By marching to his own beat, Buffett was able to surpass his competition. He wasn’t afraid to try something new. After all, “if past history was all there was to the game, the richest people would be librarians.”
Many people misunderstand the willingness by Warren Buffett to take risks. He's more than willing to, it's just that he knows how to take the right type of risk; not risk just for the thrill of partaking in risk.
Reinsurance is one example. He's willing to reinsure anything if the customer is willing to pay the type of premium required to manage the risk.
The one risk he refuses to take, is partaking in something that could permanently destroy a company. That's part of his risk-managment strategy.
Buffett watchers think that because his greatest rule of investing is that he must understand the business, it means that there is no risk involved, and by association no innovation. That's also far from the truth. There is a lot of innovation within the Berkshire Hathaway companies, but again, it's managed risk; predictable risk. Even if they miss on their projections, they understand where the worst case scenario would lead them.
One of the great challenges in business management is to guide the company through growth and innovative process while maintaining the that which is generating the major revenue for today. Maintaining that healthy tension is one of the secrets to Warren Buffett's success.
Other Buffett Resources:
Warren Buffett: The trouble with being a legend
Warren Buffett: 'I told you so'
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