777. Berkshire Hathaway's Billion Dollar Culture Secret

Thank you for joining me today. It's Brian Gumernick and welcome to the No Days Off Podcast.

We believe that every single day brings a new opportunity to get better.

So I've been digging into something recently that I think is probably worth your time reviewing

as well. Every year, Berkshire Hathaway, you may remember Berkshire Hathaway as Warren

Buffett's company, he and Charlie Munger, every year they put out their shareholder letter.

And their investors read it and other business CEOs read it, business schools usually

teach on it. And it's one of the most followed documents probably in business. And again,

I look at it every single year. This year was pretty unique though. It was pretty different

because Warren Buffett did not write it for the for the first time. And I think about

60 years, someone else actually wrote the letter and that that someone else was Greg Able.

Greg Able is the new CEO of Berkshire Hathaway. And what Greg Able chose to lead with in his

very first letter, I think is really worth paying attention to. It certainly caught my attention.

Because he didn't so much talk about strategy and sure they include earnings, but he didn't

go too deep around that. He didn't talk about their stock portfolio. He focused quite a

bit on one word. And that one word was integrity. And I think there's a lesson here for all of us.

First thing that Able writes that I want to highlight, he says that integrity is not a quality

you admire on a shelf. It has to be earned, re-earned, and maintained every single day.

I think most of us treat integrity like it's a like it's a credential or a characteristic.

Like we did this, this right thing maybe once and now we have it. Now we have integrity.

But what Greg Able is saying is no, it's more like your health or more like your fitness.

You don't work out once and suddenly stay in shape. You show up every day and you recommit.

To your health and over time, your fitness improves. I think Berkshire Hathaway has really backed

this up for decades. For over 25 or so years at every shareholder meeting, they play a clip or

they've played a clip of Buffett's Warren Buffett's 1991 testimony in front of Congress where he says

in front of Congress, he says something like, lose money for the firm and I will be understanding,

lose a shred of reputation and I will be ruthless. They've been playing that same clip at the shareholder

meeting and I've had the opportunity to be there. I think I've gone to now three or four shareholder

meetings. Every year they've played this clip, it's the same exact message. It's not some poster

they put on the wall. It's a value that I think is being reinforced year after year and they're

doing it in front of thousands of people. I think there's 30,000, 40,000 in that stadium during

their shareholder meeting. So the question I think is how are you reinforcing your values?

Not just stating them to the team or to the public, but actually reinforcing them.

I think the second point and I think this one's harder for most leaders. Greg Able gives a specific

example in the letter. Berkshire's Railroad, it's called BNSF. They had a long running dispute

with Native American tribe over over shipments. I think it's oil shipments across the tribal land

and it went on for years and the decisions that caused it were made by people that have long since

passed. So what the current Berkshire leadership did. They didn't point fingers at the previous

regime at BNSF. They owned it. They apologized and they built a real working partnership with the

tribe that ended up benefiting both sides. And so Able writes in the letter, when we fail,

we will say so. And that's the whole playbook. Say it, fix it, and then move on.

I think the leaders people trust most aren't the ones who never make mistakes. They're the ones who

own their mistakes. And they own them quickly and they own them cleanly, I would say. There's not

spin. There's there's not deflection. They say like, hey, we got it wrong. And here's what we're

going to do about it. So the question I'd ask you is, how fast do you do that with with your

team or your company or your clients or your partners? The last point that Able makes in the

letter, probably the most important. Greg Able opens the letter up talking about culture.

And he references something that Charlie Manger Warren's partner said to him directly in

in 2021. He said five words. Charlie said five words, the Greg. He said, Greg will keep the culture.

That was Charlie's endorsement. Not he didn't say like, hey, Greg's going to be a great CEO. He's

a great capital allocator. He didn't say, you know, Greg really knows how to manage our portfolio.

Instead, he said, Greg will keep the culture. Because at Berkshire Hathaway, what Warren and Charlie

built, the culture is the asset. Greg Able writes that their culture is a system for generating long-term

performance, not just not just a set of beliefs. He says it's a system. Beliefs are what you say,

systems are what you actually do. Specifically, what you do under pressure when it's costly and when

nobody's watching. What you do consistently is your real culture. And everything else is just

fodder. It's just, it's just what's on the website. So here's the takeaway, okay? And why I'm

talking about this letter and why I always love looking at it every single year. Berkshire Hathaway

is worth the company itself is worth over a trillion dollars. And their new CEO's very first

letter to the shareholders is essentially saying the foundation of this trillion dollar company

isn't the stock picks they make. It isn't their balance sheet that they have one of the healthiest

balance sheets this world's ever seen. It's the culture. And it's the culture that's built on

integrity and it's reinforced daily and it's been getting reinforced daily for 60 years or so.

Able calls it cumulative principled conduct. Cumulative principled conduct. Nobody gives you a

reputation. You build it one decision at a time. So here's your action item this week. I want you

to find one place in your business or your life where you've maybe been avoiding some accountability.

Maybe a conversation you haven't had or a mistake you haven't owned. Maybe it's a standard

that you let slide. You probably know what it is. This week I want you to address it. I want

you to own it. I want you to fix what you can fix or I want you to recommit. Because if the most

successful company in American business history is telling us the foundation is integrity, not the

strategy, not the capital, but the foundation is integrity, then that's probably worth listening to.

That's all I have for you today. The note is out podcast. Thank you so much for listening.

And remember every single day brings a new opportunity to get better. So let's get after.

Thank you.