Category: Money tips Release Date: 2006-08-15
Buffett's voluminous study of the book, usually from a stock investment perspective. However, there are exceptions, such as the investment manager James O'Loughlin this the "Warren Buffett Biography" on the show from the unique perspective of a capital management, people leadership Buffett. Buffett's model, especially in revealing the process, the power and capabilities of the mandatory scope of research, thought-provoking.
Buffett model
Surprisingly, the O'Loughlin's argument that a pattern of Buffett's supposed to be a failure mode. We have to ask is: "He is such a kind of how the failure of this model into a successful model?"
Laws of physics that simply can not fly Hornet because of its wings are too small surface area and fan speed too fast, can not generate enough thrust to generate the required lift. Berkshire is the same, it should be a long-term underperformance, because experience shows that: the insurance industry is attractive in theory, highly diversified company's efficiency is extremely low, with mergers and acquisitions have nothing in common to a lot of companies pieced together, is simply crazy, the company all the cash for reinvestment is a dangerous move, so that managers are fighting each other is also very dangerous, the target return is very high in the company held cash and other assets represent only a low rate of return kinds of fixed load. However, the same as the Hornet, Berkshire not only to fly up, and behaved so not bad.
O'Loughlin rich convincingly solved this mystery. On the one hand, "The most important thing is, Buffett know, when people should abide by a code of conduct rather than top-down development of inner cultivation, then the personnel management will be elevated to personal motives." Buffett found that only a free hand in order to achieve management control to the owner of his portraits, like the manager to act in order to achieve the I-style management --- inaction.
On the other hand, Buffett think of themselves as part of the capital market, and his job is to allocate resources so that it can most effectively utilized. He hoped to maximize the objectivity of the subjective reduced to a minimum. Through the implementation of the management areas of the capital to the important and knowable, the formation of their own "sphere of competence" and thus possess objectivity, certainty and decision-making greatly improved the success rate, forming a set of effective capital allocation model.
Coercive force
Buffett's first encounter coercive force is 1961 acquisition of Dempster Mills Manufacturing Company, he found that to bridge the gap between ownership and management, so that their own interests and combining the interests of managers is not easy, for two years later, he chose to leave --- sell his shares. Buffett now has committed the greatest mistake of a lifetime --- the acquisition of another "cigar Di" Enterprise Berkshire, because the textile industry made a commitment to pre-empt the conclusions of this made him fall into the trap, for the textile industry tired by operating activities as long as 20 years.
Later, at Charlie Mountain Ge Siwei models under the influence, "the analysis by its own mistakes, and these errors and management of Berkshire Hathaway company faced challenges associated with" the Vampire Slayer the perception of special leap: can not avoid the mandatory power in institutions is widespread; when it is to play a role, rationality is often shy away from; strategic planning is a mandatory source of strength, so the manager has been denied or lost their As the transfer of funds of those insights. Buffett with the following example to illustrate the role of coercive force: (1) is, as described by Newton's first law as a system will always be resistance to his appearing in the current direction of any changes; (2) As work can fill the time available, the Company's plans and concrete manifestation of the proceeds will be to absorb additional funds; (3) Any desire to succeed in business leader, no matter how stupid, will soon be by his subordinates of the made a detailed study of rate of return and business strategy support; (4) The behavior of competitors, would be foolish to emulate.
Completely clear the mandatory power, the Warren Buffett of Berkshire Hathaway efforts to transform into a coercive force have no place in the company, by refusing to lead the strategic planning as a means to ensure profitability on capital employed targets to dominate their own actions and encouraging and restraining those who held important posts of the employees, or adopt a "transfer of funds" approach to counter and defuse the Mandatory power; the same time to establish a "act like owners," the corporate culture to achieve leadership, to the managers full freedom, so that they form the internal motivation, and give Buffett the greatest obedience and rewards.
Sphere of competence
Buffett's investment success and failure ratio is 99:1. Behind such a high success rate, "sphere of competence" concept play a crucial role. Buffett, the so-called "affordable" means "important and knowable things," Buffett vividly likened it to baseball's "hit zone."
Buffett's sphere of competence to enable him to produce a sense of control, it is uncertain situation facing humanity are eager to get. Sense of control can produce a sense of security, and Buffett's shareholders, was his partner, coupled with margin of safety protection, Berkshire basically had no debt, all can imagine the consequences are benign, which provides security The second sense of assurance doubly sure, contributed to Buffett in the "hitting zone" to maintain emotional balance, be able to objectively evaluate the opportunity provided to him to eliminate uncertainty, greatly increased the hit rate of batting, making him Capital management, above-average level and eternity.
O'Loughlin believes that the scope of Buffett capacity developed on the basis of a "three-step" the spirit of the model: first, to determine what he knew, its approach is to identify the truth, the truth after the driving forces and between them interrelated; second, to ensure he knew what his approach is to first reverse thinking to prove that his previous conclusions are incorrect; third check he knows, from the consequences of the decisions he made were picked feedback.
The second step is often neglected by everyone, but this step to ensure awareness of the importance of objectivity and accuracy. Niu Gensheng, has said his adoptive mother for her education has a great impact on his: "To know, to play reversed; playing upside down, what are know." "Playing upside down," Is not reverse the process of thinking and empathy Mody ?
O'Loughlin a friend read the manuscript of this book after exclaimed: "God, Buffett know everything!"
Buffett has such a successful model, not because it is a genius, but because he experienced what the authors of so-called "knowledge explosion", after tireless study, the tireless and courageous thinking firm practice.
