Margin of Trust: the Berkshire Business Model /

185 Pages·0.934 MB·English

by  Lawrence A. Cunningham and Stephanie Cuba.

Margin of Trust

Columbia University Press
Publishers Since 1893
New York Chichester, West Sussex
cup.columbia.edu
Copyright © 2020 Lawrence A. Cunningham and Stephanie Cuba
All rights reserved
A complete cataloging-in-publication record is available
from the Library of Congress.
ISBN 978-0-231-19390-0 (cloth : alk. paper)
ISBN 978-0-231-55056-7 (e-book)
LCCN 2019021300
Columbia University Press books are printed on permanent
and durable acid-free paper.
Printed in the United States of America
Cover design: Noah Arlow
We dedicate this book to our daughters,
Becca and Sarah, forever and always.

Contents
Prologue: The Carrot of Trust ix
Part I: Pillars
1. The Players 3
2. Partnership Practices 22
3. Business Methods 30
Part II: Perspectives
4. Deals 45
5. Boards 59
6. Internal Affairs 64
Part III: Alternatives
7. Contrasts 75
8. Comparisons 86
Contents
Part IV: Challenges
9. Judgment 103
10. Public Perception 112
11. Scale 118
12. Succession 125
Epilogue: The Stick of Ruthlessness 129
Notes 137
Index 153
viii
prologue
The Carrot of Trust
trust is the essence of the business model Warren Buffett
developed at Berkshire Hathaway. This simple idea has profound
implications for corporate life.
We have been studying and writing about Warren Buffett and
Berkshire Hathaway for decades. In 1996, Lawrence Cunningham
hosted a symposium on these subjects that resulted in his pub-
lishing The Essays of Warren Buffett: Lessons from Corporate
America, which quickly became an international best-seller and
then a cult classic. Since then, volumes have been written about
the Buffett-Berkshire example, especially for investing and, to a
lesser extent, management.
While legions of investors follow Buffett’s lessons, embracing
the value approach, a smaller number of managers have adapted
Berkshire’s managerial practices. Timing may explain the differ-
ence: Buffett’s outstanding investing track record dates back six
decades, whereas the unique features of Berkshire’s organizational
structure have proved themselves only for a decade or two. Inter-
est is picking up, however.
ix