October 21st, 2014
“Berkshire practices a philosophy of capitalism that does well by doing good, is sensitive but unsentimental, lofty yet pragmatic, and public-spirited but profitable.”—Lawrence Cunningham
Question: What inspired you to write this book and what are some of its key implications?
Lawrence Cunningham: People have been asking for 20 years what happens to Berkshire Hathaway if Warren Buffett gets hit by the proverbial bus; the question now has added urgency since the billionaire businessman is 84. The popular answer became paradoxical: Buffett tried to build an enduring institution at Berkshire and yet even great admirers doubt that the company can survive without him. My book demonstrates how Berkshire’s corporate culture is designed to make the company outlast any one person, making the culture part of its succession plan.
Q: How did you research this book and what did your research reveal?
LC: Background research dates to the 1990s when I published The Essays of Warren Buffett: Lessons for Corporate America, based on a symposium with Buffett and Berkshire vice chairman, Charlie Munger. In that era, Berkshire looked like a mutual fund, primarily owning stocks. Today, the company is instead defined by its 50+ wholly owned businesses and so my immediate research focused on them. In addition to traditional archival material, I interviewed, with Buffett’s permission, many Berkshire insiders, including numerous subsidiary CEOs. I also surveyed 500 Berkshire shareholders. The result is, I hope, a comprehensive portrait of Berkshire Hathaway.
Q: Who is Tom Murphy and why did he write the foreword to your book?
LC: Tom Murphy is a legendary manager who built Capital Cities/ABC into a broadcasting powerhouse in which Berkshire invested. When I saw Warren during the weekend of Berkshire’s 2014 annual meeting, I asked him who he thought should write the foreword. He immediately named Murphy, explaining that he learned most everything he knows about management from Tom. Readers will discover that Murphy, now a Berkshire director, fostered the same culture at Capital Cities/ABC that characterizes Berkshire today. Tom writes, “From afar, it may look like Berkshire’s wide-ranging businesses are very different from one another. In fact … they span industries, they are united by certain key values, like managerial autonomy, entrepreneurship, frugality and integrity.”