What Do You Want To Have Happen?

When organizational leaders fail to clearly identify what they want to have happen in terms of the achievement of specific, crucial outcomes, they make it much more difficult for the people in their organizations to take accountability, own problems, find solutions, and achieve the outcomes that matter most. Here’s how leaders in one highly respected company stay focused on what they want to have happen.

Berkshire Hathaway’s performance continues to be amazing. The company is #4 (up from #8) on Fortune’s 2014 list of the World’s Most Admired Companies. What’s the company’s secret? There is no doubt whatsoever about what matters most to the company: beating the S&P index by investing in the right businesses and trusting talented management with operating decisions. Berkshire Hathaway owns a diverse range of service, manufacturing, retailing, and food businesses, including property and casualty insurance, carpet, bricks and concrete blocks, clothing, retailing, diamonds, flight training, newspapers, candy, farm equipment, consumer finance, industrial coatings, restaurants, engineering software, furniture retailing and leasing, footwear, and more. The company’s operating culture is simple: operating decisions are made by managers of the business units—Berkshire Hathaway claims to have superior CEOs running its businesses—while investment decisions and all other capital allocation decisions are made by Chairman Warren Buffet in consultation with Vice Chairman Charles Munger.

Berkshire Hathaway’s investment/acquisition criteria further clarify what matters most and what they want to have happen: “(1) large purchases—at least $50 million of before tax earnings (the larger the company, the greater our interest); (2) demonstrated consistent earning power—future projections are of no interest to us, neither are turnaround situations; (3) businesses earning good returns on equity while employing little or no debt; (4) management in place—we can’t supply it; (5) simple businesses—if there’s lots of technology, we won’t understand it; (6) an offering price—we don’t want to waste our time or that of the seller by talking, even preliminarily, about a transaction when price is unknown.”

Yes, what matters most and what has to happen are perfectly clear to Berkshire Hathaway’s operating managers, acquisition candidates, and shareholders. What about your organization? Do your people know what matters most and what you want to have happen? Can you write it down and get a majority of the people in your organization to agree? If not, then we invite you to join the Accountability Community^® at www.partnersinleadership.com, where you can review actual client case studies.