Words as Weapons
Yesterday was National Dictionary Day, a celebration of words and their power to shape our understanding of the world. This is especially true today in both politics and financial markets, where language plays a pivotal role in shaping perception and value. In both arenas, the power of language can be the difference between success and failure.
Consider the letter "A," which Noah Webster, the father of American lexicography, described in 1758 as "the first letter of the Alphabet in most of the known languages of the earth." His notes, housed at the New Haven Museum’s Whitney Library in Connecticut, reveal his deep appreciation for language's essential role in human expression. Webster’s near 30-year journey to compile the first American English dictionary was monumental. His decision to pivot after grappling with just “A” and “B” mirrors the very challenges CEOs face today when confronted with activist investors pushing for change.
Consider Elliott Management’s campaign against Southwest Airlines. Having built a reputation for successful interventions at companies like Twitter and AT&T, Elliott is now leveraging a loophole in Southwest’s bylaws to push for a special shareholder meeting in December. While past activist efforts often focused on key business vulnerabilities, Elliott’s agenda is clear: operational overhaul, cost-cutting, and urgent leadership changes to unlock long-term shareholder value. But first, Elliot is calling on shareholders to elect its proposed slate of eight new directors to ensure leadership delivers on profitable growth.
In its 50-page presentation, Elliott reframes Southwest’s corporate narrative labeling its current business strategy as "stagnant" and "outdated" while promising "modernization" and "best-in-class performance." These are not just criticisms, but rallying cries for change delicately crafted to impact shareholder perceptions and ultimately, to change the company's current trajectory.
Elliott’s multi-channel communication strategy from its website (www.StrongerSouthwest.com) to its newly launched podcast is designed to reach as many shareholders as possible. The podcast, featuring interviews with its preferred board candidates is a calculated move to persuade and gain support for Elliot’s stated goal of restoring “Southwest’s status as an industry-leading airline”.
Elliott's uses three main communication techniques in its arguments: data-driven language, juxtaposition/contrast, and emotional appeal. The use of data gives credibility to their argument, grounding their case in hard facts and figures, like singling out Southwest's declining market share and financial underperformance. Elliot then contrasts Southwest’s past successes with its current struggles framing the airline's once-thriving legacy as now sluggish when compared to peers. Finally, an emotional appeal taps into shareholders' concerns turning a logical proposal into an urgent call to action. Together, with clear steps to improve performance, they have built a reasonable case.
Southwest swiftly responded to Elliott's proposed request for a special meeting, calling the it "unnecessary," "inappropriate," and "disruptive" given its timing during the holiday travel season. This response itself underscores the power of language in shaping the narrative. The words were carefully chosen to dismiss Elliott’s proposal as ill-timed and unreasonable considering the strategic plans already in place to update its board and renew growth.
Language is so much more than words: it is the architecture of tomorrow. And in this case, it's the sharpest weapon in the fight for control of Southwest's future.
