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Reputation Hasn’t Lost Its Luster for Warren Buffett

April 28, 2016

Berkshire Hathaway Chairman Warren Buffett is widely considered the most successful investor, and one of the most astute businessmen, in America. It’s not surprising that others in leadership look to his example for making their own organizations more successful.

Reputation graphicWith Berkshire Hathaway’s annual meeting fast approaching this Saturday (April 30), we decided to take a closer look at what Buffett truly values. And one thing stood out to us in particular: Reputation.

In 1991, Buffett told a Congressional panel after taking control of scandal-ridden Salomon, “Lose money for the firm and I will be understanding. Lose a shred of reputation for the firm, and I will be ruthless.”

More well-known is his proverbial, “It takes 20 years to build a reputation and five minutes to ruin it.”

When CNBC published “Warren Buffett’s 9 key rules for running a business” earlier this year – information gleaned from his past annual letters to shareholders – “keep your reputation” was on the list.

Not satisfied, we reviewed Berkshire Hathaway’s recent 2015 Annual Report for further evidence. And Buffett’s opening letter to shareholders confirmed that reputation has not lost its luster for The Wizard of Omaha.

His feelings are revealed in what Buffett called “the most important development at Berkshire during 2015.” Was it record profits? A major acquisition?

No. Berkshire Hathaway’s BNSF railroad “dramatically improved on its service to customers,” he explained, adding that these enhancements, by the way, led to better earnings.

Who would have guessed? A good reputation makes money!

We agree, as do countless companies across the country. Building and keeping a good reputation is one of the cornerstones of any successful organization. You can bank on it.