Key Points
Buffett acknowledges 13 mistakes in annual shareholder letter
Transparency trumps perfection in corporate communication
Swift problem-solving is critical for business success
Mistakes are learning opportunities, not failures
In his 15-page letter to shareholders, the American business leader mentioned "mistake" as many as 13 times, though in different contexts.
Buffet said the cardinal sin is delaying the correction of mistakes and not making mistakes in the first place. At Berkshire, he said, "Mistakes--Yes, we make them at Berkshire."
"The cardinal sin is delaying the correction of mistakes or what Charlie Munger called 'thumb-sucking'. Problems, he would tell me, cannot be wished away. They require action, however uncomfortable that may be."
In his letter, Buffet asserted he had made mistakes in assessing the future economics of a business he purchased for Berkshire.
He said each mistake was a "case of capital allocation gone wrong."
At other times, he said he had made mistakes when assessing the abilities or fidelity of Berkshire's hiring managers.
"The fidelity disappointments can hurt beyond their financial impact, a pain that can approach that of a failed marriage," Buffet's letter read.
During the 2019-23 period, Buffet has used the words "mistake" or "error" 16 times in his letters to the shareholders. In follow-up, he said many other huge companies have never used either word over that span.
"Elsewhere, it has generally been happy talk and pictures," he said, referring to other company bosses' letters to shareholders.
"I have also been a director of large public companies at which "mistake" or "wrong" were forbidden words at board meetings or analyst calls. That taboo, implying managerial perfection, always made me nervous (though, at times, there could be legal issues that make limited discussion advisable. We live in a very litigious society.)," he supplemented.
