Mistakes—no one likes to admit them, yet they are inevitable, even for the most successful investors and business leaders. Warren Buffett, in his 2024 Berkshire Hathaway Annual Report, does something that few corporate leaders dare to do: he openly acknowledges his errors.
“Sometimes I’ve made mistakes in assessing the future economics of a business I’ve purchased for Berkshire – each a case of capital allocation gone wrong,” Buffett writes. That level of candor is refreshing in a corporate world where executives often refuse to acknowledge missteps, let alone discuss them publicly.
Buffett isn’t just talking about the numbers. He admits that errors in hiring decisions can be just as damaging: “The fidelity disappointments can hurt beyond their financial impact, a pain that can approach that of a failed marriage.”
His words serve as a reminder that bad decisions in leadership don’t just affect balance sheets—they impact trust, culture, and long-term success.
Perhaps the most valuable lesson Buffett shares is not just that mistakes happen, but that failing to correct them is far worse. He references his late partner, Charlie Munger, who warned against “thumb-sucking”—a metaphor for indecision and inaction.
“Problems,” Buffett recalls Munger saying, “cannot be wished away. They require action, however uncomfortable that may be.”
In an era where corporate leaders are often reluctant to acknowledge failure, Buffett stands apart. He points out that during the 2019-23 period, he has used the words “mistake” or “error” 16 times in his letters.
Contrast that with many other major corporations that have never once admitted a mistake in that span. “Amazon, I should acknowledge, made some brutally candid observations in its 2021 letter,” he concedes, but beyond that, corporate America prefers “happy talk and pictures.”
It’s a reality Buffett has observed firsthand as a director of other large public companies: “‘Mistake’ or ‘wrong’ were forbidden words at board meetings or analyst calls. That taboo, implying managerial perfection, always made me nervous.”
And rightly so—leaders who refuse to admit error are often the ones who double down on bad decisions rather than correcting course.
At 94 years old, Buffett knows his time at the helm is nearing its end. He reassures shareholders that his successor, Greg Abel, shares the same values: “Greg understands that if you start fooling your shareholders, you will soon believe your own baloney and be fooling yourself as well.”
Buffett’s reflections are not just a lesson in leadership but a warning to all who value transparency and integrity in business. The refusal to acknowledge mistakes does not eliminate them—it only makes them more dangerous.
In contrast, admitting and learning from them is what separates great leaders from those who eventually deceive not just their shareholders, but themselves.
You can find the entire annual report here:
Berkshire Hathaway 2024 Annual Report
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