Outline: Warren Buffett's Management Secrets

by Mary Buffett and David Clark

Step 1. Pick the right business to work for (business that offers greatest career opportunities)

Chapter 1. how to find companies that offer greatest career opportunities (w/ durable competitive advantage)

have products that:
- never really change
- easy to sell
- own a piece of consumer's mind

come in 3 basic business models:
- sell unique product, e.g. Coca Cola, Hershey
- sell unique service, sell what people need
- low cost buyer and seller of product/service that the public is consistently in need of - offer low cost through high volum, e.g. Walmart, Costco, Burlington

Chapter 2. quick test for identifying the best company to work for 

- per share earnings test (10 year period) - consistent and has upward trend
- debt test - long term debt must be low, debt load should be < 5*net earnings
- gross margin test - must be higher
      gross profit = revenue - cost of good sold
      gross margin = gross profit/revenue

Step 2. Delegate

Chapter 3. rules for delegating authority 

- every business culture is unique
- leave managers alone - let them continue to think their business as their own
- managers must have a GREAT deal of INTEGRITY

Step 3. Find the right manager for the job

Chapter 4. where to start search for manager 

- change manager only when necessary
- promote from within if possible
- look for talent w/ proven talent record

Chapter 5. victor or victim

- must have an internal locus of control
- victor = with internal locus of control - in control of themselves, take responsibility for their failures
- victim = with external locus of control - don't believe that they have power to solve their problems

Chapter 6. work at a job you like

- do what you love/love what you do, must not be driven by money

Chapter 7. put a winning sales team together

- find people who believe in the product

Chapter 8. obsession

- sd