australian advertising agency, John Singleton, had this to say in an annual report commenting on the acquisition of his company by Ogilvy & Mather:
Well, I’ve never been so happy to admit I was wrong.
Just as I was 100% sure we needed an international partner to both grow the business and give our young staff greater opportunity I also knew it would come at a short-term cost.
I knew that a merger of this magnitude across so many communications disciplines would inevitably disrupt clients, staff and inevitably result in short-term set-backs for the greater long-term good.
I was 100% wrong on all counts …
Such candor is refreshing — and agreeable to read.
A major trend changing annual reports is “plain language” reporting of financial data. Much of the impetus comes from a Securities and Exchange Commission directive to mutual funds, already showing results:
Before
All of the funds offered in this Prospectus seek capital growth by investing in securities, primarily common stocks, that meet certain fundamental and technical standards of selection (relating primarily to earnings and revenue acceleration) and have, in the opinion of the fund manager, better-than-average potential for appreciation.
After
The fund managers look for stocks of companies that they believe will increase in value over time, using a growth investment strategy developed by American Century.
Warren Buffett, Chairman of Berkshire Hathaway, has long produced reports admired for their literate insights as well as for the financial results they disclose. Buffett takes the trouble