At only six years old, he purchased 6-packs of Coca-Cola from his grandfather’s grocery store for twenty-five cents and resold each of the bottles for a nickel, pocketing a five cent profit. While other children at his age were playing, he was making money. Five years later,he took his first step into the world of high finance.
At eleven years old, he purchased three shares of Cities Service Preferred at $38 per share for both himself and his older sister, Doris. Shortly after buying the stock, it fell to just over $27 per share. A frightened boy held his shares until they reached to $40. He promptly sold them – a mistake he would soon come to regret. Cities Service shot up to $200. The experience taught him one of the basic lessons of investing: patience is a virtue.
We are talking about American business magnate, investor, and philanthropist,who serves as the chairman and CEO of Berkshire Hathaway Warren Edward Buffett. He is considered one of the most successful investors in the world and has a net worth of $84 billion, making him the third wealthiest person in the world.
Warren Edward Buffett was born on August 30, 1930.The second oldest, he had two sisters and displayed an amazing aptitude for both money and business at a very early age. He had unbelievable ability to calculate columns of numbers off the top of his head and Warren still amazes business colleagues with it today. When he graduated from school, it was never his intention to go to college. At that time he had already made $ 5000 delivering newspapers (this is equal to $42,610.81 in 2000). Buffett only stayed two years in Wharton Business School of Pennsylvania, complaining that he knew more than his professors. After some time he was finally persuaded to apply to Harvard Business School, which, in the worst admission decision in history, rejected him as being “too young”. In 1951 he received his master’s degree in economics at Columbia University, where he studied under economist Benjamin Graham, and furthered his education at the New York Institute of Finance.Influenced by Graham’s 1949 book, The Intelligent Investor, Buffett sold securities for Buffett-Falk ; Company for three years, then worked for his mentor for two years as an analyst at Graham-Newman Corp.
Company: Berkshire Hathaway
In 1956 Buffet formed the firm Buffett Partnership Ltd. in his hometown of Omaha. Utilizing the techniques learned from Graham, he was successful in identifying undervalued companies and became a millionaire. One such enterprise Buffett valued was a textile company named Berkshire Hathaway. He began accumulating stock in the early 1960s, and by 1965 he had assumed control of the company.
Despite the success of Buffett Partnership, its founder dissolved the firm in 1969 to focus on the development of Berkshire Hathaway. He phased out its textile manufacturing division, instead expanding the company by buying assets in media (The Washington Post), insurance (GEICO) and oil (Exxon).
Following Berkshire Hathaway’s significant investment in Coca-Cola, Buffett became director of the company from 1989 until 2006. He has also served as director of Citigroup Global Markets Holdings, Graham Holdings Company and The Gillette Company.
Let’s evaluate Warren Buffet according to one of the most rampant Big 5 personality traits model, As we know Big 5 model consists of:
Openness to experience
In our opinion, leadership and extraversion traits are essential for achieving such success. Everybody thinks, that Warren must be extrovert too, but he has talked about his introvert nature, that he had problems with communicating with people. Although he has high energy and his story proves, that he always wanted to be an influential person, therefore we can say that he has a average level of Surgency. We can also claim, that he has high Conscientiousness and Openness to experience, as he is flexible and can easily adapt to change, what is reflected on his way of doing business and also he has high need for achievement. As for adjustment, it’s essential for him to have self-control, stay calm and work well under pressure. His ability to stay grounded in the current moment without attachment to the past or desire for the future is at the heart of his success. He stayes true to his frugal, calm, grounded approach. His emotional stability has helped his company to overcome many obstacle. Buffet is reserved and indirect on criticising his employees. He hired Harry Bottle to do the dirty work , such as cutting costs and getting cash from underperforming factories. Every year, he would invite his shareholders to his house and shared stories with his guests. He dislikes conflicts, also shows his human side by showing emphathy. So he has high level of agreeableness too.
