We’ve all seen it happen – when people have a difficult message to put across or when they feel that they need to hide something they reach for convoluted, complicated language often strewn with pointless corporate jargon. It’s something that we frequently challenge people over during our media training courses. It’s annoying and often ridiculous. Instead of impressing the audience it has the opposite effect – it makes the speaker look shifty and even absurd.
But as the Financial Times recently reported Artificial Intelligence (AI) is being used by financial analysts to analyse the language used by the leaders of companies to understand more about how the company is really performing. “According to research by S&P Global Market Intelligence,” says the paper, “earnings calls that feature more complicated, long-winded and polysyllabic language tend to presage stock declines.”
Text is described by financial analysts as “unstructured” data because it doesn’t include the kind of organised precision that you find with statistics and figures. However, it is very useful. It puts these figures into context and tells the audience why the company is doing rather than just what it’s doing. It also allows analysts and other interested parties to understand the company’s future direction. Increasingly AI is providing investment analysts with essential information and insights into the true performance of a company by analysing the language used by its spokespeople both intentionally and subconsciously.
Shares fell by 17 per cent
By way of an example of the kind of language that investors are suspicious of the FT quotes the CEO of US software maker Seagate Technology: “I think from our perspective, we’ve always viewed this business as attractive in terms of its core business of selling into OEMs as well as servicing cloud service providers at one level, but really the opportunity to, I think, as architectures evolve and different customer needs evolve, to have the capability to optimise the devices either at the device level, at the subsystem level or the systems level, and if you do not have the software capability to do that, you really cannot take advantage of what we think would be a potentially significant long-term trend.”
The result of this gobbledygook was a fall of 17 per cent in its shares following its second quarter earnings.
The kind of language that journalists hate
This is the kind of language that journalists also hate, as we discuss when we do media skills training. During these courses we sometimes mention the Flesch Reading Ease test. Professor Rudolf Flesch was a readability expert and writing consultant who explored ways to make language simpler and more direct.
The Flesch Reading Ease and the Flesch–Kincaid Grade Level rank the complexity of language using, it has to be said, pretty complex, mathematical formulae. “The cat sat on the mat,” probably has a score of around 90-100. Ideally, corporate communications and the language used by a company’s media spokespeople should achieve a relatively high score on these two tests. Helping our clients to avoid this kind of language and to translate their choice of words, whether it’s corporate speak, legalese or simply overly technical is a key part of our courses.
Complex communication – Enron paid the price
You can understand this when you consider how companies such as Enron, once the world’s largest energy trader whose collapse was the most expensive US bankruptcy case to date, make their language more complex and obscure. If your language is opaque you’re clearly trying to hide something.
There’s nothing wrong with using technical language if it’s appropriate to your audience. For example, a doctor talking to other doctors could naturally use medical terminology but if he or she is discussing an issue with a patient or other laypeople then the language will have to be simplified.
But language that is just obscure for its own sake impresses no one. Lucy Kellaway who was until recently the Financial Times’ queen of corporate crap cited the following: “How to activate insights around latent mobility or multimodal needs?” by one CEO while a big employer, she noted, described a layoff as: “an orderly ramp down of about 3,000 persons.” Making people redundant is not nice but if that’s what you’re doing then you need to say it.Jargon will always be with us and will probably increase but as we point out in our media training courses and our analyst presentation courses it’s no longer just annoying. Thanks to the rise of AI it could actually cost you and your shareholders money.
Posted by Simon Brooke on at