“The key to test for an acronym is whether it helps or hurts communication.”
- Elon Musk (b. 1971) one o’ the world’s financially wealthiest men and undoubtedly a “free thinker…”
Acronyms. If you’re in the business of selling, which means you’re telling stories, acronyms are usually a crutch (at best) or a confusing fit of showmanship and elitism at worst. Even “industry standard” acronyms can seem shallow. “How do you keep inside the lines when it comes to HIPPA?” we might ask a health care Client, when “Tell me what you’re doing about compliance and information security” will get us a better insight into the way they run their business.
Baseball has so many new acronyms that I can’t follow it (and I played after high school and coached for 15 years after that). And then I remember that it comes down to this (thanks Moneyball). Not HR’s, RBI’s, ERA’s. Does the guy get on base? (There is an acronym for that, but cut me some slack here, people!)
Take, for example, EBITDA. It stands for “earnings before interest, taxes, depreciation and amortization.” It’s a metric used to assess the value of many companies in merger and acquisition talks by buyers, sellers, and lenders. There are, however, two reasons I’ll never use it again. (“Never” is not a word I take lightly, just like “always,” “every time” and “everyone…”)
- A few years back, I was advising a Client about to sell their business. He had an offer of $x. “What’s that based upon?” I asked him. “It’s just what it’s worth,” he said. (He did need an advisor…) “By what is it based on?” I continued. “I mean, is it an asset sale, a multiple-based sale – how did you or the buyer arrive at that number?” He replied, “Multiple of what?” “Is it a multiple tied to your revenue, projected cash flows, net profit or (here it comes) EBITDA?” “You know what I hate about guys like you” he barked? “You think it’s all just numbers. My dad owned this business, and when he died, he said, “don’t take less than $x if you sell it. I need to move on, and $x seems fair? Why does it have to be so complicated?” (Editor’s note: one could argue he needed an advisor long before this point, but bear with me…)
- The second reason I’ll never use it again; Charlie Munger, Warren Buffet’s long-time lieutenant, often said, “If you don’t understand “EBITDA” just substitute the word bullshit, because they mean the same thing.”
Early this week, we’re rolling out a go-to-market strategy for a Client. It’s pretty solid. At least we think it is.
Ironically, we will use acronyms. Internally. To remind us of the order and intent of our new thinking. One of them won’t be, but could be (for the sake of example) KISS. (Keep it simple silly!)
We will NOT use acronyms in the market. We’ll use questions, because curiosity is the most powerful tool in the world. We’ll use words, primarily the words the market tells us it want us to use. We’ll use stories, that include ideas and words that move people.
The internal acronyms will help us measure how we stick to the plan. The feedback will tell us if we chose the right acronyms. And then, when we drop or change them, the market will never know.
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