Warren Buffet: An Authentic Leader

Northouse defines Authentic Leadership as the “focus on whether leadership is genuine and real” (Northouse, 2022, p.401). Yet, this definition indicates a vagueness in what behaviors truly describe an authentic leader. Even Northouse acknowledges that “Among leadership scholars, there is no single accepted definition of authentic leadership” (Northouse, 2022, p.402). However, that does not mean that they have not determined some behaviors of authentic leaders. Primarily what the public is looking for in an authentic leader is a leader that “they can trust and (…) who [is] honest and good” (Northouse, 2022, p.401). Looking at that statement then, authentic leaders at least need to be trustworthy and morally righteous. However, as I mentioned before, there is no universal definition for authentic leadership and as a result each definition is “written from a different viewpoint and with a different emphasis” (Chan, 2005; Northouse, 2022, p.402). With that in mind, we will try to focus our analytical approach down by analyzing the famous leader Warren Buffett using George’s take on authentic leadership as described by the Northouse text.

The Northouse text highlights the view of authentic leadership created by George (2003) which focuses on “the characteristics of authentic leaders” (George, 2003; George & Sims, 2007; Northouse, 2022, p.404). Throughout his research and experience in a corporate setting he derived that authentic leaders exhibit five base character traits that define their authentic leadership style. The first character trait that George talks about is that authentic leaders “have a strong sense of purpose” (George, 2003; George & Sims, 2007; Northouse, 2022, p.404). Upon researching some of Warren Buffett’s personal achievements I stumbled upon an article talking about his escapades as a teenager making money. In the article, it mentions that Buffett used to sell packs of gum and Coca-Cola to houses in the neighborhood (Guzman & Stevens, 2017) and how by doing that he was able to save up enough money to buy a business. I can think of no better example of a strong sense of purpose. His purpose was to make money and he directly performed behaviors from childhood that facilitated that purpose. Likewise, his sense of purpose was strong as the article mentions that during his job working as a newspaper delivery boy he consistently challenged himself to finish routes faster and even went so far as to create a way of tracking when magazine subscriptions expired for people on his route so he could sell to them (Guzman & Stevens, 2017). These behaviors ultimately culminated in him becoming one of the richest people alive and an owner of one of the most successful Fortune 500 companies.

The second characteristic that George (2003) highlights is that authentic leaders “have strong values about the right thing to do” (George, 2003; George & Sims; 2007; Northouse, 2022, p.404) and they behave in a way that represents their values. In the context of Warren Buffett, an article by the Insider indicates that “Berkshire can make acquisitions cheaper than other companies can because when they’re buying a family business, the family can trust that Berkshire isn’t going to plunder the assets, lay off workers, and chop it up” (Weisenthal, 2014). To simplify the context, Buffett maintains that these family-owned business that are acquired by Berkshire are able to let go easier because they implicitly trust that their life’s work won’t be torn to shreds. In this way, Buffett emphasizes his strong values and his righteous moral compass. Many corporate mergers come with downsizing, restructuring, etc. that completely shifts the dynamic of the company being acquired. In the case of Berkshire and Buffett, these companies are able to function in the same way they did before but under the wing of Berkshire’s name and guidance. In the same article, Buffett enthusiastically speaks about a furniture store in Texas that he had acquired from a family-business that was set to expand store locations. He indicated that the opening of the store location poses absolutely no economic change to Berkshire’s bottom line but regardless he was incredibly happy for the family to be expanding their business (Weisenthal, 2014). While this may not seem like much, this happiness for a small business that he is partnered with indicates his strong value towards building family-owned businesses. He does not seek to tear down his competitors but rather build them up under his guidance to be better than they were before.

