21 Lessons From Warren Buffett

David Senra of Founders Podcast recently shared a summary list of lessons from Warren Buffett which I found valuable:

Big opportunities come infrequently. When it’s raining gold, reach for a bucket, not a thimble.
A funny thing about life: if you refuse to accept anything but the best you very often get it.
The truly big investment idea can usually be explained in a short paragraph.
Loss of focus is what most worries Charlie and me.
When a problem exists, whether in personnel or in business operations, the time to act is now.
The roads of business are riddled with potholes; a plan that requires dodging them all is a plan for disaster.
A compact organization lets all of us spend our time managing the business rather than managing each other.
Nothing sedates rationality like large doses of effortless money.
The most elusive of human goals: Keeping things simple and remembering what you set out to do.
Just run your business as if:
- (1) You own 100% of it;
- (2) It is the only asset in the world that you and your family have or will ever have; and
- (3) You can’t sell it for at least a century.
The right players will make almost any team manager look good.
Just tell me the bad news; the good news will take care of itself.
Our managers have produced extraordinary results by doing rather ordinary things—but doing them exceptionally well.
It’s difficult to teach a new dog old tricks.
On a daily basis, the effects of our actions are imperceptible; cumulatively, though, their consequences are enormous.
Charlie and I are not big fans of resumes. Instead, we focus on brains, passion and integrity.
Our experience has been that the manager of an already high-cost operation frequently is uncommonly resourceful in finding new ways to add to overhead while the manager of a tightly-run operation usually continues to find additional methods to curtail costs, even when his costs are already well below those of his competitors.
Tomorrow is always uncertain.
The trick is to learn most lessons from the experiences of others.
In allocating capital, activity does not correlate with achievement.
The less the prudence with which others conduct their affairs, the greater the prudence with which we should conduct our own affairs.

Here’s the original tweet from David Senra:

A few lessons from “A Few Lessons From Warren Buffett”

an 81 page book full of Buffett’s wisdom:

1. Big opportunities come infrequently. When it’s raining gold, reach for a bucket, not a thimble.⁰
2. A funny thing about life: if you refuse to accept anything but the best… pic.twitter.com/2G31ReiLhd
— David Senra (@FoundersPodcast) December 31, 2023

If you liked this post, you will also like Warren Buffett: “We Need Inspirational Leaders” and Warren Buffett’s Greatest Error.

Without a Goal, you can’t Score

“without a goal, you can’t score” …and you are probably somewhat de-motivated…

In sports, the goal is very clear. In football – a 24ft by 8ft steel or aluminium frame with a net… so you can clearly see if the ball goes in.

In sports, the victory condition is very clear… more goals than the other team.

In our lives, some people take the time to get clear on their specific goals… and they know when they score.

Others have only a vague idea…

Others are just kicking a ball in the dark.

Clarity on your Goals: in sports, and in life

Here’s what ChatGPT has to say on my sports metaphor and its application to our lives…

Clarity of Purpose:
- In sports, particularly in football, there’s no ambiguity about what the objective is: to get the ball into the goal. This clear-cut aim provides direction to all the players on the field.
- Similarly, in life, having a well-defined goal can give a person direction and purpose. Knowing what one wants to achieve can be a guiding light in making decisions and choosing paths.
Measuring Success:
- In football, success is often quantified by the number of goals scored. The more you score, the closer you are to winning. It’s a tangible, measurable outcome.
- In life, having specific goals allows us to measure our progress. Whether it’s a career aspiration, a personal project, or a health objective, breaking it down into measurable milestones can help us track our progress and celebrate small victories along the way.
Motivation and Drive:
- Players on a football field are driven by the adrenaline and the desire to score and win. The clarity of the goal amplifies their motivation.
- Similarly, having clear goals in life can be a powerful motivator. When we know what we’re striving for, we’re more likely to put in the effort and stay committed. In contrast, lack of clear goals can lead to feelings of aimlessness or stagnation.
Navigating Through Darkness:
- The analogy of “kicking a ball in the dark” vividly portrays a sense of confusion and aimlessness. Just like a footballer would struggle to score without seeing the goal, individuals might find it challenging to achieve success in life without knowing their true goals.
- Knowing where the goal is can be the difference between random, uncoordinated efforts and strategic, purposeful actions.
Flexibility & Adaptation:
- While the primary objective in football remains the same, the strategy might need to change based on the opposing team, field conditions, or even the game’s current score. Having a clear goal doesn’t mean there’s only one way to achieve it.
- In life too, while our main goals might stay consistent, the pathways to achieving them might need adjustments based on changing circumstances. Clear goals allow for better judgment on when and how to adapt.
The Power of Visualization:
- In football, players often visualize the trajectory of the ball, foreseeing their moves. This visualization is anchored around the clearly visible goalpost.
- In personal and professional pursuits, visualizing our goals can be a powerful tool for manifestation. When we have a clear vision of what we want, our mind and body can work synchronously towards achieving it.

