Why Buffett and Drucker? Both men champion legacy building and service leadership.
LEGACY BUILDING: LOOKING OUT FOR TOMORROW
As Warren Buffett celebrates his 80th birthday, we don’t want the media frenzy to obscure his legacy. As revealed in Buffett’s Bites his legacy is both tangible and intangible. The intangibles are his well-tested principles of long-term capital allocation and stewardship. His tangible legacy is the creation of Berkshire Hathaway, a wealth-creating company shaped according to these principles.
Peter Drucker’s legacy is also intangible and tangible. His intangible contribution was his passion for examining business challenges as a renaissance thinker. For instance, his knowledge of Japanese art allowed him to penetrate Japanese culture, win the trust of clients and become the most successful business consultant to Japanese corporations in the ‘50s and ‘60s. Drucker wrote about all he learned and experienced and published over 30 books. They are the tangible part of his legacy. He offered a perspective we need today: the best leaders respect history and practice principles-based management.
SERVICE LEADERSHIP: BEYOND THE DAILY CRISIS
Buffett praises the extraordinary efforts of the ordinary people running the Berkshire business. Their collective actions result in the long-term economic growth of his enterprise. Many of his managers are entrepreneurs who work because they love what they do – money is a secondary consideration. They focus on serving their customers and taking care of the people who work hard to create business success. Buffett calls them artists of business masterpieces.
Buffett would like to see more servant leadership among boards of directors and CEOs today, particularly when it comes to offering out-sized executive compensation packages that include stock options not reported as compensation. He tells his board never to pay him a salary greater than $100,000 a year – and never to grant stock options. This leaves more money to invest in Berkshire’s future growth. It says to Berkshire’s investors: I will make money with you – not at your expense.
Drucker similarly links service leadership with caring for the future. In his foreword to The Frontiers of Management, he praises the “ordinary people running everyday businesses and organizations” who take responsibility for building for tomorrow. “Tomorrow,” he writes. “depends heavily on the knowledge, insight, foresight and competence of today’s decision makers…especially executives…”
At the same time, Drucker recognizes that executives are busy people. “Every one of them is fully occupied with the daily crisis, the one predictable event in the executives’ working day. To enable them to see and understand the long-range implications and impacts of their immediate, urgent actions and decisions is the purpose of these essays…”
Such thinking in today’s world seems foolhardy, even frivolous. How can we expect today’s leaders and investors to consider the “long-range implications of their immediate, urgent actions” when CEOs are in one year and out the next, and investors care little beyond the next quarter’s earnings? Yet this is precisely what I propose to do each week, from now until Warren’s birthday on August 30, 2010. In a series of blogs, I will showcase Drucker’s seminal ideas and apply them to Buffett’s principles of capital allocation to remind us all to get beyond the daily crisis.
Help me celebrate Warren’s birthday. Join in the blog and send them to your colleagues and friends.
Almost a decade ago I visited Warren Buffett in Omaha just weeks before the 9/11 attacks. He has not forgotten the lesson learned from that event. It is as vital today as it was then: we are all interconnected. We are all responsible for creating the future by serving those in the present.
Both Drucker and Buffett’s examples offer us the gift of hope and a belief that the future can be better.