Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, has demonstrated throughout his career that acknowledging and learning from mistakes can be more impactful than striving for perfection. This approach, influenced by his longtime business partner and friend Charlie Munger, emphasizes the importance of admitting errors to build trust and foster growth. In his annual letters to shareholders, Buffett frequently discusses his missteps as opportunities for learning and improvement.
Buffett's journey at Berkshire Hathaway is marked by numerous correct decisions that have overshadowed his wrong ones. Yet, he acknowledges that some mistakes have been costly. Reflecting on these moments, Buffett used the words "mistake" and "error" 16 times in his annual letters between 2019 and 2023. He often stresses that admitting to errors can demonstrate emotional intelligence and humility, thereby strengthening relationships with colleagues and partners.
"The cardinal sin is delaying the correction of mistakes or what Charlie Munger called 'thumb-sucking,'" – Warren Buffett
Mistakes are inevitable in any business venture, and Buffett is no exception. His reluctance to invest in promising new companies due to high asking prices resulted in missed opportunities. These errors, however, stemmed from caution rather than a lack of knowledge or skill. Buffett's philosophy, inspired by Munger, is to reflect on mistakes to prevent repetition and to address them promptly to avoid further damage.
"Problems, he would tell me, cannot be wished away. They require action, however uncomfortable that may be." – Warren Buffett
In addition to Buffett's own admissions, the business world offers other examples of leaders who embrace errors as part of their growth strategy. Andy Jassy, the current CEO of Amazon, exemplified this during a presentation of his team's operating plan. Despite a slide filled with errors pointed out by Amazon's founder Jeff Bezos, Jassy quickly acknowledged and apologized for them. His response underscores the importance of owning mistakes as a means to earn trust and credibility.
"If you want to earn trust: If you say you've got something, deliver it. If you own something and it's not going well, be self-critical, and fix it," – Andy Jassy
Buffett's focus on learning from mistakes rather than dwelling on them has proven beneficial in the long run. His annual letters often highlight how these experiences contribute to personal and organizational growth. While some mistakes at Berkshire Hathaway have cost "many, many billions," Buffett's perspective remains optimistic.
"Mistakes fade away; winners can forever blossom," – Warren Buffett