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2014: How can we blend 3G's hands-on approach with Berkshire's hands-off approach?
JONATHAN BRANDT: Hi, Warren. Thanks again for having me back.
My first question is as follows: Berkshire has a track record of buying successful companies and leaving them alone.
3G has a more hands-on strategy with its acquisition. Its zero-base budgeting would seem to offer the potential to improve margins at any non-insurance business.
Is there a way for Berkshire to use 3G’s methods to boost profits without violating promises made to selling shareholders or breaking faith with Berkshire’s decentralized culture?
Would it be consistent with Berkshire’s culture to hire a 3G alumnus to run a Berkshire subsidiary after an existing manager retired? Or alternatively, how hard would it be for a non-3G alumnus to learn and implement their management process? Thank you.
WARREN BUFFETT: Yeah. I don’t think the two blend very well.
But I do think that we — I think 3G does a magnificent job of running businesses. And I’ve watched them in the past from afar and I’ve watched them more recently up close.
And there’s no question that it’s a different style than Berkshire. And I don’t think it would pay to try and blend the two.
But I certainly think that we will see more opportunities to partner with 3G. And we’re very likely to jump at those opportunities, because I think they’re as able as anybody I’ve seen in the management of businesses.
And to get a chance to join with them — and in addition to that, they’re marvelous partners. They’re more than fair in everything they do with us.
So we will, as I’ve put in the past, I think we’re very likely to partner with them, perhaps in things that are very large.
But I do not think a blending of the two would work very well. We’ve got a system, works very well for us.
And managers, when they join Berkshire, are joining into a large business that’s unlike virtually any large business that’s around. They really can’t find a home exactly like Berkshire.
And that’s a huge corporate asset. It’s one that’s grown over time. It’ll continue to grow. And we want to maintain that with a very clear message that it goes well beyond my lifetime.
But we welcome the chance to join with 3G.
CHARLIE MUNGER: I don’t think we’ve ever had a policy that loved overstaffing. (Laughter)
WARREN BUFFETT: Well, I would only slightly disagree with that.
We certainly never had a policy that allows for overstaffing at the home office.
We only feel happy when people are sitting in other people’s laps. I mean, you have to understand this.
But the — but we have not enforced, or attempted to enforce, nor would wish to enforce, a strong discipline on every subsidiary as to whether they have a few too many people or not.
A great many don’t. In fact, I mean, most of them are — overwhelmingly — they’re managed on a lean basis.
But that’s not true of everyone we’ve been involved in over the years. And it probably won’t be true of everyone in the future.
We encourage — I mean, we encourage, just by example. But we do not encourage it by edicts, particularly.
CHARLIE MUNGER: I think a lot of great businesses spill a little just because they don’t want to be fanatic.
And that’s all right. I don’t think you have to have the last nickel out of the staffing cost.