Warren Buffett sent his biennial memo to staff members, outlining the “succession planning” for Berkshire Hathaway and other items of importance. The top priority on the list “trumping everything else, including profits — is that all of us zealously guard Berkshire’s reputation.”
Buffett makes it clear in the memo that while money will come and go, the company’s reputation can slip away and never recover.
“We can afford to lose money — even a lot of money. But we can’t afford to lose reputation — not a shred of reputation,” the memo reads.
What’s just as interesting as the assertion about the importance of reputation is the way in which staff members are meant to gauge what’s right and wrong: not just by legal standards, but “what we would be happy to have written about on the front page of a national newspaper written by an unfriendly but intelligent reporter.”
Key here: a reporter can be unfriendly but their story doesn’t have to do damage to the company’s reputation. The media is entitled to do their reporting and even come to some undesired conclusions. But if you abide by good judgment and the culture of the company, there’s only so much negative that can befall the Berkshire rep.
Buffett has talked about the importance of reputation in the past. Still, after all this time, that he would say maintaining the company’s reputation is paramount demonstrates how much the success of his business hinges on how both he and the business are seen by the public and the media. If people don’t believe in these brand names, it erodes the value of his enterprise. It’s a lesson most companies should learn.
The Wall Street Journal has the full memo. Just a bit of a side note, there’s a PS at the bottom of the memo advising readers to say no to any requests made for the Gates Foundation. No shade there; Buffett makes an annual gift of stock to the Bill & Melinda Gates Foundation. This year, that gift was worth $2.1 billion, more than any of the previous eight donations. Because his support of the organization is so huge, we can only imagine the volume of various requests — related and unrelated — that he must get.