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I just started reading ‘The Snowball’, Warren Buffett’s biography, ‘Oracle of Omaha’, written by Alice Schroeder. It’s hard not to feel sympathy for a man who has such a realistic approach to business and life. That he has an overwhelming desire to continue proving himself and that he has a deep reverence for his father whom he felt the world had treated unfairly.
At a time when most of us are worried about the future, it is interesting to read about a man who has amassed a fortune reputed to be around $ 30 billion. Well, at the beginning of the book there is a key message for everyone involved in business. The business is essentially simple. It’s about doing things and providing services. Once it starts to get messy, it probably won’t work and it will all end in tears. As the other successful straight talker, Jon Moulton, Managing Partner at Alchemy, said of the recent banking crises: “It would be fun to hear the boards of some banks explain a CLO squared or, more simply, how they allowed their balance sheets to fill with products that they did not understand and that their auditors cannot assess. ”*
So what does a normal day look like for Buffett? Well, first you read your favorite stock writers and then you zero in on your daily business intelligence. Get the numbers from the expanded list of companies owned by Berkshire Hathaway, Warren Buffett’s investment vehicle. . As Schroeder says, you get the numbers:
“How many auto policies had GEICO sold in the past week and how many claims had it paid? How many pounds of See’s Candies had been sold yesterday? How many prison guard uniforms had Fechheimers ordered? Europe and America – and everything else? others: awnings, battery chargers, kilowatt hours, air compressors, engagement rings, rental trucks, encyclopedias, pilot training, home furnishings, cardiopulmonary equipment, pig stables, boat loans, real estate listings, ice . cream ice creams, winches and pinwheels, cubic feet of gasoline, sump pumps, vacuum cleaners, newspaper advertising, egg counters, knives, furniture rentals, nurse’s shoes, electromechanical components. All numbers on your costs and sales are they poured into his office, and he knew many of them by heart. ” **
Well, he is a very successful man. What kind of control do you have in your business, day to day, week to week? It is interesting that such a man chooses so many tangible things to measure what is happening in his businesses in which he has invested. You are not waiting for the monthly balance sheet and profit and loss nor are you running a complex mathematical model understandable only to a few insiders. No, he is looking at the daily things that happen in the real world that he knows will eventually trickle down to real results.
You have set the bar very high. But what Warren Buffett does, we can do too. We have everything at hand in our organizations. We just have to ask ourselves, can we have the discipline to do it?
* Moulton, Jon. October 8, 2008. Financial Crisis: The UK bailout is too small and too late. Accessed November 5 on Telegraph.co.uk. Website http://www.telegraph.co.uk/finance/comment/3160463/Financial-Crisis-UK-bail-out-plan-is-too-little-too-late.html
** Schroeder, Alice. 2008. The Snowball: Warren Buffett and the Business of Life. P28 London: Bloomsbury. My emphasis