That’s just semantics….” Said scornfully, the remark implies that time spent understanding the meaning of words is wasted.

In fact, words are extremely important. Clear language is not only essential to communications. It’s the basis for clear thinking.

The importance of clarity in communications is readily apparent. Too often, leaders make a request, and by the time it filters through layers of management to the people who ultimately fulfill it, its meaning has changed dramatically and results are unsatisfying.

Even in one-on-one discussions, clear language is essential. A leadership team disagrees about the need for team-building. He thinks people work well together, and team-building would be a waste of time. She complains that teamwork just isn’t working, and something needs to be done to improve it. He says “team” and means the people who report to him. She says “team” and means the people from throughout the organization who are working together on a project. It’s no wonder these two leaders disagree!

Similarly, people in organizations make commitments to one another; but when one requests this and the other promises that, their agreement is meaningless and disappointment is inevitable.

Beyond communications, precise language is also essential to clear thinking. People think by manipulating symbols — words and numbers — in their minds and in writing. If those symbols don’t distinguish differing concepts, the differences are likely to be lost.

Phillipinos have at least 22 words for “rice,” and perceive the differences. Eskimos have at least 20 words for “snow,” and perceive the differences. On the other hand, as an American, I know only a handful of words for “rice” and “snow,” and do not appreciate the subtle differences. It’s not that my eyes cannot see what Phillipinos and Eskimos see. Without the right words, it’s hard to even think about a concept.

You have a “budget” for 15 people, and all are quite busy with current commitments. A customer approaches you and requests another project — requiring that you hire an addition person — and is willing to cover all costs. Do you take her money and hire the person, or turn her away for lack of “budget?”

That depends…. If “budget” means “spending power” (like a checkbook), then your checkbook may be empty; but you’re happy to take on the work (and the additional headcount) as long as the customer pays all costs. On the other hand, if “budget” means a “cap” on your headcount, you cannot take on the project without risking a poor performance appraisal. The difference between spending power and caps is significant; it’s crucial not to use the same word for both concepts.

Sometimes, business slang leads people to serious misunderstandings. For example, in business, people have come to use the word “own” synonymously with the word “produce.” Managers might be heard to say, “I own this product line,” when in fact they mean to say that they produce it. When staff within an organization use language in this way, they often come to believe that they have the right to decide what products and services they produce. This misconception undermines a culture of customer focus, and often squanders the organization’s scarce resources on products for which the corporation has little use.

Another common example of semantic sloppiness in organizations is using the word “customer” synonymously with the word “client.” Let’s presume that the word “client” refers to people outside the organization who benefit from its work. If we take the word “customer” to mean the same thing, then clearly one’s peers within the organization are not customers.

However, high-performance teamwork depends on internal customer-supplier relationships where, for every project, a prime contractor is accountable for all its deliverables and forms teams by “buying” help from peers. With this paradigm, teams form quickly, involving just the right people at just the right time. Furthermore, everyone on each team understands his or her individual accountabilities, and the chain of authority within the team is clear.

On the other hand, if the concept of “customer” is limited to clients (outside the organization), it’s easy for people to abandon commitments to peers in favor of clients’ requests. In such an environment, it’s difficult to trust one’s peers and teamwork disintegrates. Results include dissatisfied peers and clients, political strife, and reduced organizational performance.

Clients are people outside the organization. Clients are generally customers, but peers within the organization can be customers as well. Occasionally, clients serve as suppliers, as do peers. In fact, a peer may be your customer on one project, and your supplier on another. “Customer” and “supplier” refer to relationships, not a set of people. To think clearly about one’s accountabilities, it’s essential to use different words for these very different concepts.

In most business discussion, definitions found in conventional dictionaries suffice. But there are some situations where distinctions are critical and common semantics are ambiguous. In my experience, leadership and organizational design are particularly sensitive to misunderstandings. Where this has proven the case, we’ve been pressed to define terms very carefully.

It’s not important that others adopt our words. It is important that people within an organization agree on a single meaning for each word.