I recently had the distinct pleasure of seeing Warren Buffett speak at an event.
The books and articles written about him elevate him to nearly superhuman abilities. Some claim he can see the future, or that he turns everything he touches into gold, or that he can buy a few islands if he wants to with the wealth he has amassed over his storied career.
The wealth part is undeniable. But, it's well-earned. Buffett made his first big future bet in 1951 when he purchased a healthy amount of shares in a $7M company called Government Employee Insurance Company.
Later that company hired a lizard to promote a basic idea over and over and over again. And it worked, as GEICO is worth nearly $5B today.
It is wisdom borne out of a focus on the basics that has made owning stock in Buffett's company, Berkshire Hathaway, a significant investment. Specifically, shares are currently trading around $240,280. Per SHARE. For some context, Apple trades around $120 per share.
Buffett's focus on the fundamentals of business peppered the keynote address I was lucky enough to witness.
Today I share the three big takeaways from it.
Takeaway #1: "The Key To Everything Is Happy Customers." Warren Buffett
It's such a simple notion that it's easy to forget, roll our eyes when we hear it, or just flatly dismiss it. That type of arrogant cynicism is a mistake.
We often get bogged in the processes and politics that make up our week. In doing so, we take our eye off of the most important component to our business the customers.
Having a business where people buy is not enough. The people that buy must enjoy it. If they enjoy it, they will buy again. Or tell a friend. Buffet went on to say that if a customer has a good experience they will tell ten people. By contrast, if they have a bad experience they will tell 100 people. These numbers are important. While ten doesn't seem like a lot of customers, creating a bad experience is actually a 110-customer perception swing. You lose the 10 good comments, and create 100 bad ones.
No business can afford to withstand creating too many bad experiences. So why don't we focus on creating good experiences more often?
Takeaway #2: "Don't Do Anything That Puts the Enterprise At Risk." Warren Buffett
A fundamental truth that often gets ignored by leaders and their teams is that no action should be taken that puts the business at risk. Think of Wells Fargo.
Sure, that incentive program created a lot of new accounts, but not getting customer approval for creating the accounts put the entire business at risk. Knowledge of this, and the ensuing inaction by leadership, demonstrated a shocking dismissal of risk. When building a program, make darn sure you understand the risks first. Failing to understand risk puts the business in a perilous position. When the bad stuff comes to light (and it always does), be accountable to what's happened. Failure to be accountable deepens the risk. Get the facts, communicate them honestly and openly, then create a plan to help the business and your customers and the media scrutiny to move on.
Takeaway #3: Remember that Good Business Is Always About People
"Good businesses are based on basic economics and run by people who are admired and trusted," Buffett said.
He means that it is essential to measure the business and make decisions based on real information. Further and most importantly the people making those decisions must be respected. Think about your own team. Would they say they admire you? Trust you? Also, don't confuse admiration and trust with likability. Your team doesn't have to like you. It's great when they do. But it's not the difference between success and failure.
All of this wisdom from a guy who admitted he eats Cheetos in his office routinely and plays 10-12 hours of bridge on his computer each week. Despite the delightful quirks, Buffett's knowledge is universal and timeless.
The overarching lesson from Buffett is that we must remain committed to the simple truths of business. All we have to do is put them into practice.
Josh Gordon is an award-winning marketing communications professional and President of Full Spectrum Marketing, a full-service advertising agency. You can reach Josh at firstname.lastname@example.org.