This is a story about Warren Buffett and mistakes, and it's exactly the kind of lesson I cover in my free ebook, Warren Buffett Predicts the Future, which you can download here.

Berkshire Hathaway released its 2020 annual report Saturday, and Buffett acknowledged a big error: overpaying for a company called Precision Castparts, which meant Berkshire had to "write down" (or deduct) $11 billion from its bottom line last year.

It was "almost entirely the quantification of a mistake I made in 2016," he wrote in his annual shareholder letter, when he "paid too much for the company."

But while that admission led much of the coverage Saturday, I think there's something deeper to examine, and frankly more instructive for anyone who wants to learn from Buffett and imitate his success as a business leader.

The deeper lesson stems from deep in Berkshire's history. In short, while Berkshire is basically a conglomerate or a holding company now, with subsidiaries in many different industries, it has its roots in an early 19th century textile mill, the descendent of which Buffett bought in the early 1960s.

As Buffett has said before, buying the company, largely as a result of an emotional dispute he had with its CEO back then, was his first mistake. Then, he compounded the error by trying for 20 years to compete in the textile industry, before closing things down. 

(There was also some good corporate citizenry involved, too. Buffett hesitated to leave the textile business because most of its employees depended on it at the time, and didn't have transferrable skills.)

Regardless, Buffett writes in this year's letter that it was the experience of grappling with that difficult industry for so long that led to his current strategy for Berkshire, a journey he describes as follows:

"It took me a while to wise up. But Charlie [Munger] - and also my 20-year struggle with the textile operation I inherited at Berkshire - finally convinced me that owning a non-controlling portion of a wonderful business is more profitable, more enjoyable and far less work than struggling with 100% of a marginal enterprise."

Berkshire's portfolio these days is dominated by four such "wonderful businesses" (the "crown jewels") in which, as Buffett describes things, there's zero need for him or Munger to exercise any operational control. 

These include property/casualty insurance (like GEICO and National Indemnity), along with railroad company BNSF, utility business Berkshire Hathaway Energy, and finally, a 5.4 percent stake in Apple.

They're pretty far from the textile industry, and I suspect most business leaders would agree they're more attractive businesses in the year 2021.

But that's the catch, and it's what makes this admission on Buffett's part so brutal for other people to accept and imitate. Because Buffett wasn't assessing this in the 21st century, when it's obvious to all with eyes to see; he made the pivot for good back in 1985.

That was right around when he crossed the billionaire mark, according to one estimate, and it's also when he was about 55 years old. 

Be honest with yourself: At that age, with that kind of wealth under your belt, how eager do you think you'd be to reassess your business strategy and pivot to something completely different?

How receptive would you be to the notion that your whole strategy -- the thing that got you that far -- was wrong?

Some of us have to do it. Some of us don't have a choice. You reach a stage in a business or a career (or for that matter, a life), when things aren't living up to your aspirations, and you make a change. 

But that's different from reaching a point of significant success, only to accept that you have to tear things down and build them up again if you want to achieve even loftier goals.

I admit: I've wondered sometimes why Buffett hasn't retired from Berkshire. Not that I think he'd be happy off playing golf or shuffleboard, or whatever other retirement cliche you want to try, but that perhaps he'd follow the model his friend Bill Gates did, pivoting from business to full-time philanthropy. 

Now, reading about this evolution left me thinking that maybe part of the answer is that his journey simply isn't done.

That's a good thing. If you're brave enough to admit your big, non-obvious mistakes, learn from them, and move on, maybe the game never really has to end.

(Don't forget the free ebook: Warren Buffett Predicts the Future, which you can  download here.)