When the Oracle of Omaha, Warren Buffett, was just 10 years old, he actually had an epiphany. He realized that he could be secure and free with enough money.
Now that he has reached the age of 84, he’s focused on a different asset with the management team at Berkshire Hathaway: reputation.
In the Wall Street Journal, a memo to Buffett senior managers has surfaced. In the memo he writes that “the top priority – trumping everything else, including profits – is that all of us continue to zealously guard Berkshire’s reputation.”
“We can’t be perfect but we can try to be. As I’ve said in these memos for more than 25 years: We can afford to lose money – even a lot of money. But we can’t afford to lose reputation – even a shred of reputation.
“We must continue to measure every act against not only what is legal but also what we would be happy to have written about on the front page of a national newspaper in an article written by an unfriendly but intelligent reporter.”
Buffett even mentions to his managers that if they see anything with a “propriety or legality” that might make them hesitate; they should give him a call.
Immediacy in this situation is crucial. If Buffett hates one thing, it is bad news that “festered for a while.” He references time that he spent with Salomon Brothers, the bank that experienced trouble when he served as chairman during the 1990s.
“A reluctance to face up immediately to bad news is what turned a problem at Salomon from one that could have easily been disposed of into one that almost caused the demise of a firm with 8000 employees,” writes Buffett.
Ultimately, the main thing to learn is that in business as well as finance, the secret to sustained growth comes down to great relationships.