Managerial Economics

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  • Topic: Warren Buffett, Value investing, Benjamin Graham
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Running Head: WARREN BUFFETT

The Leadership Style of Warren Buffett
BUS 508
Contemporary Business

Warren Buffett (Buffett) is the world’s second-wealthiest person and one of its most successful investors. His character, leadership style and business acumen have positioned Buffett in a world class of his own.

His Birth and Education
Warren Buffett, born on August 30, 1030 in Omaha, Nebraska, attended the University of Nebraska. There, he had the occasion to read a book entitled, The Intelligent Investor, written by a Columbia professor by the name of Benjamin Graham (Graham). Buffett was so influenced by Graham’s ideas that he applied to Columbia Business School to study under, be trained by Graham and ultimately become Graham’s protégé. (Hagstrom, 2005, p. 2). Hagstrom notes that Bill Ruane, Chairman of the Sequoia Fund, was in the ame class as Buffett. Ruane recalls the following: “There was an instantaneous chemistry between Buffett and Graham, and that the rest of the class was primarily an audience.” (Hagstrom, 2005, p. 2).

How Do We Describe Buffett
In her book, Warren Buffett Speaks, Janet Lowe’s opening paragraph in her introduction sums up the challenge one would have in describing Buffett. She wrote: “ Is there anyone anywhere who has more nicknames than Warren Buffett? Vanity Fair called him the Forrest Gump of Finance. He’s been dubbed the Oracle of Omaha, Omaha’s plain dealer, the corn-fed capitalist, St. Warren (with a less than admiring inflection), and the financial world’s Will Rogers. He could also be called the King of Bling for his ownership of jewelry stores, including the second largest in the United States, Borsheim’s of Omaha”. (Lowe, 2007, p. 1). Buffett embraces the simple and avoids the complicated. (Pardoe, 2005, p.5).

Michael Lee Stallard, President of E Pluribus Partners describes Buffett in this way: “ He [Buffett] is always courteous and considerate. He lacks arrogance and easily connects with people. Stallard notes that Buffett’s long time Administrative Assistant says that she has never seen him in a state of anger with anyone. (Stallard, March 24, 2011 p.2).

Buffett’s Leadership Style
Stallard states that Buffett creates a connection culture. By that he means that Buffett keeps his management teams emotionally connected to Berkshire Hathaway-- Buffett’s multi-billion dollar holding company – the corporate vehicle from which he buys and controls his investments, and to Buffett. Buffet treats every manager as if he is his own CEO and encourages them to treat the business as their own.

Buffett is more of an authentic leader with some traits of a transformational leader with the exception of the high risk-taking factor. Buffet keeps it simple and stays in zones, which he is knowledgeable. He knows and understands himself, knows what he believes and values, and acts on his values and beliefs through open and honest communications with subordinates and others. (Hellreigel/Slocum, 2011, p. 326). Warren Buffett did not become one of “America’s Best Leaders” just for his investing prowess. Rather, he was selected for his leadership and influence in the greater corporate world. His commitment to sound ethics and principles, his self–discipline and consistency, his transparency in disclosing mistakes, his criticism of Wall Street fees and compensation of underperforming CEOs, and his pleas for improving corporate governance – all have had a salutary influence on the corporate community. (Bill George, U.S. News. “The Master Gives It Back,” Retrieved February 2/6, 2012, Posted 10/22/2006, www.usnews.com/usnews/news/articles/061022/30buffett_print.htm.)

Stallard emphasizes that Buffett is always courteous and considerate and lacks arrogance. He notes that Buffett easily connects with people. As to his managers, Buffett brings to the table the element of voice....
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