Lawrence Cunningham discussed his book, Margin of Trust: The Berkshire Business Model, at MOI Global’s Meet-the-Author Summer Forum 2021.
Warren Buffett endorsed the book in his 2019 Letter to Shareholders:
“The two of us [Buffett and Munger] base our optimism upon five factors. First, Berkshire’s assets are deployed in an extraordinary variety of wholly or partly-owned businesses that, averaged out, earn attractive returns on the capital they use. Second, Berkshire’s positioning of its ‘controlled’ businesses within a single entity endows it with some important and enduring economic advantages. Third, Berkshire’s financial affairs will unfailingly be managed in a manner allowing the company to withstand external shocks of an extreme nature. Fourth, we possess skilled and devoted top managers for whom running Berkshire is far more than simply having a high-paying and/or prestigious job. Finally, Berkshire’s directors – your guardians – are constantly focused on both the welfare of owners and the nurturing of a culture that is rare among giant corporations. (The value of this culture is explored in Margin of Trust, a new book by Larry Cunningham and Stephanie Cuba that will be available at our annual meeting.)”
The following session offers a preview of our Meet-the-Author Summer Forum 2021, designed to provide summer reading inspiration to MOI Global members. We look forward to releasing additional conversations in the coming weeks.
Editor’s note: We are delighted to have Alex Gilchrist, a London-based research associate at MOI Global, host the Meet-the-Author Summer Forum 2021.
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This conversation is available as an episode of Explore Great Books, a member podcast of MOI Global. (Learn how to access member podcasts.)
About the book:
Warren Buffett and his company, Berkshire Hathaway, are legendary for their distinctive investing approach. Yet many equally unconventional but less well known aspects of Berkshire’s managerial practices and organizational structure are rich with lessons for those seeking to follow in Buffett’s footsteps. Margin of Trust is the first book to distill Buffett’s approach to management and corporate life. It provides a definitive analysis of the tenets of the Berkshire system, its costs and benefits, and how it can be adapted for other organizations.
Lawrence A. Cunningham and Stephanie Cuba develop a new account of how Berkshire Hathaway works, showing that the key to its success is trust. Profiling partnership practices and business methods, they contend that Berkshire’s distinguishing feature is a culture in which autonomy and decentralization are core management principles. Cunningham and Cuba provide instructive examples of how this model has been successfully adapted by other companies that share a faith in trust as an organizing principle. They also offer candid commentary on the risks of a trust-based approach and how to mitigate them. Margin of Trust features illuminating analysis of Buffett’s take on the role trust plays in business agreements, what Buffett looks for in great corporate boards, and what lies ahead for Berkshire after its iconic leader leaves the scene.
About the author:
Lawrence Cunningham is the Henry St. George Tucker III Research Professor of Law at George Washington University. He is the author of 20 corporate governance and investing books, including Berkshire Beyond Buffett: The Enduring Value of Values (Columbia University Press, 2014) and international best seller, The Essays of Warren Buffett: Lessons for Corporate America. Stephanie Cuba is a consultant in the fields of real estate investment and development. The two are married and previously jointly produced The Warren Buffett Shareholder. They live in New York City with their two daughters.
Larry is founder of the Quality Shareholders Group.