The third characteristic mentioned in the text is that authentic leaders “establish trusting relationships with others” (George 2003; George & Sims, 2007; Northouse, 2022, p.404). They are able to be open with themselves and express their opinions while also establishing relationships with other people. My previous point works very well here. When Buffett acquires these family-owned businesses he is able to do so easier than other companies. The primary factor for this is trust. The family-owned companies that Buffett is looking to acquire have poured a lot of time and effort in their own lives into making these companies work. As such, they are reluctant to give away something they have spent so much effort on only for it to get plundered and wiped from history. When Buffett acquires these companies he promotes a level of mutual trust and understanding between the two parties. Owners of the companies are “often willing, according to Buffett, to accept less money for the promise that their prize possession will be taken care of once sold” (Weisenthal, 2014). This indicates that the level of trust between these small business owners and Buffett is so high that they would be willing to give away their companies for less money purely because they know he is going to treasure their company. In this way, he forms highly trusting relationships with others and delivers on his promises. As I mentioned before, he was extremely enthusiastic about the opening of the new store location for one of his small business partners even though that new store location had absolutely no effect on his overall bottom line. He was just profoundly happy for the family, this level of authenticity, honesty, and kindness has led many to easily form trusting relationships with him.

The fourth characteristic that George (2003) mentions is that authentic leaders “demonstrate self-discipline and act on their values” (George, 2003; George & Sims, 2007; Northouse, 2022, p.404). Warren Buffett is one of the richest people alive and one of the very few to be classified as a billionaire. With that being said, he currently resides in the same house “he bought in 1958 for $31,500” (Garcia, 2022). While this may not seem like much, this indicates that regardless of economic status Buffett maintain an incredibly frugal disposition and lifestyle. He values frugality heavily and disciplines himself to act on those values. Another strong example of this is his car purchases. An article by GOBanking indicates that Buffett frequently buys reduced-price cars such as cars that suffer from hail damage (Garcia, 2022). This again indicates his self-discipline and value of frugality. Cars are a depreciating asset the moment you take them off the lot and as such he makes it a habit not to purchase a new car frequently. Instead he chooses to keep the cars he has as long as he can as he barely even drives (Garcia, 2022). Finally, another great example of his strong values comes in his choice of suits. The article indicates that Buffett does not buy high-end designer suits but rather goes to a custom tailor to get all his suits done. Instead of buying expensive designer suits he chooses to support a small-business. Likewise, he also states that the quality of her suits is very high and as such he is not even sacrificing anything. Finally, the article indicates that we should “Opt for quality goods that will last [us] a long time, rather than buying something just because it has a brand name attached to it” (Garcia, 2022). With these examples, it is clear to see how Buffett exemplifies his values and acts on them in his personal life. As a child, Buffett was not born into a rich family and worked very hard for his wealth so he values quality and affordability even years later when he became rich. Likewise, even after he became rich he still acts with a great degree of self-discipline and control.

The final characteristic that George (2003) highlights is that authentic leaders “are sensitive and empathetic to the plight of others” (George, 2003; George & Sims, 2007; Northouse, 2022, p.404). While I used this example a couple times throughout the post it once again fits well here. Buffett’s business values concerning family-owned businesses highlight his sensitivity and empathy toward others. When he acquires the businesses he makes an effort to have them understand that he has no intention of destroying their life’s work. He is able to acquire top tier companies for cheap prices because he is able to empathize with the plight of the family who put so much time and effort into building this business. The last thing they want to see is it get destroyed when they lose control and by promoting a sense of trust between the two parties that Buffet can assuage their fears and help smoothen the transition. The Insider article mentions a flashback that Buffett has as he “[thinks] back to August 30, 1983 – [his] birthday – when [he] went to see Mrs. B (Rose Blumkin), carrying a 11⁄4-page purchase proposal for NFM that [he] had drafted. (It’s reproduced on pages 114 – 115.) Mrs. B accepted [his] offer without changing a word, and [they] completed the deal without the involvement of investment bankers or lawyers (an experience that can only be described as heavenly)” (Weisenthal, 2014). This kind of situation almost never happens; to not involve lawyers or bankers in the acquisition of a company requires an extremely strong level of trust that can only be gained from the acquiring party being empathetic to the needs of the acquired party.

Overall, George (2003) highlighted many characteristics that authentic leaders demonstrate and helped determine the behaviors that authentic leaders have. Using these characteristics, Warren Buffet is a prime example of authentic leadership. He is able to exhibit all of the characteristics mentioned by George (2003) and is incredibly trustworthy and morally righteous. As I mentioned in the beginning of the post, these two qualities are inherent in authentic leaders and presently show up heavily in Buffett’s style of leadership.

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