The world of sports offers rich metaphors for understanding the significance of goals in life. Just as athletes need a clear target to direct their energies towards, individuals can benefit from defining and visualizing their life goals. This clarity can be the driving force behind actions, decisions, and eventual successes.

There are no solutions, only trade-offs.

“CEOs are in the business of making decisions”
Sam Reese, Vistage CEO

I’ve been reflecting this week on a quote from Economist Thomas Sowell “There are no solutions, only trade-offs.”

I work with CEOs. They take decisions. They feel responsible for the consequences of these decisions. They often wait to find a “perfect solution” rather than take action today on a “less than perfect option”.

CEOs (and the rest of us) live in a world of finite resources – time, money, manpower. With every decision, we are indicating our priorities. Investing in a new project might drive growth but will divert resources from other key areas. Each choice has consequences that affect stakeholders within and outside your organisation.

There is no Perfect Solution

When I teach, I often tell my participants that the worst approach to leadership is idealism. When a leader stands up and tells the world “every child deserves to go to school, every child deserves to have a safe home, every child deserves clean water, every child deserves medical services that are free and close to them…” after the applause, nothing changes. No child notices a difference. This is the worst use of the power of leadership… an idealistic rant. I agree with every part of it… but that changes nothing. There are trade-offs.

I was reminded of this idea while attending a conference yesterday at IESE Business School. I had the privilege of being the keynote speaker at an event hosted by the company Veepee.

The slide reads: “97% of people want to live a sustainable lifestyle; but only 12% of people are actually changing their behaviour”.

There are few cost free choices. Leaders often face immense pressure to deliver clear-cut answers. The pursuit of one objective always means sacrificing another. We must be very careful with the illusionary idea of a “perfect solution”.

Perspective: A Leadership Power Tool

Far from being a bleak outlook, this viewpoint is empowering. It emphasizes the importance of perspective, context, and adaptability in leadership. Recognizing trade-offs enhances our decision-making process. It encourages leaders to appreciate the complexities, accept the grey areas, and understand that their choices reflect their priorities.

For CEOs in this complex decision-making landscape, peer groups like Vistage play a crucial role. Vistage provides a trusted circle of peers who provide insight, experience, and accountability. Leaders are not alone in their decision-making process. Vistage offers a proven decision making method where CEOs can explore potential impacts, consequences, and risks associated with each choice.

This framework allows leaders to consider their priorities, weigh their options, and make decisions aligned with their strategic objectives and values… and then commit themselves and their organisation to the decision.

Conscious Decision-Making

Leadership isn’t about finding the perfect answer.

Leadership is about understanding the consequences of the choices you make and how those choices relate to the underlying purpose of yourself as leader.

3 Life and Leadership Lessons from my Father

My father is by all accounts a successful leader. There are 3 “superpowers” that he has that I think have helped him have such a positive effect in each of these environments.

My father has had a long and successful career in business leading to a decade as the Chairman of the Board of Accenture, and then as a board member for several public companies, and now as a leader and advisor for arts, culture and universities.

2 years ago, I shared a list that my father made back in the 1980’s on “Leaders and Non-Leaders” which listed 40 contrasts helped him guide his journey as a business leader.

3 of my Dad’s “Superpowers”

Remember people’s names
Decide fast & Don’t think of it as “your decision”, (this allows flexibility to change without emotion/sunk cost)
Never lose sight of the overall purpose & long term

I was in the medieval town of Pedraza again this week, where I made this video.

The Tyranny of Convenience

Convenience makes things easy… but what is easy is not always whats most important, valuable or effective.

We choose between the options we see, not all the options… we’ve got to be increasingly careful that we don’t choose the path that is just easiest to see.

Convenience food… is not health food.

Tech companies work to make things “convenient” – but easy to begin is not the same as fulfilling or important for me.

Here’s the linkedin job post for Vistage Chair that I mention.

Here’s the original “The tyranny of convenience” article over at the NY Times.

Looking under the lamppost

A person out walking at night comes across a man searching down on the floor under a lamppost.

The man on the floor says he lost his keys.

“Did you drop them here?”

“No, I dropped them over there, but the light’s better here.”

Sometimes we can find ourselves working, or searching, or staying in the places where we find it easier rather than the places that are optimal for what is truly important or fulfilling to us.

Hard Choices

Hard choices are unavoidable: it is best to make them consciously.

Don’t let convenience be the deciding factor in what to focus on and what to neglect in your life.

Convenience makes things easy, but easiness is rarely what’s most valuable.

