Episode 175: What Makes a Great Leader – Ask the Oracle
What are the makings of a true leader? This week, we look to the Oracle himself for some hometown insight and wisdom.
Welcome to another edition of Around with Randall, your weekly podcast for making your nonprofit more effective for your community. And here is your host, the CEO and founder of Hallette Philanthropy, Randall Hallett. Thank you for your time, and joining me, Randall, on this edition of Around with Randall.
I had an interesting email from a client who forwarded me an email from their executive leader of the organization. And their organization is going through some ups and downs and making some adjustments, as I think many nonprofits do. But the email that this leader sent to be candid was pretty spectacular. Talked about that here's the challenges, which he has articulated several times before. Here's what we're doing about it. Things are looking up. Let me tell you why I think that. We still don't have all the answers we want, but we're going to get this done together. When I read it, I thought that's the kind of person I want to work with and for. And my client that had a Philanthropy in the organization forded it to me and said, you know, hey, it's a nice message. And I responded with what I think generally we all want in leaders. And that led me to look a little bit further, which we'll talk about here in a second in the tactical, but someone who's been commenting about leadership and having some evidence behind him regarding success that we can follow today and into the future.
My response back to the client and my good friend and professional partner in what we're trying to do in her organization was very simple. I said, you know, it's interesting. I think it's pretty elemental what people want. They want the leader to be in the boat with me, not on their own yacht. And this email that was sent indicated that we're all doing this together. And I have taken the same steps in responsibility that I'm asking others to do. Number two is to be honest, not spring things on it. If things aren't going perfectly, that's okay. But when we think we're having things hidden from us, we don't have all the facts. Generally we don't get on board. And thirdly, they want to be communicated with regularly. And the width is an important proposition because communication with implies two-way communication, not communicated at, meaning, hey, I want to tell you what I'm thinking, but I also want to listen to what you're hearing and what you believe based on what information you have. And if we have those three things, that gets us a long ways down the road.
As I thought about my email, which I think was fine, and really what I believe, I've always believed in those three things, I began to think a little bit more in depth about what are some things we should be doing that are a little more detailed when we think about great leadership. And when you think about leadership, I've talked about it on this podcast in several times, several episodes. Number 51 was on managing up. Number 29 was on how to lead during remote, particularly during COVID, but it goes forward, circumstances with people not in the office as much. Certainly how to handle discipline more effectively in one, 21, coaching, 50, how do you help others grow? And when we are hit with bad leadership, maybe what are some things we can do? That was 160. So if you're interested in those details, go back and look at those. In this case, I turned to someone who maybe I'm a little more familiar with than most and did some digging.
So as most of you know, I'm from Omaha, Nebraska. And I don't think there's a whole lot of argument that the most famous person from Omaha, Nebraska, living or not, and he happens to be living now coming up on 94 is Warren Buffett. And that's Berkshire, half the way for those who don't know Berkshire, half the way is a holding company that owns other companies as well as stock. He has, he's there. If you took back all the philanthropic money he has given, particularly the Gates Foundation, he'd easily be the richest man in the world. He's given away to the Gates Foundation to do good in the world, more money than like most everyone else has. And it's Berkshire, half the way that's driven this. Warren Buffett every year has an annual meeting. And as a part of that meeting in prep, he puts out an annual letter. An annual meeting now draws more than 30,000 people to Omaha in the first weekend of May. And they come to listen to him and used to be Charlie Munger, unfortunately, Mr Munger, in his little bit older and his late 90s passed away this last year. And they come to listen to the wisdom because the Oracle of Omaha as they call, as they call him, has pontificated on what makes him successful. And inside these annual letters, I think you can pick up, and read a bit of information that answers the question about what we're really looking for in leadership. What are the most important things that drive the people that we want to follow? And in doing so, maybe there are things we can learn to be more like that.
