Introduction: Warren Buffett Begins
It is weird to think that there were the times when the name of Warren Buffet did not ring any bell. In the modern business world where the slightest change can possibly reinvent the whole world’s perception of what management and leadership is, such incredible instances of success as Warren Buffett’s one are truly worth taking a closer look at.
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When talking about the accomplishments of Buffett, it is necessary to mention that the man is one of those people who have redefined the whole perspective of a business theory. Understanding the way in which Buffett managed to reach for the top of his leadership career and achieved such tremendous success, one can see the impact that a single ma can have on the developing field of management and learn about new approaches towards unconventional entrepreneurial situations.
Looking for the Pearls of Low Price: Below the Intrinsic Value. Buffett’s Organizational Situation
To start with, Buffett’s situation was quite one of a kind. Instead of starting out as a clerk in a second-rate place, slowly moving to the position of the head of the company and then safely resuming the policy of the previous leader, with a lump sum of money to back him up in the case of a failure, Warren Buffett started with buying the stocks of the companies below their intrinsic value (Ryan, 2005).
Further on, Buffett found the proper application for his revenues, buying out the Berkshire Hathaway Co. and becoming its leader for the rest of his career. It is the amazing strategy, the incredibly quick start and the unbelievable income brought by Warren Buffett’s strategy that are in the limelight of the given paper.
From 105,000 to 105,000,000: The Legend of King Midas Has Been Proven Right
Among the rest of Buffett’s achievements, the fact that he managed to multiply his income by $1000 is worth mentioning. After purchasing the shares beneath their nominal value, as it has been mentioned previously, he sold them right in the time when their price rose several times, thus, increasing his investment into the Berkshire Hathaway from the initial $105,000 to $105,000,000 (Ryan, 2005, 35).
Warren Buffett and His Leadership Qualities: Watch the Legend Being Born
However, it was not only the incredible luck and the amazing business skills that helped Warren Buffett out in his incredible venture with the Berkshire Hathaway.
Apart from the talent to operate a truly great enterprise, the ability to organize the work of several hundreds of people and the rest of the amazing leadership and business skills that Warren Buffett possesses, the newly appointed leader of the Berkshire Hathaway was supposed to have a number of personal qualities that could help him survive in the fast-changing lane of the Berkshire business life (Ryan, 2005).
Thus, listing and assessing the key qualities which predetermined his triumph and made him the leader in a matter of fifteen minutes, as the company’s then vice president would recall further on, one will be able not only to understand Buffett’s approaches and his incredible personality better, but also to see what makes a true leader who is capable of making groundbreaking changes.
Humility: only the modest survive
If there is such a thing in the world as the ability to run the business in a completely modest and honest way, Warren Buffett must be the king of it. Neither has he written any autobiographies (yet), nor has he ever been boastful or self-sufficient.
Although it is widely accepted that the leader must be sled-assured and even somewhat arrogant when dealing with his business (thus, supposedly, establishing his one and only means of control – the power of fear), Buffett disregards any of the above-mentioned ways to trigger the public’s attention.
Instead, he has won the admiration of millions of people by portraying himself as an honest and modest entrepreneur, allowing people to judge him by his accomplishments. It must be admitted that the given technique works perfectly in his case.
Influence on people: listen to the chief
Partially because of the above-mentioned modesty, partially because of his success, Buffett has an immense influence on every single person whom he works with. Another impressive leadership quality, the ability to shape the others’ behavior by merely offering an example of an impeccable office worker is what Buffest is best at.
It seems that Buffett’s behavior is incredibly catchy – as most sources claim, the entrepreneur has never exercised any specific policy on the way people should act in his company, yet Berkshire Hathaway still remains one of those places where every single employee provides a perfect performance, and where every single process goes like clockwork.
According to Ann Miller, there are only three people whose influence can literally turn the world upside down, and Buffett is among them: “Bill Gates, Warren Buffet and Oprah Winfrey are the people with enough influence and social capital that they are amongst the most likely people to cause the balance of public opinion to tip” (Miller, 2011, 140).
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Therefore, it is obvious that Buffett has the charisma one needs to persuade people to follow the example. A truly impressive quality, such skill is basically the essence of a real leader.
Learning from mistakes
Another important quality that Buffett doubtfully possess is the ability to drive conclusions even from his failures. Though it seems rather obvious skill for a business leader, it is necessary to admit that few people are able to analyze their failures and, which is even more humiliating for their dignity, to get valuable lessons learnt from these unfortunate experiences.
However, with Buffett, this is not the case – the entrepreneur eagerly analyzes every single experience which he has ever had, including both the negative and the positive ones to come to certain conclusions and perfect his leadership style to the nth degree. As Buffett himself sad, “We all make mistakes.
If you can’t make mistakes, you can’t make decisions” (Tucker, 2008, 307). Thus, whether Buffett loses or wins, he always has something to get from e4very situation he gets in, which has had the greatest impact on the Berkshire Hathaway Co.
Strengths and Weaknesses: Forced to Admit His Mortality
However, considering Buffett a human reincarnation of a kind of a financial god would be incorrect as well; like any other human being, he does make a mistake one in a while, and his career in Berkshire Hathaway is no exception to the rules of the wheel of fortune. Therefore, considering the strengths and especially the weaknesses of a business titan is bound to be quite an entertainment.
Despite the fact that Buffett is an extraordinary person and must be considered the financial genius of the XXI century, it is still necessary to add that his own weaknesses and strengths do not exceed the ones of a typical businessman. What makes Buffet so special is not a particular asset, but the way he makes use of it, as well as of any weakness of his.
