Warren Buffett, billionaire, executive director of the legendary holding company Berkshire Hathawayhas long argued that the best kinds of leaders are those who are committed to mentoring their future successors—and those with a strong sense of direction.
“You must have a clear vision of where you are going so that you can get others to follow you,” Buffett told Fortune Susie Gharib at Berkshire Hathaway’s 2015 annual meeting of shareholders. He told Gharib that Berkshire Hathaway has “a ton” of next-generation leaders. “There is no shortage.”
To keep those leaders engaged and committed to the company’s mission, Buffett said he and the late Charlie Munger, who was then a vice chairman, tried to “create a strong culture through what I write and what I say—the same thing with Charlie. ”
“Ultimately, we want people to buy into the Berkshire culture,” Buffett said.
As for whether people can be trained to be great leaders — as opposed to simply being born with the right traits and the right orientation, Buffett dissected the difference.
“I think it’s a combination of the two,” Gharibu said. “Some people have much more leadership qualities in themselves, but I think you can learn a lot too.”
Only good people
For decades, Buffett and Munger have extolled the virtues of good management—and good hiring.
ua in 2014 Wealth interviewPattie Sellers, who was editor-in-chief at the time, wrote that Berkshire Hathaway generally refuses to buy companies run by bad managers. That’s unusual. “A lot of people like to buy good companies with bad managers and then replace them,” she said.
That didn’t work for Munger and Buffett. “We’ve tried it, with predictable results,” Buffett told Sellers, adding that “life is a lot more fun” when you work with people who are already naturally good — rather than wasting energy trying to turn bad managers into good ones. “I mean, who wants to spend their life trying to change people from their natural approaches?”
“Marrying someone to change them is crazy,” Buffett continued. “And I would say hiring someone to change them is just as crazy, and partnering with them to change them is crazy.”
Munger echoed that sentiment. “The reason Berkshire has been successful as a large conglomerate — more successful than any other large conglomerate, as far as I know — is that we try to buy things that won’t require a lot of managerial talent at headquarters,” he told a event from 2017 at the University of Michigan. “Everybody else thinks they have a lot of managerial talent at headquarters, and that’s a lot of hubris.”
In 1998Buffett told MBA students at the University of Florida that he looks for three things when hiring people: integrity, intelligence and energy. All three are equally vital, he added. “If they don’t have integrity, you want them stupid and lazy.”
Some things don’t change with time. On a Shareholders’ meeting in 2021Buffett said that mismanagement is the biggest threat a company can face. “You take the guy or the woman who’s in charge of it – they’re personable, the directors love them – they don’t know what they’re doing. But they know how to look. That is the single greatest danger.”