So I went back through a number of letters that he has written over the years and pulled some quotes. And then really try to analyze what they mean, and there are seven. We're going to take these apart real quickly. And I'm going to try to read a little bit from the letters so that they're an actual quotation of the work, the thought process, the perspective that one of the world's most famous and most successful people has told us about what he thinks of a leadership.
The first one comes from his letter in 2019, just for the pandemic started. I'd like you to know that almost all the directors, so he's talking about leaders at kind of a governance level. I've met over the years. Have been decent, likable, and intelligent. They dress well, make good neighbors and are fine citizens. I've enjoyed their company. Nevertheless, many of these good souls are people whom I would never have chosen to handle money or business matters. It simply was not their game. They in turn would never have asked me to help them in removing a tooth, decorate their home or improve their golf swing. Moreover, if I ever scheduled to appear on dancing with the stars, I would immediately seek refuge in the witness protection program. Here's the important part. We are all duds in one thing or another. For most of us, the list is long. The important thing is to recognize that if you are a Bobby Fisher, you play only chess for money. This talks about knowing boundaries, skills and expertise. And being able then to articulate those deficits and be able to figure out, which we'll talk about here in a moment, how to find people that can do the things you can't. Some Buffett talks about in many different ways and shapes and forms around the investment strategies. He goes, "I only invest in things that can understand, but I don't understand it. I don't invest in it." We sometimes think that leadership should be people that are omnipotent, all knowing, all seeing, all being. I am a believer in my religious convictions. I think there's only one in that entity. And it turns out they probably weren't human. None of us have this. I think the key here is when you think about leadership and the people you look up to and you think about how you apply your leadership. What is it that you can do that you know inside and out? How do you then also be able to say, "I don't do that and be okay with that?" That was a great lesson I learned from law school. What you learn in law school, I think for most of us, is that the law is so vast and that if you're a lawyer practicing, you get really good at a couple of areas. But there are other parts of the law that you're like, "I have no idea." And the key is being able to turn to people that you trust that know that particular area. This idea of boundary, skills, and expertise is something that actually develops trust with the people that we work with when we're able to say, "I really don't have all of the answers, but I know how to get them. Let's do it together." And that value builds an engender's trust with the people we work with. Number one, knowing your boundaries.
Number two from 2010 and that was the longest quote. Berkshire's CEOs come from many forms, some have MBAs, some have never finished college. Some use budgets, others are by the book types, others operate by the seat of their pants. Our team resembles a baseball squad composed of ball stars having vastly different batting styles. Changes in our lineup are seldom required. And this evolves from number one where we talked about knowing boundaries and I talked about knowing who to go to. What he's talking about is acquiring and assessing talent. I've had the privilege of working some for some pretty amazing people. And the one thing that's consistent amongst every one of them is they were incredibly good at assessing people and their talent and putting them into place into a team. Several episodes ago I talked about my favorite reads and really my all time favorite to be candid is Doris Kern just good ones, team of rivals about Abraham Lincoln and the cabinet that he put together to battle to take on and to eventually win the Civil War. That's what we're talking about here. Who are the people that can bring people into a room, into an organization, onto a board, figure out where their talents lie, elevate those talents and then compliment them with others who have other talents that will make everybody's as they say all tied rises, raises all boats. That's what we're talking about here. Places I've enjoyed the most, the people that I respect are the most, people that I've had the privilege of working for, the uniqueness is they're able to assess talent. And I think the other thing that comes of this is that they all come in different shapes, sizes, genders, colors, ethnic backgrounds, geographic locations, educational backgrounds. Those help people get to where they are, but they're really not the talent question. Number two talent.
