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

What the Numbers Don't Tell You

If nothing else, Warren Buffett is a numbers fanatic. He reads company reports like someone addicted to romance books or science fiction. He understands the powerful, objective story that it tells about management and a company. He knows that no matter what someone may tell him, the numbers will determine if its honest and accurate. It's one of the reasons, besides great trust, that he can let his managers go without endlessly checking up on them.

With that in mind, there are things that numbers can't measure - they can't measure the future. They are a measurement and metric of the past and how the business performed; even if it's only the week before.

When it comes to projecting growth and potential of a company overall, there are much more subjective measurements involved. The two most important are the value of the brand and the quality of its management.

Now in reference to the brand, even though the past performance of the company can reveal its power, it still has a future element to it that can ensure that performance within certain guidelines and realities can fairly accurately be projected and counted. This is a huge benefit and advantage to a company over its competitors.

The quality of the managment team is another key future metric that numbers alone can't measure. The team in place, because it has a past record, does offer an intangible that numbers alone cannot unveil. The measurements for these types of invisible, subjective attributes aren't by using numbers or spreadsheets, but rather by a trust and faith in what the brand and leadership represent to people.

Companies with great leadership and brand power are the closest thing to truly predicting the future, over a period of time, that we can get. It's not that we could guarantee how individual quarters or even years will perform, but what we can guarantee with relative accuracy, is over a 10-year period say, the company will perform at predictable levels that can be counted on.

The importance of that is that plans can be made for these seasons of time that weak branded and poorly run companies aren't able to respond to. The result is growth that gradually, persistently and consistenly grinds out profits while competitors ride a wild roller coaster where they have no idea where it'll be at any given time.

Other Buffett Resources:

Investment Whiz Kid: Buffett Amasses a Fortune

Management Styles - The Buffett Way: Learn from the maestro himself

Understanding the Company

Brand names Commodity companies

THE REAL GENIUS OF WARREN BUFFETT

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