Unable to bear the bureaucracy
According to Warren’s own confession, his key weakness is the lack of patience when it comes to bureaucratic issues. Quite understandable and often recurring, the inability to handle emotions when things start to slacken because of immense paperwork is truly something that everyone can relate to. Creating the famous Buffett proviso (Waltzek, 2010, 69), he made an attempt to get rid of bureaucracy within his own company once and for all.
However, the given weakness could have caused serious complexities when it came to restructuring the Berkshire Hathaway company. Since the entire redevelopment of the enterprise involved a lot of bureaucratic issues to tackle, the whole process could have gone wrong because of Buffett’s weakness.
However, the given issue must have also been used as a push for the Berkshire Hathaway Co. rapid development. Indeed, since Buffett hates so much any bureaucratic issues, he must have done everything to avoid them when rebuilding the company.
Allocating the capital the correct way
As for the greatest asset of one of the greatest businessmen on the Earth, the ability to handle the largest amounts of money in the most reasonable way must take the first prize.
Since business is not only about earning considerable revenue, but also about knowing how to distribute the money and where to invest them, every leader must know what to do eventually with the obtained income: “[…] he became not a manager, steel executive, or insurance man, but an allocator of capital” (O’Loughlin, 2003, 58).
Thus, with his ability to place the capital in the right venture and on the right time, Buffett has all the rights to be called a true leader.
Blazing One’s Own Track: When a Leader Creates a Theory
It goes without saying that a suitable theory defines the success of a venture to a considerable extent. When knowing in what manner, according to what plan and, which is the most important, for the sake of what purpose the actions are carried out, the leader will definitely take the company to its ultimate success.
However, choosing an efficient theory is quite a complicated task as well, since the choice defines the outcome. Creating his own fundament for the venture to base on, Buffett managed to comprise several theories into a single entity and, thus, develop the most efficient method to raise the company from the ashes.
Addressing the situation: when there is only one way
It seems that Buffett’s personality as a leader, as well as his manner of tackling business situations, stems from a blend of various leadership theories; indeed, why settling with one single manner of reaching for success, when one can go for a whole bunch of them? For instance, in Buffett’s manner of leading, there are evident features of transactional leadership.
According to the definition of the situational leadership provided by Martin, Buffett possesses the exact same qualities which the given leadership strategy requires:
Transactional leadership applies to leaders who are task oriented and able to direct their groups in specific ways to accomplish finite goals. Transactional leaders work to gain their group’s compliance through various approaches: offering rewards, threatening punishment, appealing to group members’ sense of altruism, or appealing to followers’ rational judgment. (Martin, 2006, 47)
Indeed, as it has been mentioned previously, Buffett did use certain means to encourage his employees for a better performance. However, it is also essential to mention that Buffett did not resort to a single style of leadership; Warren’s strategy was also based on situational leadership. Since Buffet faced the company almost falling to pieces, he had to take immediate actions.
Taking into account that the company situation was rather unique, it was also obvious that Buffet was supposed to come up with a unique plan. Thus, if following Martin’s definition, Buffett’s style was also a representation of a situational leadership:
Situational leadership theory accounts for two ideas: 1) any situation plays a large part in determining leadership qualities and the leader for that situation, and 2) the leadership qualities of an individual are themselves the products of a previous leadership situation that have molded the individual. (Martin, 2006, 46)
Another leadership theory which made Buffett’s strategy complete was the trait leadership. “Trait theory describes a leader as one who exhibit a certain set of physical, intellectual, and interpersonal characteristics.
This traditional leader would show good posture, be attractive, speak firmly, act confidently, be task oriented, and be assertive” (Martin, 2006, 44). As it has been mentioned before, Buffett has contributed a lot to building an image of an ideal manager, which means that he also uses the trait leadership theory.
The servant of the customers: another prospect
The last, but not the least, the servant leadership theory deserves a special mentioning. It is essential that Buffet not only poses himself as a perfect leader, but also tries to address the employees, influencing them and helping them improve. Thus, it can be considered that Buffett also uses a touch of servant leadership theory to add to his general strategy.
Although Buffett does not take it to the same extreme as Martin does, there are still some elements of servant leadership in Buffett’s strategy: “You can approach your leadership role form a perspective of a servant first,” (50) Martin (2006) says, which Buffett seems to follow.
Conclusion: Waiting for the Sequel
Therefore, it is obvious that the effect which Buffett has had on the contemporary business management and leadership theory development is truly priceless; with all the valuable lessons learnt from Buffett’s experience of establishing his own business, one can possibly see that in the modern world, the key to success is the ability to adapt to the rapidly changing situation.
Buffett’s experience is not only a peculiar story worth knowing – this is a model of a leader’s behavior which must be analyzed to understand what kind of qualities suffice for becoming a real entrepreneur.
As it has turned out, in the modern world, triumph depends on one’s own personal qualities rather than on the initial capital. Of course, there are a lot of factors which are to be taken into account when entering the business world, like the level of competition and the clientele, as well as the demand and supply ratio of the goods in question.
However, the key to business success is the leader’s personality – once the leader takes his/her place, the rest of the puzzle pieces fall into their places, which Buffett’s example is a perfect proof for.
Martin, B. (2006). Outdoor relationship: Theory and practice. Champaign, IL: Human Kinetics.
Miller, A. (2011). Life’s lessons: Working together to transform education, business and government. Bloomington, IA: iUniverse.
O’Loughlin, J. (2003). The real Warren Buffett: Managing capital, leading people. Yarmouth, ME: Nicholas Brealey Publishing.
Ryan, B. (2005). Warren Buffett: Financier. New York City, NY: Infobase Publishing.
Tucker, D. E. (2008). Using the power of purpose: How to overcome bureaucracy and achieve extraordinary business success! Bloomington, IA: Author House.
Waltzek, C. (2010). Wealth building strategies in energy, metals and other markets. New York, NY: John Wiley & Sons.