Number three from 1986 when we have able managers of high character running businesses about which they are passionate you can have a dozen or more reporting to you and still have time for an afternoon now. Obviously if you have one person reporting to is deceitful, inept or not uninterested, you will find yourself with more than you can handle. This dovetails beautifully into number two about assessing talent in number three, what is core to leadership and that's trust, trust ethics and morals. There's kind of an analogy that you hear I've never heard Mr. Buffett say it specifically, but that when he looks at buying companies, he's looking for people and he talked about it in the quote from 1986, passion. If he's buying a company, he doesn't want to come in and take it over. He buys the company and tells him sets a salary for the CEO who probably most likely was the founder or some part of the family. And he says go keep doing what you're doing because you're making money. I'm just here to help you. If he's looking for the CEO who's on the golf course all the time or always traveling or always fishing, that means he's probably not here, she at the office. Do they have a passion for that area? And in having that passion do the people around them, trust them. Do they have morals and ethics? The people I've had the most trouble with in my life from a leadership perspective are not the ones that are the hardest working or that even didn't get right. It's the ones that don't have any center point of honesty. If you're looking at your leadership, honesty is where you start, honor, trust. That's what I tell people when they move to Omaha, Nebraska and they see what's it like, really simple. A handshake is worth more than a contract because you screwed up once. They probably aren't going to let you back in. Number three, trust in ethics and morals.
Number four from 2005. Every day in countless ways, the competitive position of your business grows either, grows weaker or stronger. If we delight our customers, eliminating unnecessary costs and improving our product and services, we gain strength. But if we treat our customers within difference and tolerate bloat, our business will wither. On a daily basis, the effects of our actions are imperceptible cumulatively though, their consequences are enormous. How do we serve others? This one may be the most important to philanthropy in terms of an industry because it's about love and mankind, how we take care of others. What do people want to do to make the world a better place? And even though customers, he's speaking about it from a for-profit perspective, it applies to our nonprofit world. How do we treat our donors? How do we treat the people we're trying to serve? How do we treat the people who may not give us money? But if you're in university, alums or if you're in social service, people you serve locally, or the politicians or one of the great compliments I heard here recently in the last 48 hours was of the recently passed Senator Joe Lieberman from Connecticut. Republican and Democrat alike said that he was an incredible person when it came to how we treated others. That it would be almost impossible to find people who would say they may disagree with his politics. They may not like what he did. They weren't going to say he was a bad person. Then he wasn't good to them. And when you watch the coverage, you're like, yep, that's pretty much what you read. How you take care of others personally and professionally says a lot about you. And when it comes to our nonprofits and our leadership, how you take care of your teams, your donors, stewardship, are you honest, are you communicative? Do they know you care about them? How you start conversations. I try to start almost every conversation with the clients I work with. How's everybody doing? What's going on? That is all about serving others. Number five, 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. To me, this has two things. Number one, can we identify the challenges that our organizations and as leaders, that's one of our jobs, are having quickly and come up with good answers or put together a team of people that will help figure out what those good answers are. The second thing is bureaucracy. Bigger is not better. We're going to start seeing this more in healthcare or in education because we've already started seeing it in healthcare and some social service like boys and girls, but we're merging. healthcare is better and all it's doing is getting more bureaucracy and from the front lines is causing issues. The ability to be nimble and to assess and make decisions and adjust is hugely important as a leader. And as Mr. Buffett said in 2008, the ability for us to keep the lines of communication between the front line and the and the CEO or executive team or the leadership has to be true. How do you do that becomes a real challenge because at the end of the day, the more you communicate with your team, whether they're one layer below you or 15 is an essential element of successful leadership. So think about how you build your organization and how you communicate with it when you deal with leadership issues. Number six, CEOs who recognize their capital allocation skills, which not all do. We'll often try to compensate by turning their staffs, management consultants and investment bankers, Charlie Munger by chairman of Berkshire at the time. And I frequently observe the consequences of such