Importance of Succession Planning
Recently, Warren Buffett sent his famous biennial memo to his “All Stars” – that’s what Buffett calls the top management team of Berkshire Hathaway’s various subsidiaries.
Buffett has sent these memos to his top leaders for the past 50 years and they have always covered two topics: 1) protect the reputation of the firm, and 2) succession planning (although he doesn’t use that term).
Buffett’s focus on reputation gets most of the attention from news outlets who cover the memo (e.g., The Wall Street Journal, “Buffett Reminds His Top Managers: Reputation is Everything”). Indeed, reputation gets about two-thirds of the memo and succession planning gets about one-third.
Even for those companies who have succession management processes, the vast majority of these are fragmented and only focused on replacing senior level talent.
Warren Buffett has been called the “Oracle of Omaha” and is the most successful businessman of the twentieth century and one of the world’s most influential thinkers today. His books, articles and letters are closely scrutinised for replicable insights into business success. Every other year for the past five decades, he’s given us clear and simple management advice requiring succession planning.
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