Everybody agrees about fact, that Warren Buffet is very successful person and a great leader. But how does he do that? How does he lead more than 300 000 employees? According to the information, we found out that Buffet cares about his employees, tries to enhance their satisfaction, increase their intristic motivation. For example, he agreed to close stores on Sunday due to religious reasons, while he thought by this action he would give his rivals a competitive advantage. He also uses positive reinforcement. Even when the company is doing badly, managers are rewarded if they handled well, what is under their control. In our opinion, on leadership grid he would be 9,9 (Team leader), as he appears to have high concern for his people and also high concern for the performance.
Warren Buffet-transformational leader
Warren Buffet has transformational style of leadership. He serves to change the status quo by articulating to followers the problems in the current system, always deals with reality and gives chance to people to come up with new innovative ideas.He calls his organization being run by the people. He articulates a compelling vision of future and is long term oriented. He is a risk taker, but before he properly analyzes the risk and return from that particular investments.He believes in people and gives autonomy to them.
Public praise(Individual Consideration)
He always moves with a clear Vision, Mission and Goal. Time magazine published article about the way Warren Buffet does work with his employees. According to that interview it’s clear, that Warren Buffet respects the work of the employees and always showcases of the work with the name of the person who did that work. That particular work is known by the name of that person only.While most companies refer to their staff collectively, Buffett’s company names specific people within its annual report to investors. This public praise helps to motivate staff to go above and beyond to please.
Unlike other CEOs, Buffett rarely manages those below him. New Berkshire Hathaway staff are given autonomous status soon after arriving at the company are not forced into meetings or pestered about results, leaving them with more time to manage their businesses. He has trust towards his staff.
Bufffett is a master at communicating effectively and inspiring others to perform. He has motivated more than 160 billionaires to give away at least half of their wealth for philanthropic causes and inspired a $1 million bid just to have lunch with him.Generally, Warren Buffett is quite a positive person,When things are going poorly, he’s comfortable admitting that, and he’s comfortable telling others.That’s a strong quality in a leader.Buffett’s positivity is very powerful and important. People respect when a leader is not only forward-thinking, but is very open and honest.Though he is successfully running his organization, he never leaves the same joy, enthusiasm anywhere.
He is a democratic leader- discussing with his employees about the topic or assignment that needs to be accomplished and when communication is two-way,that determines long term success. One of the key traits of Berkshire Hathaway’s culture is its long term orientation. He thinks that in order to have a business that lasts forever, you need a perfect future planning system.Whenever he makes any plan, he predicts the future and also what will be its implication in the present. He always deal with real things not with what could happen. He is known as real-time businessman.
Greatest quality any leader needs while running a big comapany is that he must work with his intelligence.He knows where to invest and how much to invest so that he could drive profit out of it. he properly analyzes the risk and return from that particular investment and doesn’t loose. Warren buffet is known for his principles. He has High value of integrity and honesty. He never got engaged in any mal-practices. He always carried his business with honesty. If you talk about tax return, he pays advance tax.,
Leaders are the face and the voice of change. They communicate often to share information, keep people updated and offer encouragement. `Information Sharing Policy with employers, employees, and workers at Berkshire Hathaway is a perfect example how it must be done. Leaders provide the motivation to change. They create a sense of urgency and importance about the change,and show commitment and passion about getting things done. They offer recognition to those who are participating and doing well. As had been seen during downfalls,how Buffet acted as a motivational master and kept all his stakeholders motivated to perform. With their authority, leaders hold people in the organization accountable for the change. They uphold agreements and make sure others do the same. They don’t let people get away with not changing, and work to understand the underlying reasons so they can remove obstacles. Buffet’s organization has clear vision, mission and goal and they are been properly communicated to all. Warrenhas a likable presonality and people trust him as they see him as confident and calm.
To sum upWarren tought us 3 very important issues:
1) LEARN HOW TO COMMUNICATE EFFECTIVELY(“You’ve got to be able to communicate in life and it’s enormously important. Schools, to some extent, under emphasize that. If you can’t communicate and talk to other people and get across your ideas, you’re giving up your potential.” – Warren Buffett)
2) PATIENCE IS A VIRTUE. (“No matter how great the talents or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.” – Warren Buffett)
3) PLAN FOR THE FUTURE (The primary job of a board of directors is to see that the right people are running the business and to be sure that the next generation of leaders is identified and ready to take over tomorrow.” – Warren Buffet)