In this summary of the book "Warren Buffett's Management Secrets", Mary Buffett and David Clark informs you about the life of one of the greatest entrepreneurs in the world and, consequently, you will know some of his strategies for success!
Warren Buffett is one of the most famous investors. In a quick Google search, we find that your estimated net worth is in the $79 billion range.
He should not have gotten to where he was without, without relying on specific strategies and principles. Wouldn't it be a treasure to meet some of them? This is what we will learn in today's summary!
"Warren Buffett's Management Secrets", released in 2010, was written by authors Mary Buffett and David Clark. The work was considered a bestseller, as were all seven works of the author.
The book has more than 100 pages divided into short chapters that promise to open the curtains that hide Warren Buffett's administrative methods.
Bestselling author, international speaker, entrepreneur, and environmental and political activist - these are the striking titles in Mary Buffett's curriculum. She also regularly appears on television as one of America's leading finance experts.
With Mary, David Clark has written seven books on Warren Buffett's investment methods. Considered a renowned expert on the subject, he grew up with Warren's children. Clark holds college degrees in the fields of finance and law.
Investors, leaders, and entrepreneurs who want to know and apply the principles and methods of management of one of the richest men in the world.
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"Working in the right business makes all the difference between a successful and well-paid career or a life of slavery. It can also mean the difference between an excellent long-term investment and a worthless one".
The kind of company Warren Buffett wants to have is one that has such an inherent business economy that even bad managers seem competent when they work for it. But how to identify this type of company?
According to the book, the ideal company provides a single product or service that never needs to change or that allows high prices to be charged. Or a low-cost product or service that is always needed by the consumer. Thus, it yields high-profit margins.
The ideal company also has a market monopoly: not only does its products and services never change, but they are also easy to sell and are in the consumer's mind. She still has a lasting competitive advantage and offers the best opportunities for career growth, job stability, and long-term enrichment.
In addition to observing these characteristics, there are three tests that the book indicates to identify the best company to work for. Are they:
For Warren Buffett, running a business and growing it involves mastering the art of delegating authority. Controlling everyone and what the book calls "micromanaging" leads to neglect. Delegating now results in a more complete understanding and careful execution of the task.
Warren Buffett believes it is crazy to think that it is possible to run competent management of several companies on his own, so much so that he not only delegates functions, but delegates all work, almost to the point of abdication.
Thus, the authors pass Warren Buffett's rules to effectively delegate:
The book also advises hiring people who love to do what they were hired to do because they will be proud of their work, inspire colleagues and be the power behind the company.
Delegation involves hiring a manager to take care of the newly acquired company. But it can't be anyone, it needs to have certain characteristics.
For Warren, the ideal manager believes in the company's product or service, loves work, wakes up, and goes to sleep thinking about the company. Also, it is someone who is sincere about their mistakes and thus is more likely to learn from them.
Likewise, he is a disciplined employee from the smallest details and focuses more on the work of strengthening and making the company viable in the long run and less on the short-term economic ups and downs.
Also, the ideal manager is a good investor who is cost-conscious while preferably someone familiar with the company.
If this is not possible, it is best to find someone you have worked with before and who has a proven resume. If this does not work, the way is to use a name that is the result of referrals from trusted people.
But how do you know if someone loves what they do?
Passion for work is a crucial feature that Warren Buffett looks for in his managers. Your trick in trying to identify this is to find out what led the person to start in the business in question.
For him, an early love for the work done generates a successful future in the profession. Warren cares more about what the manager did when he was a child than what he attended college.
While Warren preaches the practice of delegating almost to the point of abdication, on the other, he argues that it is necessary to motivate his employees so that they reach exceptional levels of performance. Here is the tutorial:
When meeting a potential employee, be friendly to make a good impression. Once he is already hired, praise: Everybody needs to be recognized. Warren praises his employees for small things and lets out rockets when they do something big.
Give employees a good reputation to watch out for and don't give away free criticism. For Warren, they do not produce continuous change and kill the chances of having a productive working relationship.
He also teaches how to give indirect orders by making suggestions. This can be through questions, which act as a little push in the right direction, especially when the employee does not reach the goal of thinking on his own.
Another tip is to learn how to use compliments and criticism well. For Warren, this is an administrator's first motivational task. While the complement is made by name, the criticism cannot be direct.
