Warren Buffett had a busy Christmas.
After sitting on about $45 billion, just waiting for the right investment opportunity to arise, he closed three deals on behalf of his company, Berkshire Hathaway, in a matter of a few days.
First, on Christmas Eve, it was announced that for an estimated $4.5B he had purchased a sixty percent share of Marmon Holdings, Inc. - a Pritzker family owned business of which he’ll progressively buy the balance over the next six years based on its value at each purchase point. According to the reports, he had been quietly approached a couple of weeks earlier but the deal went down over a weekend. Classic Buffett.
Next, in the first of a one-two punch, Berkshire announced that it was starting its own bond assurance company for cities and municipalities. Any number of beleaguered bond companies had been approaching Buffett for weeks to buy into their companies. Only Buffett knows insurance like no one else and he knew that that wasn’t the way to go. So, he took some of those billions and set up Berkshire Hathaway Assurance Corp. and is now expected to be one of the few (if only) companies in the field with a AAA rating.
At almost exactly the same time, Berkshire Hathaway announced that it had bought a reinsurer from the Dutch company, ING, for $433 million.
By that time it was New Years and, evidently, he took a break. Until it’s time for the next quick round of deals – because if there’s anything anyone knows about Warren Buffett’s style, it’s that he’ll wait and look and study and think. Then, when he’s ready to move, it’s faster than the speed of light – because when the right opportunity is there, he knows it and he makes sure he and his shareholders win.
Alternatively, let’s take a look at what’s going on at Starbucks.
This is a company that has been the poster-child for growth for decades. From the time that Howard Schultz took over as Chief Executive in the 1987, Starbucks has been dedicated to creating not just new markets, but a new experience. Coffee houses – those pre-Victorian destinations where business people went to meet and talk and do their deals – simply no longer existed. Coffee, in the United States, was something you drank to give you a caffeine boost. There was no thought of going someplace to sit and talk or listen to music, let alone have a coffee-related experience.
Enter Starbucks. With a business model for expansion that takes no prisoners, Shultz grew the company from a small set of shops in the Seattle area to an international powerhouse. Probably the finest backhanded compliment the company was paid for years was that people hated Starbucks. There were too many of them. Their drinks weren’t exceptional – in fact, it was so standardized it was the McDonalds of the coffee set.
Of course, year on year, store on store growth didn’t quit so the folks who were complaining either weren’t getting much traction – or they were there drinking their lattes and Frappuccinos even as they were complaining about the ubiquitous Starbucks ‘experience.’
All of that changed in December. For the first time in years, the analysts were downgrading Starbucks’ stock based on performance. Year on year numbers did not increase. Their fiscal year ending in September 2007 showed numbers that were either flat or moving downward. The share price was down 40% from the year before.
This was not the Starbucks that anyone knew.
Quite a while earlier, an internal memo had been leaked. It was written by the now Chairman, Howard Schultz, giving warnings about the need to recreate what made Starbucks great in its earlier years. He spoke of the sameness of the coffee houses. How, because of new technology that doesn’t require the baristas to actually make the drinks, the shops no longer smell of coffee upon entry. That there were too many coffee houses too close to one another. That they had lost sight of the customer and become too focused on bureaucracy.
He made clear that it was incumbent upon the company to re-create and ensure the Starbucks experience.
Then, in December, came the numbers. Bad news all around, but no real surprises. Shultz had warned that this would happen – and it did.
A few days later, McDonalds announced that it was going head to head with Starbucks. That in their over 14,000 US sites, they were going to be adding coffee house areas and expanding their coffee offerings to their customers. That this, according to the Wall Street Journal, was the “single biggest addition to its menu in thirty years.”
The next day, it was announced that the then Chief Executive of Starbucks, Jim Donald, was being ousted and Howard Schulz was taking over, once again, as Chairman and CEO. Effective immediately.
What both of these stories – looking at speed from the upside and downside – demonstrate is that when it comes to creating success, speed is a factor that cannot be underestimated.
If you’re the most senior executive and there is a strategic opportunity on which you can move, if you don’t do so, you lose. Worse, someone else will win – and then, very likely, you’re out.
If you’re among the management set – at any level – and you have problems and issues within your department, division or directorate and you’re not addressing them – now – you lose. Worse, so does the organization and that means that, public or private sector, so do your stakeholders. If whatever you’ve not done gets enough visibility, not only do you lose, you’re probably out. As you should be.
When organizations move from the early stages of start-up to those initial moves toward becoming an ongoing enterprise, one of the first things that happens is that things start to slow down. Suddenly it takes a village to make a decision. Everyone involved somehow needs to get their two cents in.
Participation isn’t a bad thing. In fact, it’s crucial for success. But that’s not what we’re talking about here. What goes wrong as organizations mature is that decision-making slows down because too many people want to create safety nets around themselves. As a result, the decisions that need to be made – most of them not belonging to a ‘committee’ but to an individual – are not made. The one is waiting for the rest to provide them with their ‘input’ - whether it’s needed or not.
