Steal Buffett 3-step process for defining acronyms
How can you make sure your readers don’t spend the time between meetings trying to figure out what the acronyms mean?
Here’s a tip to steal from the Oracle of Omaha: Spell out, explain and illustrate acronyms.
1. Spell out acronyms.
In one of his famous letters to shareholders, Buffett spells out an acronym:
“These losses are called IBNR, for incurred but not reported. …”
2. Explain acronyms.
But spelling out the acronym isn’t enough. (Do you feel like you have a solid grounding in IBNR just because you know what the initials stand for? Didn’t think so.)
So he clarifies the term with this explanation:
“Indeed, in some cases (involving, say, product liability or embezzlement) the insured itself will not yet be aware that a loss has occurred. Even when companies have the best of intentions, it’s not easy to reserve properly. …”
3. Illustrate acronyms.
That’s a little better. But I still don’t think I could explain IBNR to my friends.
So Buffett illustrates the acronym with an apocryphal story:
“… I’ve told the story in the past about the fellow traveling abroad whose sister called to tell him that their dad had died. The brother replied that it was impossible for him to get home for the funeral; he volunteered, however, to shoulder its cost. Upon returning, the brother received a bill from the mortuary for $4,500, which he promptly paid. A month later, and a month after that also, he paid $10 pursuant to an add-on invoice. When a third $10 invoice came, he called his sister for an explanation. ‘Oh,’ she replied. ‘I forgot to tell you. We buried dad in a rented suit.’
“There are a lot of ‘rented suits’ buried in the past operations of insurance companies.”
OK, now I see!