When he disagrees with someone's proposal, Warren subtly advises, telling a story of when a similar idea didn't work for someone else, letting the employee draw his own conclusion.
However, where personal criticism is unavoidable, praise before criticizing. An isolated criticism is rejected, while a criticism with praise brings confidence for the criticism to be heard and accepted.
If an error happens, try to understand what happened and why it led to the mistake by watching the employees and putting themselves in their shoes. Another golden tip is not to argue but to agree to gain confidence and then get the person to really hear what you have to say.
It is also worth finding out what the employee or business owner you want to buy wants or needs.
Influencing and inspiring still involves encouraging people to come up with the right ideas: don't deliver on ready-made ideas, let them create their own standards and goals to reach those ideas.
When you want someone to do something, it's better to appeal to their greatness than to conscience, argues Warren Buffett. The book says:
"Appealing to one's conscience means subliminally inciting one's notion of right or wrong. This causes a feeling of guilt. We tend to reject anyone who makes us feel guilty."
On the other hand, appealing to a person's greatness or reputation, praising and valuing them, will make them want to maintain or raise the bar, the work explains.
No one can rise to the level of one of the most famous investors in the world without learning many valuable lessons. Thus, it is worth knowing some of what Warren Buffett learned throughout his journey, as presented in the book's final excerpts.
No matter how well managed a company is, it cannot stay out of trouble if it suffers from overfunding.
The authors teach that the danger of lending is linked to recessions. In them, the income of the company may fall too much, to the point of not being able to repay the debt. This will likely result in the burning of your assets; or worse, filing for bankruptcy.
The tip against lending is not just for business owners: Warren brings the general advice to stay out of debt as much as you can. Even though he was so rich, he believes he would go bankrupt if he borrowed money at 18% or 20%.
Quoting Benjamin Graham, Warren says that good ideas can complicate life more than bad ones. While bad ideas are born dead and hardly accepted, good ideas move on, but they can bring with them dangers that lead to disastrous economic results.
So another piece of advice in the book is always to pay attention to the potential danger an idea may carry.
The world is not perfect, and even an honest business owner can come across employees who act outside the law. In cases like this, the book is emphatic: the way out is to call the police, as not reporting will make you an accomplice.
Even the great investor Warren Buffett admits that he makes mistakes. If you can't avoid them, the solution is to make sure that successes outweigh mistakes. Otherwise, we will have problems.
Warren does not let his mistakes become an obsession: he admits them, but he does not mortify himself and seeks to learn the lessons his mistakes can teach. This includes those that occur through missed opportunities, so-called "errors by default."
Mary Buffett and David Clarkwarns:
"What's wrong with surrounding yourself with people who agree with everything you say? Nothing, until the disaster that could have been avoided, fell into your lap and the board resigns."
Warren Buffett's antidote to the evil of flattery is to surround himself with as many people as possible who can disagree.
According to the book "Warren Buffett's Management Secrets", it is not a shame not to have an original idea and resort to those already proven by other businessmen: for Warren, these are the best and the chances of going wrong are almost nil.
"By looking at successful companies, we can come up with dozens of great ideas on how to do something the right way; By looking at failed companies, we have learned how easy it is to make a mistake", summarizes the book.
Warren believes that a person becomes like those around him. The lesson here is to be in the company of high-level people, such as older, wiser mentors, better-behaved partners, and intelligent, educated people.
For Warren, each person is like a company with infinite earning potential, whose greatest asset is the person himself. He argues that this "company" grows and adds earning potential through study and experience and stays on top with energy and strength to excel in its field.
To cherish this "company" still involves taking good care of your health, improving your earning potential and protecting you from problems, the book points out.
In "Traction", Gino Wickman explores how successful entrepreneurs have an attractive and well-defined vision for their business. In addition, they know how to communicate this message to employees. From this, a guideline is created to be followed by everyone within the organization, always used to develop solutions and guide strategic actions.
In the field of ideas, Ed Catmull, author of the book "Creativity Inc.", advises: Always give people more preference than ideas, because creative people create good ideas, but good ideas can be destroyed by bad teams.
Finally, in "The Airbnb Story", author Leigh Gallagher cites company founders as examples of entrepreneurs as they encourage themselves to improve and innovate. And the stance of the three founders reflects the behavior of all Airbnb employees, as well as every entrepreneur for their company.
We hope you have the secrets and strategies shared in this Pocket Book. Give your rating and leave your opinion in the comments!
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