WARREN BUFFET ON HOW TO LOSE YOUR REPUTATION
Use this to remind you that one misstep can ruin your business and reputation overnight.
Warren Buffet (b. 1930) isn’t just the canniest investor in history, he is also a businessman who built up Hathaway Investments from a $100 organisation in the 1950s to a multibillion-dollar investment organisation. A man of great integrity, his organisation enjoys a truly phenomenal reputation amongst both its shareholders and the organisations he invests in. It’s therefore not surprising that he has something to say about personal and organisational reputations:
It takes 20 years to build a reputation and 5 minutes to ruin it. If you think about that, you’ll do things differently.
Warren Buffet
In business, a reputation for keeping absolutely to the letter and spirit of an agreement, even when it disadvantages you, is the most precious asset any organisation can hold.
WHAT TO DO
- Does your reputation provide you with a competitive advantage (see Quotation 2)? Remember, for a competitive advantage to exist, your reputation has to be better than that of your competitors. Being equal to is not an advantage.
- Identify the reputation you want to build for yourself and your organisation. Assuming that you are not a drug dealer or gangland overlord, you’ll want to be known for your honesty, fairness to staff, customers, suppliers and shareholders; never cheating, misleading or exploiting staff, customers or suppliers; being a person or organisation that not only honours the word of your contracts but the spirit also. Claiming that you do these things isn’t enough; you’ll have to demonstrate your commitment to them over an extended period of time. But once your reputation has been established, it will lead to better and more lucrative business deals.
- If you want to lose your reputation overnight, you will only have to be found, lying, cheating, being dishonest or disparaging about your customers, suppliers or shareholders once and you’ll find yourself spending thousands, perhaps millions, on public relations. Think of BP and the Deep Water Horizon disaster and its appalling initial reaction to the spillage. Or Gerald Ratner who confided at a business meeting that the reason he could sell a decanter, glasses and tray for £4.99 was because it was crap. Unfortunately, even in a time before social media, his gaffe was so bad it made every news broadcast in the UK, and the Ratner’s brand disappeared from the high street within a year. His gaffe has become a textbook example of the dangers of treating your customers with contempt, even when it’s meant only in jest.
- Should you have a slip, then apologise immediately, come clean and compensate (see Quotation 78).
- If you have a mentor in the organisation or have a colleague you trust, discuss with them your reputation within the organisation.
QUESTIONS TO ASK
- Am I happy with my reputation or do I need to improve it?
- Am I happy with the reputation my team have or do I need to improve it?