Berkshire Hathaway: Collaboration and the Post-Buffett Era

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This podcast is brought to you by game which game bridge offers annuities designed for the digital age. Simplified products with guaranteed returns that you can buy online. Learn more at Gabriel dot life slash W. S J not available in all states. Here's your money briefing. Im JR Waylon at the Wall Street Journal in New York, we're getting a peek at what berkshire-hathaway might look like in the post Warren Buffett era over reveal the details in a moment. I these money and market stories. You should know a report from the PR RG. Consumer watchdog group says the college students nationwide paid more than twenty four point six million dollars in fees related to their campus. 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Cambridge aims to change the game by offering simplified annuities in sleek digital experience replacing fine print and phone tag with clear conditions and a direct low fee model by online at gamers dot life slash W. S J not available in all states. The question of who will succeed berkshire-hathaway CEO, Warren Buffett or what the company will look like in the post buffet era is one of the ongoing parlor games on Wall Street, or you may now be getting hints of how the company will operate in the post buffet era. Nicole Freedman covers berkshire-hathaway for the Wall Street Journal, and she's here Woodson details. So Nicole, we're seeing senior leaders across berkshires numerous companies collaborating, and while that may seem like a standard business practice. It really hasn't been the case at Berkshire up to now. Right. Berkshire is famously decentralized in so it owns more than sixty distinct businesses, including gyco Duracell fruit of the loom Dairy Queen and historically each of Berkshire's businesses is allowed to run totally independently each manager of the business sets their own strategy reports directly to headquarters, but historically, there's not been a lot of communication collaboration among the business units. And we are seeing. In the past couple of years. More of that going on more of the business units talking to each other and sharing best practices clever. Ration- here means more than just meeting in a room or on the phone. It can mean also sharing suppliers. Yes. So we are seeing some of the units joining in purchasing groups, which they're kind of taking advantage of their shared scale to get better deals on maybe raw materials or travel costs things that that were they would share a common supplier. And none of this is mandated it's up to every single. Berkshire subsidiary weather wants to collaborate whether it wants to join a purchasing group whether it wants its managers to be in touch with other managers. So none of it is coming from the top. It's really kind of grassroots the units finding ways to benefit from each other's expertise. Another significant step you write about in your story is that the CEO's of Berkshire's companies now report of buffets, top lieutenants and not to Warren Buffett directly. Right. So this started in early. Twenty eighteen when two of Warren Buffett's, lieutenants, Jeet, Jane, and Greg able were promoted to vice chairman, and they now oversee most of the day to day operations at the subsidiaries. And so the business units in the insurance industry report to g Jane and the business units in the non insurance industry's report to Greg able and so the many Berkshire CEOs now report to either Jane or Greg able and those two lieutenants also set the pay for all of the CEO's, which historically was something that Warren Buffett did. And in terms of the business practice over the decades. Warren Buffett has been known for buying companies and sort of leaving them alone and giving them autonomy. Right. And that's still the case that Berkshire doesn't look to kind of find synergies among its units that doesn't buy a company with the expectation that oh by bringing this company into the conglomerate we can lower the costs and make it more efficient at buys the company because. Likes the way the company is run. And then it lets it continue to run the way it has. And so some of these units are finding ways to collaborate with each other. But that's still, you know, their own decision from the top down. There's no requirement that they work together is another interesting note in your story in that some of Berkshire's companies actually compete with each other for customers. Yes. So there are definitely companies that overlap in common industries, for example, there's four different Berkshire companies that sell furniture. There's multiple jewelry companies. There's a lot of companies that are somehow involved in construction housing the building industries, and so sometimes they buy or sell to or from each other. They're each other suppliers or customers and sometimes they're actually competing for the same customers. And that's all part of the vision that each company kind of runs itself independently and has its own strategy. And so if they if they end up competing, you know, may the best company win one berkshires high profile joint ventures could actually impact healthcare. Forward. Yes. So Berkshire Hathaway has teamed up with J P Morgan and Amazon to start a company called haven, which is in. It's very very early stages. We don't totally know what he's going to do yet. But the plan is that will help lower healthcare costs for the employees of the three companies, including berkshires employees, which there are almost three hundred ninety thousand of them around the world. And so that could be a change at Berkshire. Because right now each of the subsidiaries as part of the independence that they all get they all have their own healthcare plans, and there's no centralization of healthcare at Berkshire. But depending on what haven does and what healthcare at Berkshire looks like going forward that could be a change in the future. All right. That's Wall Street Journal reporter, Nicole Freedman, bringing her berkshire-hathaway expertise and knowledge to our studio. Nicole thanks for coming on the show. Thank you for having me. And that's your money briefing, im JR Whalen in New York for the Wall Street Journal.

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