Meanwhile…Warren Buffett, emeritus
Meanwhile is a shorter, wide-lens piece that runs between the main essays.
Warren Buffett is continuing his transition away from being the central figure at Berkshire Hathaway. (Read more from CNBC) Back in January, he turned over the CEO job to Greg Abel. Now his son, Howard Buffett, will become chairman, while the elder Buffett becomes chairman emeritus.
On paper, that’s a clear shift in authority. In his letter to shareholders, he said so plainly. “Greg runs the company; Howard will guard its culture and values.” But in a company so clearly guided by Buffett’s own values, how much of a shift will it really represent?
Anyone who has ever worked with a founder or long-term executive who has stepped down, but not away, has seen this. So long as the “emeritus” leader remains accessible, that leader retains more authority than the system may think.
Heifetz described it as the difference between formal authority and informal authority. Formal authority comes from the org chart. It can be given and taken away. Formal authority rests on a person, but it does not belong to them. Informal authority, by contrast, remains with a person so long as they still have followers. In a company (or let’s be honest, an economy) where people still want to know what Warren would do, he’ll have to be careful that his informal authority doesn’t constrain the formal authority he so intentionally left to others.
Buffett is one example, but there are many others. How do presidents maintain their influence over their party without getting in the way of their duly chosen successors? How do retired clergy who stay in the parish tend to their spiritual needs without getting in a triangle with the new pastor?
It’s a great example of an adaptive challenge, because it requires growth and change from both the leader and the system. The leader must deal effectively with the loss of authority and, in many cases, standing in the system. It’s an identity crisis that happens very close to the heart. And the leader must also exert some of their remaining influence to bend the system away from themselves, and toward the new reality.
The system has its own work to do, too. The first task will be to stop asking Warren and start asking Greg (or Howard). But that doesn’t mean banishing Warren altogether. Former leaders still carry knowledge and wisdom, and finding new ways to draw on it can fuel future growth. Term limits are not restraining orders.
What’s it like where you are?