I wrote this article right at the height of the 2020 pandemic, after looking back at the advice people had given during other crises, to see how they’d suggest prevailing during this one. Here’s what I adapted from Buffett’s advice, years before.
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We crave certainty and guidance with the Covid-19 crisis right now. We want to know what to do.
It's especially true when you're running a business. You're not just responsible for yourself and your family; you feel deeply responsible for your employees and your customers.
So, here's some inspiration that might help. It comes from a familiar source, but a forgotten context: Warren Buffett's advice in the 1986 Berkshire Hathaway shareholder letter.
Here's the key passage:
"[O]ccasional outbreaks of those two super-contagious diseases, and fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. And the market aberrations produced by them will be equally unpredictable, both as to duration and degree.
Therefore, we never try to anticipate the arrival or departure of either disease. Our goal is more modest: We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."
The quote is 34 years old. It's a bit unfortunate, I suppose, that he used a contagious disease as a metaphor, but for all his reputation about reading the future, it would have been a heavy lift to predict a global pandemic more than three decades later.
Also, perhaps you're put off by the word "greedy." That's understandable; just bear in mind the letter came out a year before the 1987 movie Wall Street. Instead, maybe substitute the word, "aggressive."
You come away with a sentiment that Buffett has repeated over and over in different contexts over the years:
Boiled down like that, it's a pretty simple strategic guide.
Don't follow the herd. Train yourself to seek opportunities when other people see only crises. If you're afraid, your competitors probably are too.
So let's talk about a few practical suggestions to put this to use, right now, as you try to guide your business through a difficult time:
Recruit top stars.
Maybe you're not in a position to hire new people in the short term. That's understandable. But, this this would be a great time to reach out to top performers who might be have lost other opportunities or have concerns about their futures.
Network with them now. Offer a word of encouragement. They will remember. Let them know that when know that you'd love to talk about them joining you as soon as you're able.
Preserve existing relationships with customers.
In a cash crunch you might naturally think about cutting back on services.
But I wrote recently about how McDonald's and other fast food franchises have survived by going to an all-drive through model. Among other things, it keeps their customers' habits intact.
Ask yourself: Where are the key customer problems we can continue to solve, even if we have to scale back in other areas?
Look for new opportunities.
This might be the boldest and most exciting step you can take. Yes, it's a daunting time to expand, but done smartly it could include huge payoffs. Resources that might have been too expensive to consider a few months ago might suddenly be available a lot more cheaply, for example.
And, competitors who might have gone head to head with you might be caught focusing more on fear than aggression.
A short quote from many years ago won't change your business, of course. But if it gets you thinking about where good opportunities and a way forward might be found in the current crisis, it's worth the time it takes to think it through.
(Originally published: Apr. 19, 2020)