222 InManagersWeTrust
ment, energy, intelligence, knowledge, leadership, and creativity.^1
Which of these is the most important?
Obviously, you want to avoid entrusting your wealth to a brilliant
croo kor a trustworthy idiot. An above-average IQ and these other
traits are certainly assets, but your CEO need not be in the top 10%
in the world on all these scales (who is?).
You might be tempted to follow the line of Fred Schwed inWhere
Are the Customers’ Yachts? who joked that he’d prefer a smart crim-
inal to an honest bonehead because at least with a writ and a cop
he’d collect from the thief whereas all he’d get from the bonehead
was a pathetic apology. Don’t do this.
Buffett repeatedly emphasizes that the one characteristic that
belongs on a pedestal is integrity. This means a CEO who thinks of
your interests first, one who has what Buffett calls an owner orien-
tation. CEOs reveal the degree of their owner orientation in their let-
ters, as described by the rules Warren Buffett sets for himself when
he writes his annual letter to Berkshire Hathaway shareholders: “to
tell you the business facts that we would want to know if our posi-
tions were reversed. We owe you no less....TheCEOwhomisleads
others in public may eventually mislead himself in private.”^2 Apply
that standard in evaluating whether a CEO deserves your trust.
Everyone knows that Warren Buffett is an enormously successful
investor, but not everyone is aware that he is also an enormously
successful and owner-oriented manager. On this score, Buffett is to
business management what Ted Williams was to baseball. Both are
in classes by themselves, Ted constantly hitting near .400 and War-
ren constantly writing lucid and candid reports of his successes and
failures at Berkshire Hathaway (compiled into the bookThe Essays
of Warren Buffett: Lessons for Corporate America).
While Buffett is in a class by himself, there are many runners-
up, and searching for them by reading CEO letters is a valuable and
often entertaining investing exercise. This chapter looks at what is
revealed by the letters of three leaders who display not only honesty,
the key characteristic you should seek in a CEO, but also in various
degrees achievement, energy, intelligence, knowledge, leadership,
and creativity.
ACTION
Few CEOs have affected corporate America as GE’s Jac kWelch has.^3
By word and action since taking the helm at General Electric in