Warren Buffett is well known both for being one of the world richest and the world’s greatest investor for a good reason. He is the current chairperson and CEO of Berkshire Hathaway and known to be worth more than $66 billion according to Forbes’s list of the richest people. According to his book, “Berkshire Beyond Buffett: The Enduring Value of Values,” one of the contributors, Lawrence Cunningham argues that the reason behind Berkshire Hathaway’s success is its reputation.
Indeed, reputation and integrity have an economic value that is worth real money. A good Reputation Defender is sometimes used to replace a line of credit at the bank. Buffett not only buys companies with good reputation and integrity but also prepared to pay vast sums of money to maintain his good reputation. Buffett demonstrated the value of reputation in 1972 when he acquired Wesco company at a higher price that the value of the business on the stock market. Buffett had previously advised Wesco to pull out of a merger with another company to pave a way for a takeover by Berkshire Hathaway, a situation that resulted in a significant drop in its stock price.
When Buffett went ahead to acquire the company at a higher price, many investors including the SEC were baffled by the Buffett’s strategy. However, Buffett explained to them that he did it to show integrity and reputation were at stake for future deals. Think about it, Berkshire Hathaway’s reputation is the reason many entrepreneurs like the company, and it results in a greater number of opportunities for the enterprise.
Mr. Buffet is a man who believes in the culture of trust. According to him, it is not having the biggest compliance departments that results in a good reputation as some of the organizations with big departments like Wall Street have most scandals. Having a big compliance department does not guarantee a real integrity, it is instead the commitment of the organization and its leaders to preserve the good reputation.
Online reputation in the 21st century is, in fact, crucial to handle considering how online reputation has become very influential to the performance of businesses. Online reputation must be addressed in a way that portrays trust and acceptance of mistakes with the intention to learn.