The writer is a finance professor in the Heider College of Business at Creighton University. He is also chairman and CEO of Economic Index Associates.
Last weekend, along with approximately 40,000 other shareholders, I descended on Omaha to attend “Woodstock for Capitalists” — the Berkshire Hathaway annual meeting. I bought my first share of Berkshire Hathaway in the early 1980s and have been privileged to attend these meetings regularly for the past 30 years.
The highlight of the weekend is the seven-hour question-and-answer session with Chairman Warren Buffett and Vice Chairman Charlie Munger. A variety of topics are covered, and the wisdom imparted is priceless. The financial topics included share repurchases, Berkshire’s recent performance, advancing technology and the investment climate in China.
While the focus of the discussion is obviously financial and investment topics, a bigger life lesson was subtly provided for the attendees. You see, one of the biggest concerns of Berkshire Hathaway shareholders is the fate of the firm when octogenarian Buffett and nonagenarian Munger are no longer at the helm.
While not answering the succession question directly, throughout the meeting Buffett continually praised Vice Chairmen Ajit Jain and Greg Abel as well as portfolio managers Todd Combs and Ted Weschler. In fact, Buffett and Munger denigrated themselves for mistakes they have made in the past — for instance, paying too much for Kraft and failing to invest in Google — while giving credit to their chief lieutenants for the firm’s success.
When a question was asked about Combs’ and Wechsler’s portfolio performance, Buffett responded, “They’ve also helped in all kinds of ways. What Todd has done in connection with the medical initiative we have with JP Morgan and Amazon, I mean, I don’t know how many hours a week he’s worked on that. The things they’ve brought to me, what Ted did in terms of Home Capital Group where we have essentially, in a major way … well, we stabilized a financial institution that was under attack and experiencing runs in Canada. And he did the whole thing.”
People often remark about Buffett’s intellectual capacity, and his IQ is, without question, off the charts. But, I contend that his EQ — his emotional quotient — exceeds his IQ. People with high EQ make great leaders and team players because of their ability to understand, empathize and truly connect with the people in their orbit. Who wouldn’t want to work with a leader who constantly praises subordinates for successes and takes responsibility for failures?
While many of the meeting attendees weren’t experts in analyzing balance sheets and income statements, they all received a lesson in how to treat people. This, by the way, is a lesson that many high profile CEOs should take to heart. Are you listening, Elon?