Warren Buffettthe billionaire who was CEO of the legendary holding companyBerkshire Hathawayhas always stated that the best types of leaders are those who are committed to guiding their future successors — and those with a firm vision for direction.
“You need to have a clear vision of where you’re going so you can get others to follow you,” Buffett told Fortune at Berkshire Hathaway’s annual shareholder meeting in 2015. He said Berkshire Hathaway has “a ton” of next-generation leaders. “There is no shortage.”
To keep these leaders engaged and committed to the company’s mission, Buffett said he and the late Charlie Mungerwho was vice president at the time, tried to “create a strong culture through what I write and what I say — the same goes for Charlie.”
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“Ultimately, we want people to buy into Berkshire’s culture,” Buffett said.
As for the question of whether people can be trained to be great leaders—as opposed to simply being born with the right traits in the right guidance—Buffett averaged it out.
“I think it’s a combination of both,” he said. “Some people have a lot more leadership qualities by nature, but I think you can learn a lot too.”
Buffett and Munger have been extolling the virtues of good management — and good hiring — for decades.
Berkshire Hathaway, as a rule, refuses to buy companies run by bad managers. This is unusual. “A lot of people like to buy good companies with bad managers and then replace them,” she said.
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That didn’t work for Munger and Buffett. “We’ve tried that, with predictable results,” Buffett said, adding that “life is a lot more fun” when you work with people who are already inherently 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 according to their natural approaches?”
“Marrying someone to change them is crazy,” Buffett continued. “And I would say that hiring someone to change you is equally crazy, and partnering with them to change them is crazy.”
Munger echoed the 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 are not going to require a lot of management talent at headquarters,” he said at a 2017 event at the University of Michigan. “Everyone thinks there is a lot of managerial talent at headquarters, and that is very arrogant.”
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In 1998, Buffett 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 to be stupid and lazy.”
Some things don’t change over time. At a 2021 shareholder meeting, Buffett said that mismanagement is the biggest threat a company can face. “You put a man or a woman in charge — they’re nice, the directors like them — they don’t know what they’re doing. But they know how to make a good impression. That’s the biggest danger.”
