“The CEO who misleads others in public may eventually mislead himself in private.”
In the last post we talked about Jack Welch and the power of informality that was one of the secrets of the great success of General Electric. Along similar lines, Warren Buffett, in the area of candor, is just as adamant about that being part of the makeup of the managers of Berkshire Hathaway (BRK-A).
There is absolutely nothing in Buffett concerning Berkshire Hathaway that he won't disclose to shareholders. In reference to his managers, he expects the same when problems arise that they may not be able to handle. He demands that if they have bad news, let him know it right up front.
Candor is one of those things that can seem so secondary, that it's power is vastly underestimated within management and a company. As Buffett said above, “The CEO who misleads others in public may eventually mislead himself in private.”
When thinking in terms of candor and its impact upon managers, Buffett was right. If you start misleading others, you can start telling lies to yourself that you start to believe are true.
In our minds we start creating artificial scenarios that have no bearing on reality. Developing the habit and discipline of candor can be a tool that will help us to keep from doing this.
I believe that's why Buffett says that he wants to hear bad news right up front. If other stuff is brought forth, the whole situation could be communicated and perceived in a completely different way than really exists. That is a dangerous place to put ourselves and others in.
Honesty and openness is always the best policy, no matter what eventually happens. It will come out one way or another. It's best to bring it out right up front, than to try to work our ways around it.
Candor is also one of those things that our people will see and emulate. Something that can bring a company to greatness as it deals with all those involved with it with honesty, openness and integrity. Candor makes all of that happen.
Other Buffett Resources:
Warren Buffett: The trouble with being a legend
Warren Buffett: 'I told you so'
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