Margin of Trust: the Berkshire Business Model / PDF
Preview Margin of Trust: the Berkshire Business Model /
Margin of Trust Columbia University Press Publishers Since 1893 New York Chichester, West Sussex cup.columbia.edu Copyright © 2020 Lawrence A. Cunningham and Stephanie Cuba All rights reserved A complete cataloging-in-publication record is available from the Library of Congress. ISBN 978-0-231-19390-0 (cloth : alk. paper) ISBN 978-0-231-55056-7 (e-book) LCCN 2019021300 Columbia University Press books are printed on permanent and durable acid-free paper. Printed in the United States of America Cover design: Noah Arlow We dedicate this book to our daughters, Becca and Sarah, forever and always. Contents Prologue: The Carrot of Trust ix Part I: Pillars 1. The Players 3 2. Partnership Practices 22 3. Business Methods 30 Part II: Perspectives 4. Deals 45 5. Boards 59 6. Internal Affairs 64 Part III: Alternatives 7. Contrasts 75 8. Comparisons 86 Contents Part IV: Challenges 9. Judgment 103 10. Public Perception 112 11. Scale 118 12. Succession 125 Epilogue: The Stick of Ruthlessness 129 Notes 137 Index 153 viii prologue The Carrot of Trust trust is the essence of the business model Warren Buffett developed at Berkshire Hathaway. This simple idea has profound implications for corporate life. We have been studying and writing about Warren Buffett and Berkshire Hathaway for decades. In 1996, Lawrence Cunningham hosted a symposium on these subjects that resulted in his pub- lishing The Essays of Warren Buffett: Lessons from Corporate America, which quickly became an international best-seller and then a cult classic. Since then, volumes have been written about the Buffett-Berkshire example, especially for investing and, to a lesser extent, management. While legions of investors follow Buffett’s lessons, embracing the value approach, a smaller number of managers have adapted Berkshire’s managerial practices. Timing may explain the differ- ence: Buffett’s outstanding investing track record dates back six decades, whereas the unique features of Berkshire’s organizational structure have proved themselves only for a decade or two. Inter- est is picking up, however. ix
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