Warren Buffett’s annual letter to Berkshire Hathaway shareholders is known as the “gold standard” of CEO communication with shareholders. His letters are so fundamentally different from those of a typical CEO that they have become a much-anticipated annual event for many investors.
Celebrated author and psychology expert Robert Cialdini discusses a simple “trick” Buffett uses to make his letters more persuasive. It is a trick every CEO or investor can use, but it is used rarely because it is counter-intuitive and requires self-awareness and authenticity.
According to Cialdini, as quoted by CNBC’s Catherine Clifford:
“On the first or second page of the report he describes an error, a mistake, that he and his company made the previous year.”
“It is so disarming.”
“I say to myself every time, ‘Oh! This guy is being straight with us. What is he going to say next? I need to pay attention to everything he says next!'”
“And that’s where he describes the strengths.”
“He’s established himself as a trustworthy credible source of information before he describes the things that are most favorable, that he wants me to process and recall. Brilliant.”
Learn more about persuasion — or pre-suasion — from Robert Cialdini:
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