Warren Buffett is known as the Oracle of Omaha for his uncanny ability to pick stocks, but he is far more than just a stock picker. He’s also one of the greatest managers in the world, as the success of his conglomerate Berkshire Hathaway has shown. Here are 10 things successful managers can and should learn from Warren Buffett.
- Do what you love.
Buffett loves what he does, and it certainly shows. It’s why he can still get up and work even in his 80s and 90s. He said when people do what they love, they’ll never work a single day. He said people who work in a job they love will “jump out of bed in the morning.” He also said he thinks people are out of their mind if they keep taking jobs they don’t like because they think it will look good on their resume.
“Isn’t that a little like saving up sex for your old age?” he said.
- Live below your means.
Buffett is well-known for his frugality, and successful managers would do well to learn from it. He still lives in the same house he paid about $31,000 for in the 1950s, and he has said it was one of his greatest investments.
Managers who can avoid wasting money will find themselves on a much better footing than those who spend money like it’s water. Buffett has said that those who buy things they don’t need will end up having to sell things they need.
- Know when to quit.
Every manager makes mistakes, even Warren Buffett. He once recalled that he paid $400 million for a company called Dexter Shoe in the 1990s, but the company ended up going to zero after he paid about $400 million worth of Berkshire stock for it.
He added that in the case of a sinking boat, “energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.” Every manager should know when to walk away if things aren’t going well.
- Say no to almost everything.
Buffett has also said that “really successful people say no to almost everything.” His advice has to do with day-to-day decision making as he sees time as one of his most valuable assets. Most successful business managers have a lot of ambition and want to accomplish a lot of things, so it can be tempting to say yes most of the time.
However, it is important to say no to the unimportant things to make time for the important things. Not every investment will have the same level of return, and the same is true in business as well.
- Don’t follow the crowd.
One of Buffett’s most well-known sayings is to “be fearful when others are greedy and greedy when others are fearful.” His statement illustrates how dangerous it can be to follow the crowd, especially when stock prices are skyrocketing.
The same holds true in business. Managers who blaze a path in their field are likely to be trend setters. If you just focus on doing what you do best instead of just doing what everyone else is doing, you’ll find greater success in the long term.
- Invest in yourself.
Buffett has frequently talked about how important it is to invest in yourself. When he was younger, he knew that he needed to have good speaking skills to be able to talk to investors, so he took public speaking classes to learn. He was also scared of public speaking, so the class he took from Dale Carnegie changed his life forever.
Today he still tells young entrepreneurs that they must be able to communicate effectively in order to be successful. There are plenty of other ways to invest in yourself as well, most of which will make you a better manager.
- Don’t try to do everything yourself.
Buffett’s partnership with Charlie Munger is very well-known, but Munger isn’t the only one Buffett depends on in his business. In many of his letters, he has written about how skillful the managers of his many companies were.
For example, in his 1989 letter for Berkshire Hathaway, he said most of the managers of his companies don’t have to work for a living, and they “show up at the ballpark because they like to hit home runs.” He couldn’t and wouldn’t be involved in so many companies if he didn’t have such a strong team of managers handling the companies. Every successful manager should find some strong team members they can trust so they can build their empire like Buffett built his.
- Have a succession plan.
Every manager should work with an idea of long-term success of their business in mind, and the way to do that is to make sure they have a succession plan. Buffett said in his 2006 letter to shareholders that it’s “essential” that he had managers that were “much younger” than he available to succeed him.
He then went on to reveal numbers that demonstrated why the younger managers he had in place would be strong successors.
- The risk of being out is greater than the risk of being in.
In his 2012 letter to shareholders, Buffett said many CEOs were crying “uncertainty” when it came to capital expenditures, so they were holding back. However, he said there will always be uncertainties, just as there have been since the nation was founded.
He believes business and stocks will always be successful despite temporary setbacks. He believes many people miss out because they’re trying to dance in and out of the market based on the predictions of “experts” or the “ebb and flow of business activity.” However, he said the “risks of being out of the game are huge compared to the risks of being in it.”
He told shareholders how he had bought his first stock in 1942 when the U.S. was suffering major losses, but the nation’s GDP more than quadrupled between 1942 and 2012, demonstrating that given enough time, success will be found.
- Business is about more than just money.
In his 1977 letter to shareholders, Buffett said some investors were questioning the wisdom of staying on the textile business, which was unlikely to produce returns on capital comparable to those in other businesses.
One of the reasons he named for staying in was the fact that their mills in New Bedford and Manchester were among the largest employers in each town. He added that their workers and unions had been working with management to enable the company to remain viable. It’s important for leaders to remember that business is more than just money. It’s also about making the world a better place and supporting workers as long as modest profits at least can be made.