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I doubt The Berkshire Hathaway is successful because of their processes. They are successful because Buffet and Munger are geniuses in their respective field an
by amix 10y ago
I doubt The Berkshire Hathaway is successful because of their processes. They are successful because Buffet and Munger are geniuses in their respective field and to build the internet version of The Berkshire Hathaway, you would probably need to copy the wisdom and not merely their processes.
There’s an interesting video about how Magnus Carlsen makes his chess moves. He makes the next move in seconds and then thinks if it’s the right move, ref: https://www.youtube.com/watch?v=PZFS0kewLRQ https://www.youtube.com/watch?v=PZFS0kewLRQ -- And maybe Buffet does a similar thing, he can look at balance sheets and quickly decide if it's a business worth buying or not.
- Lordarminius 10y ago> I doubt The Berkshire Hathaway is successful because of their processes.... Buffet and Munger are geniuses Numerous writers in different fields have debunked this myth. Starting with Taylor in organization theory [1] It is the process that matters, not some undefined 'talent' 1. https://en.wikipedia.org/wiki/Organizational_theory https://en.wikipedia.org/wiki/Organizational_theory
- Spooky23 10y agoIf that were true, there would be many more successful conglomerates like Berkshire Hathaway. Processes are ante into the game, great process and lousy leadership will fail.
- Lordarminius 10y agoThere ARE many more successful conglomerates like BRK. Many, many, more.
- Spooky23 10y agoNot that provide the same returns.
- adventured 10y agoNo there are not in fact "many, many, more" and you can't name them accordingly. There are exceptionally few, massive, successful conglomerates. So few that there are only a handful of them in the entire $19 trillion US economy. In the entirety of all global business today, there are only a few dozen conglomerates large enough to make either the US or global equivalent of the Fortune 500 in terms of sales. The majority of those conglomerates exist not due to a special process or skill, instead they exist due to vast amounts of time and wannabe empire building managements (eg General Electric). GM was a classic example of that wannabe empire building. They tried to build a conglomerate and it went poorly. They acquired companies like Hughes and EDS. More often you get outcomes like GE's empire building which nearly bankrupted the company and required a bailout to keep them from collapse. Sony is another classic example of a failed attempt at a conglomerate empire.
- valuearb 10y agoThere are actually zero. First there aren't many $500B conglomerates to start with, and not with BRK's returns. Second, there is almost certainly not another conglomerate even a tenth the size with such a tiny executive staff. He's got only 24 people total at the corporate headquarters, and their role is mainly just doing the tax returns. He has more than a hundred businesses reporting directly to him. It might be the least duplicatable process in the world.
- adventured 10y agoYou've got the order backwards. Buffett's talent - capital allocation - is what provided the capital to begin building the foundations of the conglomerate in the first place. He stacked a large amount of capital up from the wildly successful Buffett Partnerships, long before he had any supposed process in place in regards to what has made Berkshire successful.
- valuearb 10y agoBecause you can't define talent doesn't mean it doesn't exist. Berkshire debunks organizational theory because it's organization structure has been fabulously successful and no one else has been able to copy it.