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Is it really worth reading a book on Warren Buffett's management style written by his daughter-in-law? The short answer is yes. Warren Buffett's Management Secrets is short, to the point and useful. Much of what drives Buffett's business success is common sense and the discipline to follow that common sense. Many of us fail in either one or both of those attributes at times in our own entrepreneurial or investing processes. So it is good to pick this book up periodically to remind oneself of how to stay on the straight and narrow path to success.
Warren's management style is presented in five related segments, all interacting to create a valuable road map that any entrepreneur can and should follow (with a few additions from Dave):
- Pick the Right Business (and Business Model)--I see many good ideas from entrepreneurs that lack a solid money making business model. You need the right economics in any business to ensure long term sustainability and most important, high market valuations.
- Delegate Authority (and Choose the Best Employees)--There is no way a founder can "run" an entire business, but that's what many try and do. Getting the right team in place, making sure they are correctly motivated and resourced and delegating responsibility to make it happen are what I look for in an entrepreneur. Good companies fail every day due to poor hiring and poor delegation decisions.
- Find a Manager with the Right Qualities--Warren looks for integrity, intelligence and a passion for the business when choosing companies to purchase or new leaders for his current companies. The recent David Sokol debacle around insider trading in Berkshire Hathaway shows the importance of questioning all hires about their ethics, especially if they end up quitting and going to work for a competitor.
- Motivate Your Workforce--Warren has adapted and improved on Dale Carnegie's methods for motivating people. These tools have been somewhat forgotten today in the world of new age management, but hold many useful lessons that can help establish a positive and well-motivated work force. You cannot be successful without having others believe in what your are doing with benefit them as much as it will benefit you.
- Focusing on Key Managerial Axioms--The book ends by dwelling on around ten key managerial axioms that Warren lives by. For example, learning from your mistakes instead of ignoring the potential lessons and moving on, or banking on the tried and true, or the dangers of borrowed money, etc. These are worth incorporating into daily business management, not only for the entrepreneur but also for his fellow travelers.
The book has much deeper insights than I have presented here. I found myself agreeing with many of his insights and thinking about how I would look at business differently as a result. You can read the book on a short plane trip.
Five Stars***** rating from Dave.
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