I am reading a book entitled “The Warren Buffett Way� by Robert G Hagstrom Jr.
Warren Buffett is the greatest investor in the history of the stock market. I firmly believe to be the best, you learn from the best and so I am currently learning from the best investor ever.
I have learned Buffett will not buy a company (or even own stock in a company) that does not have great management. He has very specific criteria he uses to judge the leadership of a company. This is what I found so interesting and applicable to our situation because leadership qualities are universal and apply equally to all professions. I apologize in advance for the length of this post but I feel Buffett’s insights can teach us a lot about our program and its direction.
One of the main areas Buffett uses to judge management is what he terms “candor�. Buffet holds in high regard managers who report their companies’ performance fully and genuinely, who admit mistakes as well as share successes, and are in all ways candid with shareholders (fans are not “shareholders� but there is no doubt we have a financial stake in the NCSU basketball program). Buffet also “admires those with the courage to discuss failure openly. Over time, every company makes mistakes, both large and inconsequential. Buffett believes that too many managers report with excess optimism rather than honest explanation, serving perhaps their own interests in the short term but no one’s interests in the long run.�
When reading this I was reminded of the interview Roy Williams held after the George Mason game. He admitted he made a mistake, pointed out what the mistake was and made it plain he would not repeat the error. Compare that to Herb’s post game interviews in which he consistently blames “missed shots.� If a person cannot see their errors they cannot correct them. But who cares what Herb says in public, it is what he does in private that truly matters, right? Buffett addresses this point when he says “The CEO who misleads others in public, may eventually mislead himself in private.� Buffett believes that candor benefits the manager at least as much as the shareholder.
Hagstrom goes on to say that in school, Buffett was taught that experienced managers were honest, intelligent, and automatically made rational decisions. Once in the business world he learned that “rationality frequently wilts when the institutional imperative comes into play.�
Institutional imperative, the second management trait I am going to discuss, is the lemming-like tendency to imitate the behavior of other managers. But is Herb’s behavior lemming-like? Certainly his use of the Princeton offense is not; however the true problem behavior at NC State is the attitude that has saturated our athletic department – the attitude to set the bar so low so that goals can always be reached (or re-adjust the goals at a moment’s whim to insure ‘success’)
NC State’s Athletics Director wants nothing more than to “be competitive” and his fellow managers (coaches) fall right into that paradigm. According to Buffett, the institutional imperative exists when (1) an institution resists any change in its current direction; (2) any craving of the leader, however foolish, will quickly be supported by detailed studies prepared by his troops; and (3) the behavior of peer companies will be mindlessly imitated.
Can there be a better synopsis of our basketball program that these three things? Herb is as resistant to change as any basketball coach I have ever witnessed. Herb has multitudes of sycophants dreaming up irrelevant stats to support him (i.e. fastest to 20 wins in XX years). And Herb has hypnotically fallen into the “I am competitive� mindset.
Buffett isolates three factors he feels most influence management behavior.
* First most managers cannot control their lust for activity. In Herb this hyperactivity leads to his legendarily difficult practice sessions and the subsequent late season injuries.
* Second, most managers are constantly comparing themselves to other “companies�. For Herb these comparisons (to UNC and Duke) exacerbate the “I can only compete� attitude.
* Third, Buffet believes most managers have an exaggerated sense of their own management capabilities. Herb does not believe he commits mistakes. If something goes wrong it was because his players did not execute properly, not because there was a problem with his plan.
Would Buffett buy our “company�?
I think it is obvious he would avoid it like the plague. Since the NC Stat ecommunity has already “bought the company�, our only choice is to improve the management.
