May 2014: Thoughts from Omaha
[As published in the Manual of Ideas, May 2014]
As fund managers, attempting to learn from and emulate the success of Warren Buffett, most of our focus is on his decisions and judgement. What is less commonly discussed is the importance of his personality towards his success. We got a glimpse of this in the way that he handled questions on his decision not to vote against Coke’s new management incentive plan (he abstained) despite making it clear in subsequent interviews last week that he felt that they were too generous. Buffett explained that he does not believe that you can be as effective on a Board if you are constantly working against management.
It is important to “pick your battles” and figure out how best to engage management in such a way that your views have genuine influence with the management team rather than boxing them into a corner. Buffett is a disciple of the Dale Carnegie principles of “How to win friends and influence people”. The fact that Coke has subsequently reviewed the incentive programme is I am sure driven significantly by Buffett putting this skill to great use – as he said “there are other ways of achieving the same objective”. Sure, Buffett’s discipline, patience, integrity, long-term perspective, focus on value are all key ingredients of his success, but he also has incredible skills in persuasion – coming from a unique blend of style, quick wittedness, self-deprecating humour – this is a much more difficult part of the ‘secret sauce” to emulate.