What Silicon Valley Needs to Learn from Warren Buffett – Part 1

BRK

I’m taking CEOs from Silicon Valley and elsewhere to Omaha later this week for a private (sold-out) workshop followed by the “Woodstock of Capitalism” – the annual Berkshire Hathaway meeting with Warren Buffett and Charlie Munger.

I’m doing this because tech and other non-financial leaders have a lot to learn from the Chairman and Vice Chairman of Berkshire Hathaway. Most leaders assume the primary lessons to learn from these two concern investing. They are wrong. The most important lessons are about leadership, innovation (yes – innovation despite their public reluctance to invest in tech) and building great, durable brands.

What Buffett and Munger have done slowly and with integrity over 50 years is nothing if not remarkable. Buffett bought Berkshire in 1965 when it’s per-share book value was $19. The 2015 per-share book value as reported in the annual report was $155,501. Wow. What’s their secret? How have they achieved these extraordinary results? They practice a number of simple, ordinary principles.

For example, they play the ‘time arbitrage’ game. In a society obsessed with speed, multi-tasking, and short-term considerations, they are long-term oriented. While events swirl around them (like private technology valuations dropping after another short-term investment bubble), Berkshire keeps generating a reliable $2 billion a month in profits – month after month with boring businesses like railroads, insurance, machine parts, and See’s Candies (ok – railroads and chocolate can be pretty exciting).

Short-term thinking leads to all kinds of biases and blind spots as the behavioral economists have taught us. Buffett and Munger, on the other hand, make decisions slowly, carefully and with a long-term horizon. They don’t follow fads. As a result, they gain a competitive advantage not available to the speed-obsessed short-term oriented leaders.

Buffett is a customer experience pioneer. He has understood the power of customer-driven leadership for years. He – unlike most CEOs – is willing to get out and observe and learn from customers himself and integrate those insights into his decision-making. This is one of the central messages of my book, Customers Included. Buffett actually practices it. So did Steve Jobs. So does the Berkshire CEO speaking at my workshop. Most Silicon Valley (and other CEOs) however do not.

We’ll talk about these and other practices in Omaha this week. And we’ll discuss the one simple thing they do that every leader should immediately copy.

What is that? I’ll describe that in part two of this column.

– Phil

1. Customers Included?
The first 10 U.S.-based readers to email will get a free copy of my book (including free shipping). Email us at book at collaborative gain dot com.

2. Attending the annual meeting in Omaha?
If you are already planning to attend the “Woodstock of Capitalism”, then let me know. My workshop is sold out but it would be great to see you in Omaha.