The Longevity of a Successful CEO
As a follow-up to the June newsletter about longevity I found a gentleman who’s kept up with the same job title for over 50 years. Based on statements he made last month he doesn’t plan to go anywhere just yet.Warren Buffett is the 87-year-old CEO of Berkshire Hathaway. He is also known to many as the “Oracle of Omaha.” He continues to run the $467 Billion-dollar company, along with business partner Charles Munger, but has made provisions to transition the company to others (eventually).
Buffett wrote in a letter to shareholders that upon his death his Berkshire ownership shares would be steadily transferred to foundations over a number of years. These charitable organizations will be tasked with carrying out his philanthropic wishes.
A new HBO series, Succession, is said to have its main character, Logan Roy, tailored after Buffett, along with Rupert Murdoch and Summer Redstone. All these successful business owners have had their drama and conflicts with family. In Buffett’s instance, he writes that family members as substantial shareholders will have some influence on future senior managers, but their judgment is not the final determinant.
Some predict that his son, Howard Buffett, would take on a role as nonexecutive chairman. Buffett plans for Berkshire CEO role to be split in two parts. One position will be the operational CEO and the other position will be responsible for the investment portfolio. The board of directors and assigned managers will handle the decision-making of new acquisitions.
Lawrence Cunningham writes in his book, Berkshire Beyond Buffett, that Berkshire’s corporate culture provides the ability for the company to continue indefinitely. Cunningham feels that the greater threat comes from outside forces advocating for results in a shorter time frame. Buffett joked at a recent Berkshire annual meeting that if he were to die later that day, “the stock would go up tomorrow” because of the conglomerate’s breakup value.
Whatever happens in the future for Berkshire, there are lessons which can be drawn from his plans for succession. Whether a publicly-held conglomerate or a family-owned business, planning for successful transitions requires three elements.
1. Leadership training and development
2. Business planning which is purposeful
3. Estate and personal financial planning
In a business and in family situations, it is key for communication between all the stakeholders which develops into a common vision. The first few episodes of Succession seem to indicate the fictional mogul’s character and family members don’t quite have that communication thing down yet. Maybe things turn around for them in Season Two.