Warren Buffet as Military Chief

Here is a bit from a posting by Thomas E. Ricks on his blog The Best Defense. Ricks's blog cover the military, including its shortcomings. In this posting he is proposing that they look to the financial investor Warren Buffet for some advice on building a better military:

If Warren Buffett were the chief of staff of the Army, we likely would be better off, with a military that is more effective in combat, and also with a better selection of leaders. That's the thought that occurred to me while reading his latest annual report. You can learn a lot about how to run a large organization from a guy like Buffett.

First of all, Buffett, the chairman of Berkshire Hathaway Inc., didn't follow a "zero defects" philosophy during the course of investing his way to becoming one of the richest people in the country. Unlike some Army leaders, he knows that if you aren't making some mistakes, then you aren't trying hard enough. Punishing all errors simply will deter subordinate leaders from taking necessary risks, or even making timely decisions. You want prudent risk taking and you want it done as fast as possible. Time is the great variable in both investing and war, but that isn't acknowledged often enough in the military strategic discussions. Buffett writes that,

We would rather suffer the visible costs of a few bad decisions than incur the many invisible costs that come from decisions made too slowly -- or not at all -- because of a stifling bureaucracy."

That said, he is quick to go on to describe what he sees as his role in risk taking and other leadership tasks: He and his deputy, he writes, "limit ourselves to allocating capital, controlling enterprise risk, choosing managers, and setting their compensation." In military terms, I think that would mean allocating resources and people, deciding where to take strategic risks, and selecting subordinate commanders. Everything else? That stuff "we delegate almost to the point of abdication," he states in his management principles, printed later in the same annual report. Buffett is so serious about limiting himself that in a company with 257,000 employees, his headquarters office numbers just 21. (This is an approach that reminds me of William Slim, the greatest British general of World War II, who insisted that his corps headquarters be able to travel in just a few trucks and jeeps.) Of course, as Buffett notes, he has to be more careful than most to keep his subordinates happy, because they tend to be wealthy people who can walk if they feel micro-managed or mistreated.

A significant part of discouraging a "zero defects" mentality is leading the way in confessing your own mistakes, which Buffett is quick to do. He notes that the chiefs of GEICO (yeah, he owns that too) opposed his idea of issuing credit cards to the insurance company's customers, a project that ultimately lost about $50 million.

GEICO's managers ... were never enthusiastic about my idea. They warned me that instead of getting the cream of GEICO's customers we would get the -- well, let's call it the non-cream. I subtly indicated that I was older and wiser.

I was just older."

Despite his willingness to see mistakes made, Buffett, whose company is bigger than the Marine Corps, is a big believer in accountability. I believe we need more of this in our military, which used to relieve senior commanders quickly (such as 17 division commanders in World War II), but no longer does. In all walks of life, if you screw up big time, you should suffer the consequences. For what it is worth, I agree with him -- too often we have privatized profit and socialized risk, letting the taxpayer pick up the tab when Wall Street's bets go wrong.

All organizations die from the head down. It is too easy for a leader to surround himself with sycophants. It is difficult -- if you have power -- to allow those around you to have power, an opinion, or autonomy. But successfuly leadership achieves these by building a camaraderie and esprit de corps that levels the hierarchy and engages all members. You have to take people into your confidences at the same time you are unleashing them to act autonomously. Power is diffused and, at the same time, strengthened because it now resides throughout the organization.