Warren Buffett is known for sage advice and some of his quotes have reached legendary status.
Two of my favorites? For starters, the time he said love is the best way to measure your success in life. That's hard to beat. Until Buffett tells you that you can be worth 50 percent more than you are now by improving your communication skills.
One of Buffett's lesser-known quotes, however, is quite apropos for the pandemic. You'll find it in a 2001 Berkshire Hathaway's annual shareholder report, one of the hardest years ever for Berkshire Hathaway. Buffett writes:
Predicting rain doesn't count, building arks does.
The Noah Rule
He called it the Noah rule, named after the biblical prophet who saved humanity (and all the animals) by building a ship in anticipation of a great flood. In the business sense, the Noah rule became strong imagery for leaders who can predict market conditions, and foresee events before they happen, but fail to "convert thought into action" to minimize risks.
That year, the rain came as he and his partner, Charlie Munger, expected it would in the form of the deadliest strikes on American soil since Pearl Harbor. Buffett later admitted that, although he had foreseen the possibility of something similar to a September 11 terrorist attack, he procrastinated and failed to react. Buffett didn't build an ark. He had violated his own Noah rule.
The process of building an ark from an investing standpoint, if you're a student of Buffett's, is to mitigate risk by carefully investing only in those few companies that are strong and adaptable enough to thrive no matter what the outside environment throws at them.
But from a leadership standpoint, how do you go about building an ark to sustain your business long-term? Ah, yes. I've been asked this question multiple times from countless founders and execs. My answer?
Hire the smartest people you can find
Peter Senge in The Fifth Discipline refers to a "learning organization" as one of the key differences that set apart high-performing teams and companies. This means the whole organization relies upon the knowledge of individuals and teams, not one leader perched up in the Ivory Tower, to learn from one another and learn together with every project.
This also means hiring the smartest people you can find -- smarter than their managers even -- to set a learning organization in motion so you can be challenged by them.
Steve Jobs agreed with this premise by famously remarking, "It doesn't make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do."
Jeff Bezos also swears by this hiring approach. The Amazon founder said, "Every time we hire someone, he or she should raise the bar for the next hire, so that the overall talent pool is always improving."
Is this a different twist to Buffett's Noah rule? Perhaps. But I can tell you as someone who has witnessed many organizations drastically fail, every business problem can be solved by investing in the hiring, growth, and development of people. Simply put, when your people succeed your business succeeds. That's a solid ark that will weather any storm coming your way.