Buffet's Top Priority

Warren Buffet's legendary focus on reputation was highlighted in a recent article appearing in the Economic Times of India (http://bit.ly/1Cl14jn). The article highlighted Buffet's December 2014 biennial memo to Berkshire Hathaway operating company managers. In it he said "The top priority - trumping everything else, including profits - is that all of us continue to guard Berkshire's reputation...As I've said in these memos for more than 25 years: We can afford to lose money - even a lot of money. But we can't afford to lose reputation - even a shred of reputation."

Buffet is an icon in the world of business and while even he will readily admit he isn't perfect, he has largely gotten it right from the aspect of reputation. While reputation isn't the only root of his business success - smart investing has a lot to do with it - Berkshire's reputation has allowed it to make the business moves it has wanted to. Because of his reputation, business leaders want to do business with Berkshire. But his acknowledgement that reputation has to be the top priority - even above profit - may be much more unique in the world of business. Certainly, our believe is that achieving reputational excellence can be an excellent strategic framework for business success - and more importantly a guiding principle for corporate behavior. Understanding the behaviors which are counter productive to establishing a great reputation is essential. Removing these barriers to is a must. While our framework (linked to Enterprise Risk Management) is robust, I do wonder whether all of us complicate this more than we should. Perhaps Buffet's stance is the best guidance - "We must continue to measure every act against not only what is legal but also what we would be happy to have written about on the front page of a national newspaper in an article written by an unfriendly but intelligent reporter."

Perhaps it really is this simple.