What’s the ultimate capitalist tool? Some executives say it’s the Internet. Others place their faith in junk bonds. For the privileged few, it’s a Gulfstream V jet. All are important. But Michael Capek says the real answer is something we all can afford: language.

anguage constitutes the foundation of human interaction and advancement. It is the medium in which we exist, survive, and thrive. It is what has allowed us in the space of a few thousand years to travel from marginal nomadic existences to the moon. It is the means by which we get the useful material trapped in our heads into the minds of others.

In today’s business culture, effective communication skills are regarded as a sine qua non for success. But comparatively few people realize that language remains, at root, a tool. Indeed, language is as critical a prop for road warriors and global executives today as jawbones, flints, and wooden clubs were to our less-evolved ancestors eons ago.

Language is the bridge between material fact and mental abstraction. But it’s even more powerful than that. As management guru Peter Senge has written, “the alternative to seeing language as describing an independent reality is to recognize the power of language – to bring forth new realities.”

In fact, reality shows up in language before it shows up anywhere else. By the mid-1980s, Japanese car manufacturers had captured a big chunk of the American car market. Having taken their cue from American quality guru W. Edwards Deming, they developed systems of building cars of of superior quality.

Indeed, it was reported at the time that the Japanese had fundamentally redefined and expanded the concept of quality. In Japanese atarimae no hinshitsu means ordinary quality, quality of a type that is “taken for granted.” The new, expanded concept, called miryokuteki na hinshitsu, translates into “things gone right” – indicating a breadth and depth of quality beyond what the consumer expects or can even imagine. One of the reasons Japan produced cars of superior quality has to do with language. For the Japanese miryokuteki na hinshitsu constituted reality, and it found embodiment in Toyotas and Hondas.

Most of us are comfortable with the thought that language is a means of communication. But we are less aware that language is our primary tool for representing reality to ourselves and to others. It enables us to suspend our thoughts in air or capture them on paper, or on a computer screen, or store them on a hard drive, so that our thinking can be seen, examined, and modified. And in a very real sense, business is language. Business is analyzed and talked about in language, business takes place in language, and virtually all breakdowns in business are either breakdowns in communication or are accompanied by breakdowns in communication. Recognizing this seemingly innocuous presumption is important because it enables a different conversation about business and business problems. And it leads us to the conclusion that the very language we use can profoundly influence outcomes.

or example, there are times when articulating a single phrase can produce dramatic results. When famed banker John Reed first arrived at what was then First National City Bank, the Operating Group, one of the bank’s six divisions, was experiencing breakdowns of a magnitude that threatened the entire entity. At the time, the Operating Group was viewed simply as a mechanical support function for the customer contact offices.

Reed, who would later rise to become CEO of Citicorp, was not the first to view the Operating Group as an independent, high-volume production operation. But he was the first to insist on calling it a “factory – which designed and controlled its own processes and products in the style of a manufacturing organization.” This ‘naming’ allowed something quite remarkable to happen. Once that fundamental shift in perception took hold, the bank installed the appropriate personnel – professional production management – and they managed to resolve the systemic difficulties that had plagued the Operating Group. The point here is that the importance of language in business goes beyond good communication skills. It goes to the heart of understanding your business and what makes it work.

Words do not contain meaning at all. Rather, words have meaning attributed to them by people. Many successful business leaders seem to grasp intuitively that one of the most important things they manage is meaning.

Using language as an effective business tool is complicated by the fact that words are not like Morse Code, in which there is a fixed meaning for each symbol. In fact, words do not contain meaning at all. Rather, words have meaning attributed to them by people. Many successful business leaders seem to grasp intuitively that one of the most important things they manage is meaning. Part of Jan Carlzon’s success in turning around the airline SAS was his emphasis on front-line workers – those who keep business customers happy. Early on he declared that henceforth they would be known as managers: “It may seem like a mere word game but I use the term to remind my staff – and perhaps mostly those at upper levels of the old pyramid – that their roles have undergone a fundamental change.” Similarly, GE’s Jack Welch used the phrase “boundaryless corporation” to help legitimize what he saw as the essential egalitarian nature of organizational success.

Because our core vocabulary has multiple meanings, there is always a certain amount of slippage between how we perceive things and represent them to ourselves, and how we are able to describe those things to others. Thoughtful, intelligent employees can be communicating at their best, but a company may continue to lose market share. Why? Part of the reason may be a gap between perception and reality, a failure of language.

Consider one of the most frequently used terms in business: problem. The process of identifying problems sounds simple. But as every businessperson knows, gaining consensus about exactly what constitutes a problem – or ‘the’ problem – can be a challenging undertaking. We can point to, see, and sit on a chair. And even when chairs are not physically present we have no difficulty communicating about them. But we normally cannot ‘see’ a problem. A problem is an abstraction from the outset, and herein lies part of the difficulty. In fact, ‘problem definition’ has become an industry. Consulting firms make millions by taking on this process for client companies. At a time when many industries are undergoing profound change and new industries are developing willy-nilly, the ‘sense-making’ ability of managers is all the more critical.

he other major barrier limiting our ability to use language effectively to achieve business goals is the tendency to believe that our perceptions are a description of what reality actually is. Indeed, the trick to communicating effectively is to distinguish what we are getting from outside versus what we are getting from inside our heads. This is a prerequisite for then being able to put into words the ‘meaning’ of what is going on externally, in front of our eyes.

To be sure, this process is among the most complex and least understood of all human activities. But by becoming aware of the tool-like nature of language, we can become more aware of our capacity to create meaning and to leverage our ability to manage effectively, as well.

More information available at: www.stern.nyu. edu/~mcapek/mginglng.html

Michael Capek is clinical associate professor of management communication at Stern.