During the 2019 Berkshire Hathaway Annual Meeting, Warren Buffett discusses how Berkshire Hathaway has had to adapt over the years to keep up with the changing business landscape. Here’s an excerpt from the meeting:
WARREN BUFFETT: Yeah. But I mean, we basically want to have a group of managers, and we do have a group of managers, who are on top of their businesses.
I mean, you saw something that showed BNSF and Berkshire Hathaway Energy and Lubrizol all there. Those people know their businesses. They know what changes are likely to be had.
Sometimes, they find things that they can cooperate on between their businesses. But we don’t try to run those from headquarters.
And that may mean — that may have certain weaknesses at certain times. I think, net, it’s been a terrific benefit for Berkshire.
Our managers, to a great degree, own their businesses. And we want them to feel a sense of ownership. We don’t want them to be lost in some massive conglomerate, where they get directions from this group, which is a subgroup of that group.
And I could tell you a few horror stories from companies we bought, when they tell us about their experience under such an operation.
The world is going to change in dramatic ways. Just think how much it’s changed in the 54 years that we’ve had Berkshire. And some of those changes hurt us. They hurt us in textiles. They hurt us in shoes. They hurt us in the department store business. Hurt us in the trading stamp business. These were the founding businesses of this operation. But we do adjust. And we’ve got a group, overall, of very good businesses.
We’ve got some that will be, actually, destroyed by what happens in this world. But that’s — I still am the card-carrying capitalist. And I believe that that’s a good thing, but you have to make changes.
We had 80 percent of the people working on farms in 1800. And if there hadn’t been a lot of changes, and you needed 80 percent of the people in the country producing the food and cotton we needed, we would have a whole different society.
So, we welcome change. And we certainly want to have managers that can anticipate and adapt to it. But sometimes, we’ll be wrong. And those businesses will wither and die. And we’d better use the money someplace else.
You can watch the entire discussion here:
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