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

Warren Buffett and Secrets of Management - 47

We've already talked about the hazards of being a commodity company or creating products or services that are commodities. Buffett will never buy or buy into a company that is run in that way.

Now from the management point of view, these are things that can be managed and controlled; we aren't simply victims of the profit margin higher power.

I know the word "differentiation" is used so much that we can sometimes be hypnotized into such a familiarity that we start to neglect what it stands for, but we have to fight that urge.

Being different in the minds of consumers can be made at all stages of doing business, not just the end result product or service. It can be in what is being created from the beginning, marketing, customer service, branding, among many things.

The reason all of this is so important is because it's all related to profit margins and the profitability of the company. Being able to get high profit margins means that you've done the job of differentiation in the creation of your product. Sameness breeds low prices and vulnerability to attack from competitors.

Higher profit margins helps a company fight one of its greatest enemies, inflation, which when it rears its head too high, can be compensated for by raising prices, which having products that differ allows.

Being different and higher profit margins are twins that are connected. When you have one, you have the other.

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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