Worse, some executives who know exactly what they’re going to do will still slow down the process by ensuring that ‘everyone involved has a chance to contribute.’ Then, they go ahead and do what they were going to do anyway. The only difference is that when they position it, they’re able to pick and choose the language of their colleagues and subordinates to, ostensibly, assist in making their case.
If they were brave, if they had the courage of their convictions, they wouldn’t put everyone through the lost time and energy of innumerable meetings and emails. They’d simply get the information they need and then make the decision they need to make.
Within the enterprise, employees are looking for decisiveness. Whether it is in giving clear delineation regarding what is needed and expected in any given function or in seeing that ‘problem’ employees are dealt with rather than being allowed to be ongoing problems, your employees are looking to you to do what you’re paid for. In their eyes (and rightfully so), you’re making the big bucks. You should be taking the hard decisions.
Only too often that doesn’t happen. The easiest person to get rid of in any organization is the Chief Executive. There is rarely a progressive discipline process required. Mostly what it takes is for the Board to decide that the CEO isn’t doing his or her job and, for the good of the company, it’s time to send them on their way. (We could get into a discussion here about the golden handshakes and outlandish termination fees paid, but we’ll save that for another time.)
As soon as you move one level down, in most companies you’ve entered into the world of Human Resources Hell. It’s not that you can’t fire people – or even do so quickly. After all, there are no real surprises about bad performance. It’s not like you’ve not seen it. You’ve just not done what the courts require – and they require a lot – to make a compelling case that will live through the unfair termination litigation or employment tribunals that are yet to come.
But in the meantime, what your employees see is someone who knows what the problem is yet makes no decision to act. Shame on you.
Back to strategy. You’re in a market. The market is changing. New players are coming in and introducing whole new ways of doing business. Customers are asking you to provide what you provide in ways you’ve never had to before. Service levels are increasing. Prices are dropping.
Simultaneously, new markets are emerging. Whatever it is you provide – product or service – new opportunities to do so are always on the horizon. Sometimes it’s with your existing customers and it’s just a matter of educating them in how else you can help them create success. Sometimes it’s new markets and new customers altogether.
That combination – looking at the changing landscape of your existing business while simultaneously creating new markets and opportunities for your enterprise – is what best of breed executives do. Otherwise, why would Starbucks own a tea company (Tazo)...let alone become a music distributor (Starbucks Hear Music)?
But that takes a combination of vision, strength and a willingness to act – which takes us back to speed.
The goal isn’t to go for everything at once. That’s bad management and no vision or strategy at all. The goal is to ensure that you’re actively looking for how to make the most of what you own by making it even more valuable than it was yesterday, let alone the day before.
And then it’s time for you to act.
Whether you’re the first mover or you’re taking what the first mover did and creating something even more and better, do it. Moreover, do it now. Don’t wait.
Because, when all is said and done, there is no time to waste. As soon as you hesitate, you’ve lost your edge and, most likely, a competitive opportunity. Then, wait for it. Next will be losing your job.
Don’t let it get there. Do what you’re there to do. Be an executive.
About the Author:
Leslie L. Kossoff, internationally renowned executive advisor specializing in strategy and corporate turnaround, was cited by About.com as “one of the most intelligent and perceptive voices on executive and managerial leadership today.” For over 20 years, she has assisted clients in the public and private sectors in the U.S., U.K., Europe and Japan. Her clients, ranging from start-ups to multi-nationals, include Sony, Kraft Foods, the UK National Health Service, Fidelity Investments, Seiko/Epson, 3M and others.
A former C-level executive in the aerospace/defense, pharmaceutical and entertainment industries, Leslie enjoys an outstanding reputation as an invited speaker at conferences around the world. She is the author of two books, Managing for Quality and the award-winning Executive Thinking, and writes regularly for Horticulture Week/The Grower focusing on business and management issues in the agricultural industry. Having written over one hundred articles in journals including the Financial Times and CEO Magazine, she is frequently quoted in Entrepreneur, Investor’s Business Daily and is a regular guest on the syndicated “Small Business Advocate” radio program. Jim Blasingame, its host, cites Leslie as “one of the top organizational thinkers for executives and business owners.”
During her association with Dr. W. Edwards Deming, the quality management expert credited with turning around Japanese and Western industry during the latter half of the last century, he declared Leslie “Quite simply one of the best at implementation.”
Leslie is a founding Board member of the Global Women’s Leadership Center at Santa Clara University Leavey School of Business, serves on the Advisory Board of the Russia Research Network, is the former director of the Institute for Quality and Productivity Improvement at California State University, Long Beach, has been a member of the Judges Panel for the Sterling Award for Quality in California and is included in the Who’s Who Registry of Global Leaders among others.
She is a Fellow of the Royal Society for the Arts and a Freeman of the City of London.