The record clearly indicates Warren Buffet is a businessman extraordinaire who continues to enjoy a long and exceptional career. Apparently his success has not been all about the money, given his personality and humility. As the 76 year old magnate ages he has come to terms with his mortality, and the challenge of a succession plan to replace him from the helm of Berkshire Hathaway. Such an endeavor did not go unnoticed and a New York Times column partially titled "The Apprentice: Omaha Edition," described Buffett as having Donald Trump like tendencies, and was critical of the "Apprentice" like approach to select a successor.The Times' writer struggled with Buffett’s idea of allowing a few selected leaders to play with several billion dollars to see how they do. The selection trial is to determine who is a worthy successor, and the measure of such competency test is short-term financial management performance. One immediately thinks that the selection process would put too much emphasis on near-term behavior rather than long-term value creation.
Being a fan of Warren Buffet and being objective about what he is trying to accomplish, my money is with him and his plan to pick a new CEO. One thing that sticks out is that assumptions were made or ignored about the qualifications required to get to participate in the trial. I bet the few finalist have strong leadership and financial performance records, so the comparison to flash in the pan Mutual Fund industry performers is not accurate. While it’s possible that the Times used “the Donald” analogy in part as headline-grabbing hyperbole, Buffett is actually showing a clear pattern of situational leadership and logical decision making. He has spent his entire 40+ years career engaged in assessing investment risks and returns, and making judgments not just about investments, but about the talents of smart people that work for him. Rather than just hiring the traditional way through networking, resumes, interviews, and references, he will get a chance to observe the finalists in action before a final selection is made. No doubt, he is applying insight, perspective, and ultimately, investments to judge his potential successors.
To appreciate Warren's thinking, business savvy, and insight it is worth taking some time to read through his illustrious annual letters to shareholders. There are 30 years of them, readily available online. They are inimitable for their consistency of tone, message, and even personality. They express who he is, what he cares about, and what he hopes for. Once you get an appreciation for this remarkable man, the last thing you would be concerned about from Warren is careless or short-term decision making about a successor. With such legacy of greatness to behold, it makes me wonder what people will say about our own collections of “shareholder letters” or their equivalents. Will our legacies demonstrate that we invested our own time with an eye toward the long-term? What can possibly beat that?
