Category Archives: L.J. RIttenhouse

How to Invest with Trustworthy CEOs

L J RittenhouseBy L.J. Rittenhouse

Georgia was a successful artist. She had never taken a business course in her life, nor picked investments. Her father was an experienced businessman and did this for her. When he died, Georgia inherited his portfolio of stocks and hired a manager.

Her new financial advisor, Russell, didn’t waste time and purchased three gold companies for her portfolio. With the economy heading south, he figured these investments would outperform the market. When he called to tell her what he had done, Georgia thanked him. Then she went to each company’s website to find their annual reports. After reading the letters to shareholders in each report, Georgia called Russell back. “Keep the stocks in two of the companies,” she said. “Sell the third.”

Russell was shocked and asked, “Why?” Georgia replied, “The shareholder letter by the CEO in that third company isn’t as candid or informative as the other two letters. It didn’t discuss the company’s financial results and used a lot of useless business jargon. It didn’t inspire trust.” Russell assured her that all three companies were sound, but Georgia was firm. He sold the stock.

Four months later, this company was charged with falsely reporting income. Its shares dropped to all-time lows, and Georgia was vindicated. Did she have insider knowledge? Had she carefully analyzed the financial statements? No. Georgia trusted her instinct that executive candor is a vital clue to investing with trustworthy leaders.

Perhaps you’ve read shareholder letters that failed to educate you about the business. Written in PR-speak, they hide the CEO’s true personality and leadership style. But, not all letters will waste your valuable time. Georgia’s experience taught her to invest with leaders who communicate clearly. As annual reports are released in the spring, read them and look for these three leadership qualities:

1) Reveals Leadership and Avoids Business Jargon: Consider these sleep-inducing phrases taken from some 2013 financial company shareholder letters in 2014: “the outstanding capabilities of our company,” “the strategy we outlined several years ago is driving growth,” and “help make financial lives better, through the power of every connection.” This business jargon fails to inspire confidence or build trust.

In contrast, Charles Schwab CEO Walt Bettinger opens his 2013 letter with a personal reflection about writing a shareholder letter: Some time ago, a close friend and I discussed the nature of the annual letters that CEOs write to their companies’ stockholders. He and I agreed the best approach was to craft the letter as if I were speaking with a colleague who had been away from the company for the entire year and to keep it free from spin or corporate-speak.

Bettinger’s language is straightforward and candid. He imagines what it would be like if he were the reader. His active verbs and simple descriptions engage us and begin to build connection that can lead to trust.

2) Provides Context and Explains “Why”: CEOs write a lot about what is happening in their businesses, and less about why this is important. JetBlue CEO Dave Barger does both in his 2013 shareholder letter. He is a master of meaningful context that reveals underlying business strengths and weaknesses. One such strength is the company’s strategy to constantly maintain a cost advantage relative to competitors.

Context adds credibility to CEO claims such as the airline’s 14-year old mission to “bring humanity back to air travel” through the “JetBlue Experience”. What can JetBlue passengers expect from this experience? Barger cites: “free inflight entertainment, the most legroom in coach of any U.S. airline…unlimited free snacks and great customer service.” But how does the company deliver great customer service? It nurtures an ownership culture that engages and rewards employees for going the extra mile for customers. How is this working? J.D. Power recognized JetBlue in 2013 as “one of only a few companies (and the only airline)” for service excellence in all of the past nine years.

3) Sets an Example by Reporting Successes and Failures: Berkshire Hathaway CEO Warren Buffett believes that a trustworthy CEO communicates candidly with investors – in just the way he would expect if their positions were reversed. In his 2013 shareholder letter, Buffett described Berkshire’s wide-ranging businesses from candy to machine tools and railroads to windmills. He admitted that while some businesses have enduring advantages and report growing profits, others “have very poor returns.”

Buffett took responsibility for these disappointing results. He wrote: “I simply was wrong in my evaluation of the economic dynamics of the company or the industry in which it operated.” In this and in past letters, he shares the lessons learned from these mistakes and how these helped him to find companies with sound economics. Like other successful executives and entrepreneurs, Buffett continues to perfect the skills of “failing wisely.

Why does straight talk matter?

As Georgia learned, words are the building blocks of trust. But not just any words. Only those that shine light into dark places — a definition of candor. Companies that lack candor will weaken trust and eventually stumble or fall apart.

To invest with trustworthy leaders, look for executive communications in which the CEO: 1) carefully uses words that grow revenues and trust; 2) explains the “what” and “why” of company actions; and 3) candidly sets an example by reporting on successes and failures.

