Devoted to Managers and those that seek to improve their management skills

Warren Buffett and Secrets of Management - 53

When Warren Buffett refused to invest in or buy the hyped up Internet companies through Bershire Hathaway (BRK-A) in the late 1990s, he probably had more pressure on him than any time in his business career. He refused to budge and stayed with what he knew. As usual, he was right the rest of his detractors have been proven completely wrong.

Buffett understood that as a manager he couldn't be, like other managers that were, as he said "hypnotized by the staggering ascent of tech stocks and ignored everything else, including whether the businesses they were investing in were making money."

If we find ourselves attempting to be dazzled by someone or something, it's the time to be wary as a chicken would be of a fox. Being hyped and dazzled breeds only one thing in managers: being hypnotized. Someone who's hypnotized just does whatever they're told to do. Or in the case of business - what everybody else is doing, for no other reason than everybody else is doing it.

Being hypnotized by hype means that you've dropped your reason and logic. You're blindly following the herd that doesn't know why they're doing what they're doing. Everything is based upon being caught up in the fever of the moment. Gold fever.

This doesn't mean that someone shouldn't look into something and see what's going on. It just means that the criteria you used in the past to make managment decisions should never change. There needs to be a cold, objective look at what is being hyped and peddled, to see if there's anything in it for your company.

Just because Buffett didn't buy into the hype didn't mean that the companies he owned didn't have an Internet presence. For example, Wells Fargo Bank has an online presence, just like the insurance companies and other companies in the Berkshire fold.

He just didn't go out and panic buy because everybody said it was the next big thing. He knew that people were doing nothing else than creating companies without profits so that they could sell them to make money for themselves and nobody else. And time proved him right.

The bottom line is that we should never let go of our way of measuring opportunities and changes by blindly adopting the newest thing every time it comes out.

Other Buffett Resources:

Wisdom of Warren Buffett

Warren Buffett, investor

Warren Buffett: The trouble with being a legend

Warren Buffett: 'I told you so'

Company growth

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