Agonizing over errors is a mistake. But acknowledging and analyzing them can be useful, though the practice is rare in corporate boardrooms. There, Charlie and I have almost never witnessed a candid post-mortem of a failed decision, particularly one involving an acquisition | CCC-Boroson 3 91-134 8 28 01 1 27 PM Page 12 CHAPTER 17 Admit Your Mistakes and Learn from Them Agonizing over errors is a mistake. But acknowledging and analyzing them can be useful though the practice is rare in corporate boardrooms. There Charlie and I have almost never witnessed a candid post-mortem of a failed decision particularly one involving an acquisition. The financial consequences of these boners are regularly dumped into massive restructuring charges or write-offs that are casually waved off as nonrecurring. Managements just love these. Indeed in recent years it has seemed that no earnings statement is complete without them. The origins of these charges though are never explored. When it comes to corporate blunders CEOs invoke the concept of the Virgin Birth. Warren Buffett One recurring theme of the Berkshire annual reports is Buffett makes a lot of mistakes. As he wrote in the 2000 annual report I m the fellow remember who thought he understood the future economics of trading stamps textiles shoes and second-tier department stores referring to seeming blunders he had made in the past. In the reports the litany of mistakes tends to come right up front. The 1999 report discusses just how poor our 1999 record was. . Even Inspector Clouseau could find last year s guilty party your Chairman. He describes the mistakes he tries to figure out why he made them and he assesses the consequences of those mistakes. Admitting mistakes and trying to learn from them seems to be an attribute of gifted investors and of gifted people in general. Let s look at how Buffett has discussed some of his mistakes in the past In the 2000 annual report he confesses I told you last year that we would get our money s worth from stepped up advertising at GEICO in 2000 but I was wrong. . . The extra money we spent did not produce a commensurate increase in inquiries. Additionally 121 CCC-Boroson 3 91-134 8 28 01 1 27 PM Page 12 122 admit your mistakes and learn from them the .
