Sunday, September 10, 2006

Main reason to Berkshire Hathaway success

To many, the main reason to Berkshire Hathaway success can be attributed to both Warren Buffett and Charlie Munger. But the main reason besides their ability to select a durable and wonderful business is the main man directing the play behind each of these businesses. Thus, to be a winner, you must always work with a winner.

Each and every operating managers in Berkshire operating business are a master of their crafts and run their businesses as if they were their own. These are people who enjoys what they do rather and gain satisfaction from seeing that their painting are always-evolving towards the north.

For Warren, the managerial model is Eddie Bennett, who was a batboy. In 1919, at age 19, he begin his work with the Chicago White Sox, who that year went to the World Series. The next year, Eddie switched to the Brooklyn Dodgers, and they too won the World Series. He, however, smelled trouble. Quickly, he joined the Yankees in 1921, and they promptly won their first pennant in history. Now, Eddie had settled in, shrewdly seeing what was coming. In the next 7 years, the Yankees won 5 American League titles.

What does this have to do with management? It's simple - to be a winner, work with winners. In 1927, for example, Eddie received $700 for the 1/8th World Series share voted him by the legendary Yankee team of Ruth and Gehrig. This sum, which Eddie earned by working only 4 days was roughly equal to the full year pay then earned by the batboys who worked with ordinary associates.

Eddie understood that how he lugged bats was unimportant; what counted was instead hooking up with the cream of those on the playing field. At Berkshire, they regularly hand bats to the heaviest hitters in the American business.

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