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Details:
What this is.
For 2,500 years smart armies have known: “A
great General is unfathomable, his actions having
formlessness.” Translation: a great General keeps his enemy
guessing. A great CEO moves in the same way because the
competition wants to prevent him or her from reaching their
goal. And reaching intelligent goals is where increases in
shareholder value are found (the point of the exercise). But
most market share needs to be “taken” just like ground in the
battlefield. And taking ground is expensive in countless
ways—and even more so if the enemy [your competition] is
waiting for you.
So the great General [CEO] thinks ahead. Keeps his battle
plans vague. Keeps the enemy [the competition] guessing. This
allows the great General [CEO] to show up where he isn’t
expected and that’s beautiful competitive technique. That's
great corpcraft™.
And isn't that what we want when we hold
shares? |
So why are we criticizing
corporate leaders for not publicly disclosing their plans?
Last week the Financial Times (which
we admire), published a story with ratings of the annual reports and
websites of 50 major companies in the U.S. and Europe. They listed
the five “Best” and the five “Worst” companies via a multivariate
model (the study was done by Shelly Taylor Associates). The
companies were rated on a variety of parameters that heavily weighed
how much information they disclosed to readers/viewers. What we
found shortsighted was a major downgrade was bestowed if a chairman
didn’t discuss, in relative detail, his or her upcoming plans.
The more detail the better.
As sharp-end, shareholder
oriented competitors, we think that’s a bit shortsighted.
Berkshire Hathaway was given the lowest possible rating, the bottom
of the list (50th out of 50!) because Warren Buffett
didn’t exactly rhapsodize about his future plans. Hey, we trust
Warren to do right by shareholder value. I don’t want to know
the details—because we don’t want the competition to know anymore
than they already do. We want Buffett to act like the great CEO
[General] he is—be vague, be formless, keep the competition [enemy]
off guard/in the smoke and wasting resources, while he swings around
in the induced fog of competition and increases the value of
the company.
Think about it…
Below are links
to websites the above survey rated Best and Worst.
It’s interesting to compare them. The annual reports can be found by
exploring the individual websites also listed.
Top Website:
Kingfisher
Bottom Website:
Berkshire Hathaway
Top Annual Report:
GlaxoSmithKline
Bottom Annual Report:
Berkshire Hathaway
This newsletter is produced by the governance
group at Parcon
Research.
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