While Warren Buffett’s success and reputation is built on the capitalist market system, some of his observations overseeing his 60 plus companies are also spot on for the credit union system. Especially so for NCUA and the half dozen or so organizations that play lead roles by size or function. Some remarks I noted:
- The biggest risk to a firm: Picking the wrong CEO. Any organizations come to mind?
- The most common problem for firms: The myths people have about their own organization. They are passed on from one leader to the next. The CEO does not want to critique is predecessor. Subordinates are afraid to speak up. These myths lead to enormous errors. What myths are repeated defending otherwise dubious proposals in cooperative organizations?
- The key to success in running a business: You must be in love with your business to be good at it. Know any leaders out of “love” with credit unions?
- The economy is red hot: Not a price sensitive economy right now (supply chain disruptions and scarcity shortages). A lot more inflation is going on than realized. How will this affect interest rates?
- Lessons from last year under covid: You have to be a learning machine. Right now is very confusing. We’re in uncharted territory in government policy.
- Their thoughts on firms providing free online trading apps for new retail stock market investors (the gamification of investing): They are preying on people’s propensity to become addicted to gambling. Just like state lottery systems which took over the numbers games and pushed the Mafia aside. These activities are immoral. An interesting word, immoral. Any credit union activities that fall under this umbrella?
What Credit Unions Can Learn
Buffet (90 years old) and his partner Charlie Munger (97) were on TV live for over 4 hours, no breaks, taking questions on all subjects before the 20-minute scripted formal annual meeting.
I believe if a CEO and senior leadership were to similarly interact with their members in a virtual annual meeting, the example could increase credibility, confidence and trust in the credit union.
Buffet believes his primary responsibility is to his shareholders, to manage their investments well. He admits mistakes. His logic is transparent. His confidence in his organization is second only to his fundamental optimism about America.
This link is a summary of the meeting Q&A on Yahoo Finance. Watching even 30 minutes of this multi- hour questioning will show that the Oracle of Omaha is about more than his businesses. What if credit union leaders publicly affirmed a similar belief in their performance and the cooperative system at this year’s virtual annual meetings?