Berkshire Hathaway's success stems from Warren Buffett's business philosophy. He only buys wonderful companies with great management that he intends to own forever. Buffett lets the managers continue running operations with autonomy. Each subsidiary CEO has a compensation tied to performance and can allocate capital to expand. Subsidiary CEOs have freedom from headquarters oversight on reporting and press. Buffett expects high ethics and integrity. He only buys from sellers passionate about their business. Subsidiaries operate as if they independently owned the business forever. This philosophy creates an ideal home for acquired businesses and reassures sellers their legacy is in good hands with Berkshire. Buffett takes stewardship of acquired companies very seriously.
GEICO, a leading auto insurer headquartered in Maryland, has grown significantly under CEO Tony Nicely's leadership. Nicely, who joined GEICO in 1961 and worked his way up, played a pivotal role in the company's turnaround from near bankruptcy in the 1970s to its current success. His strategy involved reorganizing the business and attracting investment from Warren Buffett, leading to Berkshire Hathaway acquiring a significant stake in GEICO. Nicely's management philosophy emphasizes understanding customers, providing excellent service, and initiatives to save money, fostering loyalty through word-of-mouth. He values honesty, integrity, fairness, and effective communication, focusing on expanding the core business rather than diversifying. Nicely believes in the efficiency of the free market system, with consumers ultimately driving success.
book.moreChapters
