Margin of Trust: The Berkshire Business Model

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.

Table of Contents:
Prologue: The Carrot of Trust Part I. Pillars 1. The Players 2. Partnership Practices 3. Business Methods Part II. Perspectives 4. Deals 5. Boards 6. Internal Affairs Part III. Alternatives 7. Contrasts 8. Comparisons Part IV. Challenges 9. Judgment 10. Public Perception 11. Scale 12. Succession Epilogue: The Stick of Ruthlessness Notes Index

About the Author :
Lawrence A. Cunningham and Stephanie Cuba are authors, investors, consultants, and board members. Their previous work includes The Warren Buffett Shareholder: Stories from Inside the Berkshire Hathaway Annual Meeting (2017). Cunningham, editor and publisher since 1997 of The Essays of Warren Buffett: Lessons for Corporate America, is the Henry St. George Tucker III Research Professor at George Washington University and author of Berkshire Beyond Buffett: The Enduring Value of Values (Columbia, 2014). Cuba is president of CC Strategies, a real estate consulting firm specializing in project management, investment analysis, and public-private partnerships. The two are married and live in New York City with their two daughters.

Review :
To truly understand Warren Buffett’s conglomerate, one needs to look beyond the extraordinary numbers and absorb the unique culture of Berkshire Hathaway. Every Berkshire shareholder—or investor of any other company, for that matter—should read Margin of Trust to better understand what makes a sustainable corporate culture and, therefore, superior investment that’s built to last multiple generations. The essential element for successful long-term investing is a trust formed between managers and owners of a company. Margin of Trust outlines the special ingredients that have been baked into the relationship between Berkshire and its shareholders for over fifty years. This book is an important must-read that has earned a place in every investor’s library. Everyone wants to understand the ingredients of Warren Buffett’s success—Lawrence A. Cunningham and Stephanie Cuba have delivered compelling answers in Margin of Trust. This readable and practical book takes the reader inside the Buffett organization to show how the concept of trust is the foundation of Buffett’s deal making and operations. Essential reading for fans of Buffett and anyone who wants a better understanding of management. Few writers are more familiar with the intricacies of Berkshire Hathaway than Lawrence A. Cunningham. While detailing the strengths and notable successes of a trust-based approach, the authors are candid about its risks, and how Berkshire works to mitigate them. Their prose is lively, and their points well taken. This brief, concise, and pleasant exploration of the inner machinations of Berkshire Hathaway will interest anyone who seeks a better understanding of Buffett's Midas Touch. . . . Highly recommended.