J. Rittenhouse is CEO of Rittenhouse Rankings Inc., a corporate communications company that analyzes gaps in corporate candor to improve performance. A financial relations advisor and motivational speaker, L.J. has been featured on CNN and in The Wall Street Journal. Warren Buffett recommended her bestseller, Investing Between the Lines. For more information, please visit

Be an Authentic Rock Star Communicator

L J RittenhouseBy L.J. Rittenhouse

How Candor Determines Performance and Results

Investors in a hotel meeting room wait to hear presentations from two utility CEOs, a widely-followed financial analyst and a respected portfolio manager. The CEOs start. Each one shows PowerPoint slides that illustrate their large companies’ “bright futures.” As they speak, people in the audience read Blackberries and Wall Street Journals.

Up next is Ken, the financial analyst. He begins, “At the end of this presentation I may not have many friends left in the audience.” At once, Blackberries and newspapers drop. Ken describes the losses in the CEOs’ companies and questions their ability to navigate industry change. The audience is abuzz when he sits down. Were the executives insulted or inspired by his candor?

Finally Scott, the portfolio manager, goes to the podium. “When I’m finished,” he states, “I know I won’t have friends left in the audience.” Now everyone pays attention. Scott describes a meeting with his investors, who are angry and upset because the fund is losing money. One investor, “a retiree with hands the size of meat loaves,” shouted out loud, “Why should I invest in your fund?”

Scott pauses and turns to the CEOs. He asks them, “Why do you deserve this man’s capital, his savings from a lifetime of hard work?” Startled, the CEOs offer canned responses.

Over dinner that night, people from the audience agree that the CEOs’ remarks were predictable and forgettable. They believe that Ken connected with the audience, but his remarks were noteworthy for their tone and less for their content. Scott, however, connected with everyone. His message stuck. His authenticity made a difference.

This story offers four lessons for becoming an authentic rock star communicator:

1) Find the right words: The words chosen by the speakers made all the difference. Clichés, like “bright future” and “create shareholder value,” anaesthetize audiences. In contrast, the word “friends” chosen by the portfolio manager transformed the meeting from merely exchanging financial and strategic information, to an opportunity for building relationships. Why does this matter? Warren Buffett once said that finding “the right word” is everything. Until he did this, he could not get his thinking clear—and clarity is essential to build trusting relationships. They are the foundation for growing sustainable, wealth-creating businesses.

2) Invite in the elephants: Make a difference by inviting the elephants into the “room” of your communication. Scott did this by describing his client’s hands, the “size of meat loaves.” This image restored the power relationship between the CEOs as managers of the company and their shareholder bosses, including those who need company profits to support their retirement savings. Today, the words “fiduciary responsibility” are too often absent in corporate governance reporting. They have been replaced by words like “compliance regulations”, “executive compensation committees”, and other bromides intended to put non-CEOs to sleep. This is why the audience was galvanized by Scott’s story.

3) Speak from your authentic purpose: Look at your thumb print: no one in a world of 7.2 billion people has a thumbprint like yours—it makes you unique. Now consider that you share 95 percent of your genetic code with a mouse. Ask, “What am I doing to differentiate myself from mice?” How am I using my unique gifts? Ask your friends and colleagues to name them. The ones that passionately resonate with you are true gifts. Use them and hard work will seem effortless.

Does the work you do lie somewhere near the intersection of your greatest joy and the world’s greatest needs? Choosing self-actualizing work requires courage. Scott and Ken had a choice. They could have engaged in the predictable investor meeting dance of giving and questioning information. Instead, they spoke from a calling—to passionately speak truth to power. This choice revealed their unique thumbprints.

4) Engage energetically: Emotional engagement inspires energetic commitment. The post-meeting dinner conversation with investors showed they had listened to Scott and Ken’s remarks with more than their ears; they had also listened from their minds, hearts, skin, and from each cell in their bodies. Their committed listening arose from these speakers’ commitments to finding the right words, inviting elephants into the room, speaking from authentic purpose and engaging energetically.

Words have power. They influence our breathing, the very source of our life. Saying the words “thank you” causes us to exhale slightly. Our bodies move closer to the person we are thanking. When we say, “I appreciate you,” we inhale and move slightly away from our listener. Words reflect our inner truths and emotions. They will evoke emotional responses in our audience. The philosopher Ludwig Wittgenstein described this power succinctly, “The limits of my language are the limits of my world.”

What can we expect from authentic communication?

Several weeks after this investor conference, one of the two CEOs spoke at another conference attended by some investors from the earlier meeting. He reported on company sales, profits, strategic initiatives and industry regulations. He also commented on how he was being accountable to his investors. He told them about an investor-retiree with meat-loaf-sized hands.

L.J. Rittenhouse is CEO of Rittenhouse Rankings Inc., a distinguished communications company that shows executives how to exploit the risk-mitigating and wealth-creating advantages of Corporate Candor. An author and speaker, L.J. has been featured on CNN, The Wall Street Journal and selected as one of the Top 100 Thought Leaders in Trustworthy Business Behavior in 2013. Warren Buffett recommended her best-seller, Investing Between the Lines in his 2013 shareholder letter. For more information, please visit