Saturday, May 7, 2011

Lessons for Mr. Buffett

Recently, I spoke to my class in Organizational Behavior about what I would advise Mr. Buffett after the recent incident with Mr. Sokol.  Here is a summary of what I said.

Number one, be aware of your cognitive biases.  You like people who are like you.  So do most people.  But don’t let that color your judgment.  You liked Sokol because he came from the same school as you, has had a good track record and is results-oriented like you.  You have many things in common with him.   But you still need to judge him based on his performance AND his values.  In OB, these are called "similar-to-me" and "knowledge-of-predictor" biases.

Number two, make sure you get multiple sources of feedback – preferably using a 360-degree  process.  Recognize that you are the boss, and information to you gets very filtered – sometimes you are the last to know.  Jack Welch recognized this early on, and this is part of the reason why he created the Crotonville Management facility.  By the way, if you reach out and ask people two levels down what they think of their boss, chances are you won’t get the straight scoop - at least not right away.  In many cases, after a manager is fired, people will come to you and say, thank you for firing him – he was a terrible leader; what took you so long?  So having a process like 360-degree feedback will help you get a more rounded view of your team.  

Number three, adapt your management style, and specifically your decision-making style, to the situation.  You like to delegate.  It seems that you spend most of your time in your office, reading or talking on the phone.  You don’t generally manage by walking around.  You trust your direct reports.  You like to empower them.  This suits your personality and is understandable, given the diversified nature of your company.   That’s fine in most circumstances.  But when there are yellow or red flags, or when the situation changes, you have to be willing to change your style also.  Sometimes as a boss, you have to dig deep and you need to ask a lot of questions.  This is not the opposite of delegation nor does it suggest that you no longer trust your people.    This is to make sure you have a good understanding so you can best support your team.  In my experience, your team will not view this as "interfering" but as a positive perception that you are interested in their business and willing to help.  It will also help you connect the dots among your various businesses and see where you as CEO can truly add value.