The real measure of your life management technique: does it help you ignore the right things.

Make Convenience work for You

Do not underestimate the power of convenience: Increase the convenience of what’s important to you. If writing more is important, leave a notebook and pen on your table. If watching less TV is important, put the remote control far away from the sofa. If drinking more water is important, have a bottle on your desk.

What do excellent CEOs do? (according to McKinsey research)

A company has only one ultimate decision maker: the CEO.

The CEO is the only person in a company without peers. No other individual holds such a full and final responsibility for the company. The CEO is the most powerful and sought-after title in business, more influential than any other. The CEO takes the company’s biggest decisions. These decisions account for 45% of a company’s performance.

This power and influence comes with a heavy burden.

The role of CEO can be all-consuming, lonely, and stressful. Just 3 out of 5 new CEOs live up to expectations in their first 18 months… and many CEOs struggle with their quality of life (health, family relationships, friendships) in the face of the pressures they face.

I run Vistage in Spain. Vistage is the world’s leading CEO coaching organisation. Over more than 60 years, Vistage has worked closely with CEOs to take and implement better decisions which enhance their performance and increase their quality of life.

The following post draws heavily from a recent McKinsey article “The mindsets and practices of excellent CEOs“.

The Biggest regret of CEOs

I spend time with hundreds of CEOs each year. They are good people and they want the best for the good people around them. This makes it extremely personally challenging for them to deal with underperformance. They like the people around them. They want to give them lots of opportunities. They feel that it is a personal failure when someone close to them repeatedly underperforms expectations. They give more time. They allow for environmental factors. They wait and hope.

The single biggest regret of CEOs is not dealing quickly with underperformance.

In my work with CEOs through Vistage, over half of all of our work is about the current and future performance of the people and teams that surround the CEO. We challenge CEOs to stop waiting for underperformance to fix itself.

The Differentiator between Great and Good CEOs

According to McKinsey, the distinction between good CEOs and the great CEOs is the ability to focus.

Great CEOs place “big bets”. They focus on the top 3-5 most important initiatives. They dedicate 90% of their time, energy, resources to the 5 most important projects. They say “no” often. They don’t allow their time to fill up with many different activities and different priorities.

The Good CEOs avoided this level of focus. Their prioritisation of what is truly important is less clear. They are involved in many initiatives. They allow their agenda to fill up and try dedicate a couple of hours each week to the most important projects. They try to fit the important initiatives in around their “day job” of running the company.

The Great CEO has delegated the running of the company to an effective leadership team. They have made themselves unnecessary for operating the company today, so they can dedicate themselves to building the company of the future.

Jeff Bezos says that he spends 5% of his time running the company, and 95% of his time building the future company.

The Job of the Great CEO (according to McKinsey)

What specific behaviours can make current CEOs most effective? This is a summary of the McKinsey article linked above.

The Great CEO’s job has 6 main elements.

Setting the Strategy
Aligning the Organization
Leading the Top Team
Working with the Board
Being the face of the company to external stakeholders
Managing one’s own Time and Energy

1. Setting The Strategy

Objective: Focus on Beating the odds…

Vision: reframe what winning means, where do we want to be in 5, 10 or 15 years?
Strategy: make bold moves early
Resource allocation: stay active, top performers actively & quickly move resources to their strengths

2. Organisational Alignment

Objective: Manage Performance and Health

Talent: match talent to value
Culture: go beyond employee engagement
Organisational design: combine speed with stability

3. Leading the Top Team

Objective: Put dynamics ahead of mechanics

Teamwork: show resolve
Decision making: defend against biases
Management processes: ensure coherence

4. Board Engagement

Objective: Help directors to help the business

Effectiveness: promote a forward looking agenda
Relationships: think beyond the meeting
Capabilities: seek balance and development

5. Being the face of the company

Objective: Center on the long-term “Why?”

Social purpose: look at the big picture
Interactions: prioritize and shape
Moments of Truth: build resilience ahead of a crisis

6. Managing one’s own time and energy

Objective: Do what only you can doceo

Office: manage time and energy
Leadership model: choose authenticity
Perspective: guard against hubris

If you liked this post, you will also like The CEO’s Guide to Boards and The CEO’s 7 Leadership Laws During Times of Uncertainty.

Photo credit: fauxels on Pexels.com, Liza Summer on Pexels.com, SplitShire on Pexels.com

What evidence would change your mind?

I was listening to Shane Parrish interview Adam Grant on his knowledge project podcast last week.

Adam was speaking of the loss of rationality in many public domains. Politics, gender, science, global warming, race relations… are all domains where it has become dangerous to ask questions or engage with open curiosity.

As Adam was speaking about this he gave us a question “what evidence would change your mind?”

If I can’t answer this question, it is possible that I have become too emotionally attached to my position.

