• Skip to main content
  • Skip to header right navigation
  • Skip to site footer
Farnam Street Logo

Farnam Street

Mastering the best of what other people have already figured out

  • Articles
  • Newsletter
  • Podcast
  • Books
  • Courses
  • Log In
  • Become a Member
TweetEmailLinkedInPrint
Leadership|Reading Time: 3 minutes

When Things Go Wrong: The Warren Buffett Way to Handle Problems

“Get it right, get it fast, get it out, get it over.”

***

In an interview with Jeff Cunningham, Warren Buffett hits on two principles that elude most of us.

Interviewer: I was reading a Lincoln quote the other day, “With public sentiment, nothing can fail. Without it, nothing can succeed.” Of course, he was talking about what led to the Emancipation Proclamation. When I think about your world, 330,000 people who are employees of Berkshire Hathaway or its subsidiaries, how do you send the message that they are being scrutinized under the microscope by the media at all times?

Buffett: I send a message to their managers. Those 330,000 people work for maybe 70 or so CEOs and in turn work for me. My job is to have those 70 CEOs sending out the right message. Every two years, I write them a very simple letter. It’s a page-and-a-half. I don’t believe in 200-page manuals because if you put out a 200-page manual, everybody’s looking for loopholes basically.

Page-and-a-half, it’s very hard for them to argue about what I’m talking about. I tell them that my reputation, Berkshire’s reputation, is in their hands. We’ve got all the money we need. We’d like to make more money but we’ve got all the money we need. We don’t have an ounce of reputation beyond what we need. We can’t afford to lose it. We never will trade reputation away for money.

They’re the ones that are the guardians of that. I want them to not only do what’s legal obviously, but I want them to judge every action by how it would appear on the front page of their local paper written by a smart but semi-unfriendly reporter who really understood it to be read by their family, their neighbors, their friends.

It has to pass that test as well. I tell them I don’t want anything around the lines. I tell them there’s plenty of money to be made in the center of the court. I’m 84. My eyes aren’t that good anymore. I can’t quite see the lines that well. Just keep it in the center of the court. If they have any questions, call me.

As for advice on what to do when you face a problem …

Interviewer: Even the occasional dust-up at Berkshire is big news. I’ll pick on Salomon only because it’s history now. It’s got a lot of time to reflect on that. When you think about what you went through there, what advice do you have for a CEO who’s on the media hot seat because of a similar situation?

Buffett: There are a couple pieces of advice on that. The first is that when you find out a bad news, correct that and if it’s necessary to report it, then the authorities report it to the media. The big problem with Salomon was not what a fellow named Mozer did which was to defy the US government, not ever a very good idea. But that could have been handled, but he reported…He didn’t report it.

John Meriwether, his supervisor, picked up on it in late April of 1991 and went to the president, the chairman and the chief legal counsel of Salomon and said, “Here’s what this fellow Mozer has been doing.” They all agreed it was wrong. They all agreed it was reportable to the Federal Reserve promptly. Unfortunately, nobody did anything.

In the middle of May, Mozer went out and did it again. Now, you’ve got a terrible problem because you knew the guy was a bad actor a few weeks earlier and he hadn’t reported it and that compounded there. Then, you’re in a real pickle.

When you find bad news, I say get it right, get it fast, get it out, get it over. Get it right is important. When they questioned, Mozer had done it there. But the get it fast and get it out, they missed on.

You’re going to get bad news. I got 330,000 people. I will guarantee you that probably dozens of them are doing something wrong right now. I just hope I find out about it early and the person below me finds out and lets me know if it’s bad enough and that they stop it.

You can’t have a city of 330,000 without an occasional [laughs] crime of some sort. It’s going to happen. You’ve got to do something about it fast when it does happen.

Read Next

Next Post:Andy Warhol: Don’t Make a Problem of your Problems, How a Person Gets Disciplined, and The Value of Time on ValuesIn The Philosophy of Andy Warhol (From A to B and Back Again), Warhol advises us not to make a problem of our problems. Everybody has …

Discover What You’re Missing

Get the weekly email full of actionable ideas and insights you can use at work and home.


As seen on:

Forbes logo
New York Times logo
Wall Street Journal logo
The Economist logo
Financial Times logo
Farnam Street Logo

© 2023 Farnam Street Media Inc. All Rights Reserved.
Proudly powered by WordPress. Hosted by Pressable. See our Privacy Policy.

  • Speaking
  • Sponsorship
  • About
  • Support
  • Education

We’re Syrus Partners.
We buy amazing businesses.


Farnam Street participates in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising commissions by linking to Amazon.