2010: How do you change culture of an organization?

AUDIENCE MEMBER: Mr. Munger and Mr. Buffett, thanks for having us here.

I recently joined a new organization and for me to succeed there, the culture of the organization needs to change.

So I’m interested in hearing your thoughts about how do you change culture of an organization? And if you’re building a new organization, then how do you make sure you have a strong and unique culture?

WARREN BUFFETT: Well, I think it’s a lot easier to build a new organization around a culture than it is to change the culture of an existing organization. It is really tough. And I like that fact, in the sense of Berkshire.

I mean, it would be very tough to change the culture of Berkshire. It’s so ingrained in all our managers, our owners. Everything about the place is designed, in effect, to reinforce a culture.

And for anybody to come in and try and change it very much, I think the culture would basically reject it.

And the problem you describe, if you want to walk into, you know, whatever kind of organization you want to name — I’ve got to be a little careful here — it is tough to change cultures.

Charlie and I have bucked up against that a few times. And I would say if you have any choice in the matter, I would much rather start from scratch and build it around it.

But that was the — I’ve had the luxury of time with Berkshire. I mean, it goes back to 1965, and there really wasn’t much of anything there, you know, except some textile miles, so I didn’t have to fight anything.

And as we added companies, they became complementary and they bought into something that they felt good about, but it took decades.

And, you know, at Salomon, I attempted to change the culture, in terms of some respects, and I would not grade myself A+ in terms of the result.

Charlie?

CHARLIE MUNGER: Well, I’m quite flattered that a man would say that he’s in a new place where he can’t succeed unless he changes the culture and he wants us to tell him how to change the culture.

In your position, my failure rate has been 100 percent. (Laughter) And —

WARREN BUFFETT: Yeah, Charlie started a law firm. Go back to, what, 1962, Charlie, what was it?

CHARLIE MUNGER: Yeah. I can move out but I couldn’t change the culture. (Laughs)

WARREN BUFFETT: We can tell some interesting stories from the old law firm, but we’ll go on to Carol now.