Warren Buffett, the billionaire CEO of legendary holding firm Berkshire Hathaway, has lengthy maintained that the very best sorts of leaders are those that decide to mentoring their future successors—and people with a agency sense of path.
“You have to have a clear vision of where you’re going, so that you can get others to follow you,” Buffett instructed Fortune’s Susie Gharib on the Berkshire Hathaway Annual Shareholder Assembly in 2015. He instructed Gharib that Berkshire Hathaway has “a ton” of next-generation leaders. “There’s no shortage.”
To maintain these leaders engaged and dedicated to the agency’s mission, Buffett stated he and the late Charlie Munger, who was then the vice chairman, tried “to create a strong culture through what I write, and what I say—same thing with Charlie.”
“In the end, we want people to buy into the Berkshire culture,” Buffett stated.
As for whether or not individuals may be educated to be nice leaders—versus merely being born with the correct traits within the correct orientation, Buffett cut up the distinction.
“I think it’s a combination of the two,” he instructed Gharib. “Some people have way more leadership qualities inherently, but I think you can learn a lot, too.”
Good individuals solely
Buffett and Munger have extolled the virtues of fine administration—and good hiring—for many years.
In a 2014 Fortune interview, Pattie Sellers, who was editor-at-large on the time, wrote that Berkshire Hathaway as a rule refuses to purchase corporations run by unhealthy managers. That’s uncommon. “A lot of people like to buy good companies with bad managers and then replace them,” she stated.
That didn’t work for Munger and Buffett. “We tried that, with predictable results,” Buffett instructed Sellers, including that “life is so much more fun” while you work with people who find themselves already good by nature—quite than expending power attempting to show unhealthy managers good. “I mean, who wants to spend their life trying to change people from their natural approaches?”
“Marrying somebody to change them is crazy,” Buffett went on. “And I would say hiring somebody to change him is just as crazy, and becoming partners with them to change them is crazy.”
Munger echoed the sentiment. “The reason that Berkshire has been successful as a big conglomerate—more successful than any other big conglomerate, so far as I know—is we try to buy things that aren’t going to require much managerial talent at headquarters,” he stated at a 2017 occasion on the College of Michigan. “Everybody else thinks they’ve got a lot of managerial talent at headquarters, and that’s a lot of hubris.”
In 1998, Buffett instructed MBA college students on the College of Florida that he appears to be like for 3 issues when hiring individuals: integrity, intelligence and power. All three are equally very important, he added. “If they don’t have integrity, you want them dumb and lazy.”
Some issues don’t change over time. At a 2021 shareholder assembly, Buffett stated unhealthy administration is the most important menace an organization may face. “You get a guy or a woman in charge of it—they’re personable, the directors like ’em—they don’t know what they’re doing. But they know how to put on an appearance. That’s the biggest single danger.”
