He’s bluffing. Period! The man is a master of contrarian logic and knows how to call a spade an ox and even gets away with it. Warren has no intentions to give away his position in Berkshire and all talk about a successor should be relegated to the bin. Steven Philip Warner in a delightful analysis...
The last time I tried to meet up with Buffett to convince him I could be the one, I was stopped at the New Delhi airport itself (alright, I’m lying; I couldn’t even afford the air ticket). But think about it; we’ve all been had. A handful of months back, when we ran Warren’s (and his son’s) exclusive interview in B&E, we had forecasted bang on that Ajit Jain (Berkshire Hathaway’s Reinsurance Business Head) was amongst the nine probable candidates who could be successors to Warren Buffett. And we’d regimentally recommended to Warren that he should give up his position sooner than later. Oh, how dumb could we have been...
“I did some dumb things in investments. I made at least one major mistake of commission and several lesser ones that also hurt... Furthermore, I made some errors of omission, sucking my thumb when new facts came-in that should have caused me to re-examine my thinking and promptly take action...” Thumb sucking adjectives aside, these are the actual words of confession from Warren Buffett in his annual letter to Berkshire Hathaway shareholders (Purely due to ethical journalistic policies, I have not bought Berkshire’s shares; one share cost Rs.60,00,000 last year; they say it’s down this year).
But what left me sucking my thumb (sorry Warren, if you can use it, then this is a global usage now) was his one announcement in the above mentioned letter to his shareholders (where he also made the confession written before) where Buffett overtly praises Ajit and paints a picture that most definitely points towards Ajit donning the top hat at Berkshire. In his own words, “There is no one like him and his business is never the same. Ajit came to Berkshire in 1986. Very quickly, I realised that we had acquired an extraordinary talent. So I did the logical thing: I wrote [to] his parents in New Delhi and asked if they had another one like him at home. Of course, I knew the answer before writing. There isn’t anyone like Ajit...” And guess what, it is Buffett’s custom to call up Ajit Jain every evening to discuss ‘business matters’. I never could imagine that I’d live to see the day when Warren would be doodling over a guy. Has Warren finally fallen in love? Well, despite my unfathomable bubbling eagerness to say yes, the answer is a clear no. This is Warren at his impressive bluff best.
Surely, every person even slightly informed about the world’s richest man knows that succession planning has always been questioned critically when it comes to Buffett. Realising that he himself goes against many imperative corporate governance policies (separation of ownership from management, for one), Buffett too cleverly chooses to keep the beach bikini on, revealing much frivolous skin, but hiding the most essential parts. “There are four potential successors to me within the company, but I would never discuss their names,” is what he gloatingly told Daily Telegraph some years back, “I have got this letter which actually goes out the day I die. And it says: Yesterday, I died. That’s bad news for me, but it’s not bad news for you, the shareholders of Berkshire...” Yeah, right Warren! And we all can then go meet up with Monica Belluci!
But for argument’s sake, let’s move to the realm of logic. At present, Ajit heads Berkshire’s Reinsurance business, which is only the ‘third-largest’ amongst Buffett’s insurance empire – indeed a small fragment of the vast Berkshire empire. And if you considered that insurance segment contributes to more than 50% of Berkshire’s annual revenues in 2008, we would rather have Tony Nicely, CEO of GEICO (Berkshire’s largest insurance player) or Joseph Brandon’s successor at General Re (the second largest in the segment) as the more ‘logical’ choice. As far as leadership and manpower count is concerned, Ajit only has 31 people in his company. For records, that is just a negligible 0.01% of the total count of manpower at Berkshire Hathaway! Can a person with that little ‘leadership’ experience head a group with more than 300,000 people?
Alright, if we play to the grandstand – as Warren has mastered over the years – and simply choose Ajit because “Warren has mentioned him in his letter,” then allow the blundering me to inform you, Warren does that ever year. Not counting this time, Buffett had flattered Ajit 5 times in the past 13 years (in his annual letters to his shareholders)! And if I go by the same logic, then the world would have had 21 prospective Berkshire CEOs since 1995. Wonder how? Besides praising Jain 5 times, the grandiose Buffett has praised Tony Nicely (CEO, GEICO) 9 times, Kevin Clayton (CEO, Clayton Homes) 2 times, Richard Santulli (CEO, NetJets) 3 times, Joseph Brandon (Former CEO, General Re) 2 times! If efficient succession planning policy was to be decided on the count, all is lost.
