Plenty to learn from the outgoing chief executive
Berkshire Hathaway’s charismatic chief executive Warren Buffett, the much-vaunted ‘Oracle of Omaha’, enjoyed two significant career milestones this week.
The first was helming his 60th annual meeting for the fund, which shed light on where the trillion-dollar-investment manager will be focusing its attentions in the near future. Almost 20,000 people attended the event, which sees attendees spend hundreds of thousands at concession stands alone.
The other, of course, was Buffett finally announcing that he would step down from his chief executive role by the end of the year.
Any IR professional worth their salt would likely read Buffett’s annual letter to shareholders for a glimpse of what the veteran stock picker thought would shift the market in the year ahead.
At this week’s meeting, he showed a clear preference for Japanese equities in the long term, said that real estate wasn’t in focus and gave Apple CEO Tim Cook more credit for building Berkshire’s wealth than Buffett could take credit for.
But the lessons that the outgoing chief executive has for IROs have been a little longer in the making. Here are a few of the thousands of words of wisdom the great man has shared over the years.
Reputation is paramount
IROs will no doubt be familiar with Buffett’s most famous attribution: ‘It takes 20 years to build a reputation and five minutes to ruin it.’ The importance of maintaining reputation cuts several ways for IR teams: not just in terms of their company’s standing in the market, but also their own personal reputation with stakeholders in a time of crisis.
At any rate, it’s a familiar call for proactive reputation management and constant vigilance in both routine communications and during a crisis.
Emotional discipline is a key attribute
Despite his affable exterior, Buffett frequently emphasized the critical importance of keeping them in check. ‘People have emotions,’ he said at Berkshire’s latest annual meeting, ‘but you’ve got to check them at the door when you invest.’
That of course applies to the formal communications IR teams have with the market – and probably should extend to any C-suite comments that an IR team signs off on – but also applies to how professionals can navigate more stressful situations too. That might be steering communications during a complicated corporate transaction, where the hours are long and the challenges myriad. It could also apply to the daily struggles of dealing with investors and analysts.
Take accountability and learn from mistakes
A frequent fixture at Berkshire Hathaway’s annual meetings was Buffett owning up to mistakes he had made in the previous year. One such mistake was making a significant investment in UK supermarket chain Tesco, which seemed a no-brainer: the retailer had a dominant market share, strong customer loyalty and steady sales growth. However, a combination of emerging competitors (in the form of discounters like Aldi and Lidl), declining fundamentals and a string of management scandals, where bosses knowingly overstated profits, led to a big write-off.
In his 2014 shareholder letter, Buffett admitted his mistake, writing: ‘An attentive investor, I’m embarrassed to report, would have sold Tesco shares earlier. I made a big mistake with this investment by dawdling.’
It’s a good note for IROs, too, who are always best served by owning up to mistakes early. It also goes doubly for corporate missteps, which investors and analysts will be much more forgiving of should they understand the reasoning behind them.
Surround yourself with good people
Another vintage slice of Buffett wisdom that is as applicable to our professional lives as our personal ones. ‘Who you associate with is just enormously important,’ he said at his final shareholder meeting. ‘Don’t expect you’ll make every decision right on that. You’re going to have your life progress in the general direction of the people that you work with, that you admire, that become your friends.’
Luckily for our readers, the IR profession is one defined by the tight-knit, supportive community that we’ve all come to appreciate. Whether that’s at IR Impact’s events (which, of course, present the best opportunity), at any of the world’s wonderful, regional IR associations or under your own steam, surrounding yourself with good people easily delivers a stronger IR program and better outcomes for investors.
What do you think is the best lesson to take away from Warren Buffett? Let us know, either on LinkedIn or at [email protected]
