| | | ZHamz, I'm certainly no expert, but what I've gathered from reading about Buffett is he wants to work with people that are competent and that he trusts. This is a prerequisite for delegation. If he can't trust the management he can't do that, so there are only some managements he can work with. Recent deal with 3G probably tells you that he thinks very highly of them.
Buffett set up Berkshire so that he can control capital allocation decisions between units, but he does not want to get very involved in the operational aspects of any of the companies much at all. That's just what I've gathered from the reading. He likes to keep his time free so as to not be bogged down in operational matters. Early in his career he got more involved operationally in a few investments (more than he'd like) and from what I gathered didn't enjoy it much, didn't like the public criticism he took (sometimes you have to make tough decisions to save failing businesses), which led him to take a more distant stance that he has now. I think the slow winding down of the Berkshire textile operations stemmed from that. It wasn't a good investment, and probably would've been better to close it down sooner rather than later, but he didn't like the conflict so the result was a slow wind down.
He takes pride in his small home office. What is it, like only 20-some employees for his entire home office operation? He feels like if you buy the right companies, set the right incentive, and have the right management it's best to let the experts at operations do their job. He has built a system for them to do that, and in the process built a company w/ the minimal of oversight.
Here's a good summary
corpgov.law.harvard.edu |
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