“I did some dumb things in investments. I made at least one major mistake of commission and several lesser ones that also hurt... Furthermore, I made some errors of omission, sucking my thumb when new facts came-in that should have caused me to re-examine my thinking and promptly take action...” Thumb sucking adjectives aside, these are the actual words of confession from Warren Buffett in his annual letter to Berkshire Hathaway shareholders (Purely due to ethical journalistic policies, I have not bought Berkshire’s shares; one share cost Rs.60,00,000 last year; they say it’s down this year).
But what left me sucking my thumb (sorry Warren, if you can use it, then this is a global usage now) was his one announcement in the above mentioned letter to his shareholders (where he also made the confession written before) where Buffett overtly praises Ajit and paints a picture that most definitely points towards Ajit donning the top hat at Berkshire. In his own words, “There is no one like him and his business is never the same. Ajit came to Berkshire in 1986. Very quickly, I realised that we had acquired an extraordinary talent. So I did the logical thing: I wrote [to] his parents in New Delhi and asked if they had another one like him at home. Of course, I knew the answer before writing. There isn’t anyone like Ajit...” And guess what, it is Buffett’s custom to call up Ajit Jain every evening to discuss ‘business matters’. I never could imagine that I’d live to see the day when Warren would be doodling over a guy. Has Warren finally fallen in love? Well, despite my unfathomable bubbling eagerness to say yes, the answer is a clear no. This is Warren at his impressive bluff best.
Surely, every person even slightly informed about the world’s richest man knows that succession planning has always been questioned critically when it comes to Buffett. Realising that he himself goes against many imperative corporate governance policies (separation of ownership from management, for one), Buffett too cleverly chooses to keep the beach bikini on, revealing much frivolous skin, but hiding the most essential parts. “There are four potential successors to me within the company, but I would never discuss their names,” is what he gloatingly told Daily Telegraph some years back, “I have got this letter which actually goes out the day I die. And it says: Yesterday, I died. That’s bad news for me, but it’s not bad news for you, the shareholders of Berkshire...” Yeah, right Warren! And we all can then go meet up with Monica Belluci!
But for argument’s sake, let’s move to the realm of logic. At present, Ajit heads Berkshire’s Reinsurance business, which is only the ‘third-largest’ amongst Buffett’s insurance empire – indeed a small fragment of the vast Berkshire empire. And if you considered that insurance segment contributes to more than 50% of Berkshire’s annual revenues in 2008, we would rather have Tony Nicely, CEO of GEICO (Berkshire’s largest insurance player) or Joseph Brandon’s successor at General Re (the second largest in the segment) as the more ‘logical’ choice. As far as leadership and manpower count is concerned, Ajit only has 31 people in his company. For records, that is just a negligible 0.01% of the total count of manpower at Berkshire Hathaway! Can a person with that little ‘leadership’ experience head a group with more than 300,000 people?
Alright, if we play to the grandstand – as Warren has mastered over the years – and simply choose Ajit because “Warren has mentioned him in his letter,” then allow the blundering me to inform you, Warren does that ever year. Not counting this time, Buffett had flattered Ajit 5 times in the past 13 years (in his annual letters to his shareholders)! And if I go by the same logic, then the world would have had 21 prospective Berkshire CEOs since 1995. Wonder how? Besides praising Jain 5 times, the grandiose Buffett has praised Tony Nicely (CEO, GEICO) 9 times, Kevin Clayton (CEO, Clayton Homes) 2 times, Richard Santulli (CEO, NetJets) 3 times, Joseph Brandon (Former CEO, General Re) 2 times! If efficient succession planning policy was to be decided on the count, all is lost.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Prof. Rajita Chaudhuri's Website
domain-b.com : IIPM ranked ahead of IIMs
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
IIPM B-School Detail
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Prof. Rajita Chaudhuri's Website
domain-b.com : IIPM ranked ahead of IIMs
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
IIPM B-School Detail
