Pricing leadership

There's  a Bloomberg story this morning quoting from Warren Buffett's interview with the Financial Crisis Inquiry Commission in which the legendary investor declared that, “The single most important decision in evaluating a business is pricing power.”  He went on to state, “The extraordinary business does not require good management.”

Buffett, of course, is speaking from the vantage point of an investor who is looking at a set of circumstances and fundamentals at a particular point in time. As such, he doesn't have to give any weight to how the business became extraordinary in the first place. Nor does he have to worry -- yet-- about it losing its pricing power in the marketplace.

He is also, no doubt, speaking of companies that are relatively mature, or well beyond the life-and-death early stages of growth and development.

The one thing we would point out is that we are hard pressed to think of a successful company that is not associated with an individual leader -- or series of leaders for the very fortunate ones.  And one of the hallmarks of such leaders is what they leave behind and how long the company is able to thrive once they are gone. Sometimes, that means a "no-name" leadership team that just gets it done without a lot of headlines or buzz.



 

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