quote unquote help. On balance, we feel it is likely to accentuate a capital allocation problem rather than solve it 1987. I saw this and I thought about my book. Do our CEOs understand their responsibility in capital allocation skills? Do they get it that they are the head fundraiser? Yes, if we're CPO CDO, we are responsible for the ins and outs. But at the end of the day, the CEO is responsible. Now if we go down a level and you're the chief development officer chief of length, be officer. It's your ability to go to go into capital allocation mode. And if you don't do that, then you're depending on everybody else and they look at you and you're not doing it, why should I do it? And that's when we turn to all these other people, teams of people, which by the way, I thank you as a consultant to come in and help. But half time, my answer is you have a job to do. You are the head fundraiser here, either at the kind of the mid level, the CPO or the CEO as the ultimate authority in the organization. In 1987, Warren Buffett was talking about capital allocation and acquisition from the perspective of for profit. It's just as applicable today and it applies to the nonprofit as well. Money drives mission without it. It's awfully hard to do that. Number seven, cultures self propagate. Winston Churchill once said, you shape your house and then they shape you. That wisdom applies to business as well. Bureaucratic procedures, but get more bureaucracy and imperial corporate palaces introduce imperious behavior. At Berkshire Hathaway, worldwide headquarters, our annual rent is $270,000. Moreover, the home office investment in furniture, art, coke, dispensers, lunchroom, high tech equipment. It totals 301,000. As long as Charlie and I treat your money as it was our own, Berkshire managers are likely to be careful with it as well. Leadership in the ends about example. It's what you tell your kids. Or you think you're telling your kids. Do as I do, not as I say. If you say one thing and you do something else, it's hard to leave. I always tried to have the adage and I did not get it right, but I wasn't going to ask anyone else to do something that I wouldn't be willing to do. And when I had larger teams, that meant sweeping the front walk. That meant painting walls when maintenance couldn't get there. That meant showing up early and staying late to count receipts when my team had to do it as well. So, by example, is how you elevate trust and build a sense of camaraderie of accomplishment from the masses, from the team. 2010, that last quote, talking about how they lead, he and Charlie, by example, not by grand stature, but by hard work every day. So a quick review of the seven. Know your boundaries. Find the people and the assets that can get you the rest of the way. Finding, acquiring, identifying, and so on, is unleashing talent that can be part of a larger solution where you don't have to know everything and you know your limitations. That trust ethics and morals are quintessential to what we're trying to accomplish. That serving the customers, the connectors, the stakeholders, the end of the day is the name of the game. And we have to treat them like we would want to be treated ourselves. That we need to identify challenges and that we want to try to make sure that there's a direct connect between the frontline and the executive team. So there's not too many layers of bureaucracy and then make those changes as quickly as possible. That your CEOs and your upper leaders are the asset allocation and acquisition skill sets that are necessary. And while we as fundraisers may have responsibility, we depend on them for communication, for relationships and for selling a vision of what we're trying to accomplish. And finally, that leadership by example is the essence of what our teams know we will do and what we will do for them. Seven points from seven letters. Actually, I think a couple of them 19 I think had one or two that I picked up by reading born Buffett's letters and leadership lessons for us today and going forward as we look at what we can be and what we can do in our organizations. Don't forget, check out the blogs at Halifelanthropy. To a week, 90 second reads, our SSV right to you, howletflanthropy.com is where you'll find them and you'd like to reach out to me. It's podcasted at howletflanthropy.com. Because we have some chaos in the world philanthropy, what we need, what we have to have is leadership. It's going to help us find the solutions to problems no matter what part of the nonprofit world you're in, no matter what part of the hierarchy you're in, entry level or all the way at the top is the CEO. Leadership matters.
That's what gets us to our favorite, my favorite saying. Some people make things happen, some of the watch things happen, then there are those who wondered what happened. Things happen. Sometimes that's leadership for making things happen to people inside of our organization. We're wondering what's going on and how they can be a part of solutions and eventually into the community for the people in the places that are the misrepresented, the not heard, and the not engaged. Be a leader, stretch yourself and find others who want to be leaders too and you'll make your nonprofit and your career a better place today, tomorrow and well into the future. I look forward to seeing you next time right back here on the next edition of Around with Rant. And don't forget, make it a great day.