I asked myself: what beliefs do I hold to such a degree that no evidence would change my mind?

It is not a bad thing to hold strong beliefs… I believe it it a vital ability to develop faith in the universe. I decided to believe that the universe is a good place. I decided to believe that people are trustworthy. These are decisions of a stance I take towards the world.

The problem comes when I pretend to be rational when my belief really doesn’t come from reason. You could prove to me that people aren’t trustworthy and I still would prefer to act towards the world as if people are trustworthy. I don’t really care about the evidence. As long as I recognize this as a “stance towards the world” rather than an evidence-based rational decision, I will be ok. However if I want to convince others, it’s important to realize on what basis I hold the belief.

Adam Grant on Advice

Adam shared a story of someone asking him for advice… and as soon as Adam started sharing his opinion he realized that the other person didn’t want to hear it. Since those early days of his career, Adam has become much more careful in offering his opinion.

When someone comes to Adam for advice:

First: Ask them for their Pros & Cons? Their Risks & Rewards? Get their perspective on what is important and what challenges they see. Get this first.

Next: Ask “Why did you come see me?”

Did they really come for Validation? Or Approval? Or are they really open to have you test their thinking?

Be careful about offering help when the other is not open to another perspective.

Did you come to visit this blog to challenge your thinking? Or to confirm your existing beliefs? 😉

Reps vs Hours

What matters most in the gym? The hours you spend or the reps on the weights?

In the areas where you must be highly competent to succeed in your role: are you accumulating hours or reps?

Do you just do your job or do you spend time practicing the important skills that make you effective?

By practice, I mean “deliberate practice” – setting an intent, taking action, getting feedback, reflecting on original intent vs actual result, seeking new approaches… and repeat the cycle.

Thinking about writing is not writing. Publishing an article and listening to reader feedback is how to do reps.

Thinking about exercise is not exercise. Lifting the weights, pushing through discomfort, sweating… is exercise.

Thinking about difficult conversations is not having difficult conversations. Having challenging conversations (for you and for the other) and seeking productive conflict is how to do reps.

Thinking generates hours, but does not generate reps.

Be careful of equating hours (or years of experience) as competence.

Uncommon sense

Charlie Munger on uncommon sense…

Competence – you can only be trusted as competent if you clearly understand the limits of your competence. The great danger of experts is they forget the limits of their expertise – “it is better to trust a man of 130 IQ who thinks he is 125 IQ, than to trust a man of 180 IQ who thinks he is 200 IQ” Warren Buffett

Inverting – if you want to make life better, think of what you would do to make life worse. Charlie was an aviation meteorologist during WWII. His task was to give weather briefings to pilots. His role was unclear until he thought of the inverted perspective “if I wanted to kill pilots as a meteorologist, what could I do? Flying with iced wings, flying in conditions they will be unable to land.” This really clarified for him the important aspects of his role in keeping pilots alive. In our own lives, asking “how would I really make my life worse?” can be a valuable perspective on what really matters.

Collector – be a collector. How many collectors do you know who are unhappy? Identify things or experiences that you enjoy collecting and become a curator of your collections.

Integrate ideas between domains – most people focus on details within the idea (especially academics), few people look at the interaction between big ideas. That’s where there’s not much incentive in academics, but it’s very interesting for investing money.

Occam’s razor- go for simple… with a proviso that was initially shared by Einstein “Everything should be made as simple as possible but not more so” Einstein. Anywhere there is a “lollapalooza result” (Charlie’s term for a hugely positive and rapid outcome)… look for a confluence of causes. Academic experts find one cause. To a man with a hammer, everything looks like a nail. There are rarely just single causes for high impact outcomes.

The problems of Social science– all chemists can answer “where do the rules of chemistry not apply?” In the high temperature plasma state. how many social scientists can answer “if you want to sell more should you raise or lower the price?” Where does this rule not apply? 1 in 50 will say “luxury goods!” Many social scientists forget to think of the exceptional cases.

Update… a summary of this post in a #shorts video

More on Charlie Munger’s thinking process

Charlie Munger’s Inverse Thinking Process

Short term Happy vs Long term Fulfilled

Leaders Must Develop 2 Skills in the People around Them

If you are a leader, you need to work on developing 2 skills in the people around you:

Influence and
Decision Making.

The Importance of Influence Skills

Without the people around you learning how to influence others, they will always need your involvement to get anything done.

The Importance of Good Decision Making

Without the people around you taking good decisions, you will always need to step in to stop disaster from happening. In the IESE MBA program we have a course called “Analysis of Business Problems”. We teach a 6 step process for business decision making:

What is the Problem?
What are the Criteria?
What are the Options?
Compare Options to Criteria
Select Option
Create a Plan