Posts Tagged ‘Warren Buffett’

Good to be home from traveling around Asia Pacific the past couple of weeks talking about Reputation Warfare.  So am now back on the blog posting trail. Two things struck me this week although I will make sure to write more about some of my observations about reputation in Asia in the weeks to come. Just to start out, while I was away, Barron’s World’s Best CEO list came out.  This highly coveted and selective list usually has a theme in addition to its traditional focus on longterm financial performance.  As they say, they like to  identify corporate leaders who make a difference to their companies and deliver for investors. Barron’s require that a CEO has been at the job for at least three years and prefers companies with market values of at least $5 billion. This year their advice to leaders is “Go Thee to Asia.”

“Any big company looking for serious growth in the 21st century must have a plan for Asia. The region is home to half the globe’s population and, increasingly, it’s driving the world’s economy. So, as Barron’s drew up its annual list of the world’s 30 best chief executives, we took a hard look at how each candidate was approaching Asia and other developing markets.”

On another note, this morning while waking up super early from jet lag crazies, I read about the Warren Buffet-Berkshire Hathaway reputation bruise.  In a New York Times article, it says: 

 ”In a July 2010 letter, Mr. Buffett instructed his managers to “zealously guard Berkshire’s reputation.”

“We can afford to lose money — even a lot of money,” Mr. Buffett said. “But we can’t afford to lose reputation — even a shred of reputation.”

These Buffett quotes don’t surprise me and neither does the removal of Mr. Sokol. When I turn to my favorite quote of all time from the sage/oracle from Omaha, it appears he acted swiftly and deliberately. In case you have never heard me say it, it is quite appropriate today. 

“If you lose dollars for the firm by bad decisions, I will be understanding.  If you lose reputation for the firm, I will be ruthless.”

   The test question. Warren Buffett says he uses a New York Times example to advise leaders in his company whether they should take certain actions and risk ruining their reputations overnight. He warns them that if they think they’d feel uncomfortable seeing whatever they did or said on page one of the New York Times, they shouldn’t do it. He could add another verion — think about your mom reading what you did or said on the front page of your local paper. (Somehow I don’t think Tiger Woods took this test.)  In our social media guidelines for employees at Weber Shandwick, we have a more intuitive but equally important test. We remind people that if they are posting online and have any doubt about what they are doing or saying, that’s evidence enough not to go ahead.  If they are not sure, we suggest asking their supervisor.  Believe me, this guidance is not as easy as it sounds.  There are times I doubt what I am about to write and steer away from it after thinking twice. I usually ask myself what my boss would say and that usually does the trick!

In recent weeks as executive bonuses have become the talk of the town, a new test was suggested by David Wessel in one of his columns for the Wall Street Journal.  He quoted Britain’s finance minister, Alistair Darling (I always think of the Darlings from Peter Pan when I hear his name) who remarked at a WSJ Future of Finance conference in London packed with financiers that “you have to pass the next-door neighbor test. You have to be able to look at your next-door neighbor and justify what you are doing.”  Wessel’s commentary on this new test was right on the money: “And many of them cannot. They cannot even explain what they do. They promise better ‘risk management,’ but to many of their neighbors the past few years were all risk, no management.” All risk and no management….I love that!

I would have changed the Darling test question to something along the lines that if you can explain to your neighbor why you should get a bonus in the millions when the economy is failing, unemployment is high and public outrage is off the charts, then maybe you actually deserve it. But I agree that many, not all, financiers cannot explain how they actually managed risk well enough for most of us over the past 18 months and helped make our economy more productive and safer for future generations.  

All this makes me wonder what the next test question will be 12 months from now.  How about….if you don’t want to see what you said or did on the home page of the Huffington Post, don’t do it!  A possibility.

  Always try to get my CEO fix and today turned out no differently. For inspiration, went to Fortune‘s Pattie Sellers who has a super blog named Postcards.  I always learn something from her and I get my CEO jolt that helps me through the day. I was breezing through her postings this afternoon on an inspiration break and read what Susan Jacques, the CEO of Borsheims Fine Jewelry and Gifts, said about the best advice she has gotten from owner Warren Buffett. Buffett writes his top team a memo along these lines every year. The advice also contains a piece of my favorite quote regarding reputation. If you know me, you’ve heard me quote it. Had to get it down on this blog for posterity’s sake:

We can afford to lose money–even a lot of money. We cannot afford to lose reputation–even a shred of reputation. Let’s be sure that everything we do in business can be reported on the front page of a national newspaper in an article written by an unfriendly but intelligent reporter. In many areas, including acquisitions, Berkshire’s results have benefitted from its reputation, and we don’t want to do anything that in any way can tarnish it. Berkshire is ranked by Fortune as the second-most admired company in the world. It took us 43 years to get there, but we could lose it in 43 minutes.