Tuesday, November 16, 2010

Two lessons from Mary Buffett and Ferran Soriano

Last Thursday, I had the opportunity to attend the “Management Lessons 2010” conference sponsored by HSBC Premier and ExpoManagement 2010. The conference took place in México City at Centro Banamex and had Mary Buffett (Best-seller author and Warren’s daughter in-law) and Ferran Soriano (Former Barcelona F.C’s CEO) as guest speakers.

Of course, my primary interest was to hear what Mary Buffett had to say about her father in-law and to learn some valuable insight on his personal life, his numerous investment principles, and strategies.

Mary Buffett began her speech explaining why she was so interested in Buffett’s strategies and knowledge: she was not only married to Buffett`s younger son, Peter, but she was also a business consultant and analyst herself. “If you like business and you are sitting beside one of the most successful investors in history, it would be stupid not to ask him questions and not to write his answers down…” she said. I couldn’t agree more.

Mary spent a great amount of time listening to Warren talk about business with industry tycoons, politicians, decision-makers and influential leaders. Through participation on Trips, conferences, family dinners, and vacations, she took advantage of almost every single minute she got to spend with him during the past 12 years and turned all that knowledge into 7 best-seller books.

“Buffett has 4 principles upon which he makes investment decisions… (1)Trust your Judgment, (2)Look for a durable competitive advantage,(3)invest in good companies at a fair price and (4)look for a good management”. Sounds quite simple, and it actually is, but the key is to know how to find those undervalued companies that fulfill Buffett’s principles.
For Mary, the most important of these principles is the fourth one: invest in a good management.

For her, the key to Warren’s success as a value investor is to evaluate a company for its good or bad management. Warren always says “Invest in people…good managers always lead to profits, good managers usually lead to a reputation crisis”. Hence, whenever he is in the search for a company to invest in, he always pays close attention to the people in charge of running the business.

Businesses are people, and if we understand that management is a key factor in the value equation, we will start making better investment decisions. That’s the first lesson from last week’s conference.

The second lesson came when Ferran Soriano made his appearance. To be honest with you, I was quite surprised by his approach to soccer as a 360º business. When he assumed the position of Barcelona’s CEO in 2003, the team was roughly making US$130 MM in sales and assuming US$72 millions in annual losses.

For Ferran, the opportunity couldn’t be better. Changing Barcelona’s business model from one of a circus (with tickets sales accounting for more than 70% of the total income) to one based on Walt Disney Co. was a challenge of great proportions. “At that time our business model was obsolete and that we need to change immediately. Barcelona had a great brand, great stadium and great players so we needed to understand that our business wasn’t selling tickets but selling entertainment content”

According to Soriano, the Barcelona turn around needed to begin by transforming the stadium into a theme park. “In Europe we have great stadiums and it is no secret that Clubs make a lot of money not only by selling tickets during game days, but also by selling tickets for guided visits to their stadiums during normal days”. Guided visits to Barcelona`s “Nou Camp” add US$40 MM to the club`s total income.

The second great change came when Ferran invited a group of professional specialists to assume key positions as top managers. For marketing he brought a former P&G expert and for Finance he brought a well-known Colombian banker. “The people who know about business should run the office. The people who know about soccer should run the team”. Professionalizing the executive team meant having a good management onboard. That makes absolute sense if we consider the lesson we learned from Mary Buffett.

The third change came with approaching soccer as a selling content business. Good soccer means good spectacle and along with that comes the marketing and merchandising as motors to increase revenue and broaden Barcelona’s presence in the world.
Ferran resumed his strategy as one focused in changing mentalities, embracing change and working hard. But the most important fact for him, once again, was having a good executive team on board.

It shouldn`t surprise us that the lesson from Ferran, is also the same lesson we learned from Mary Buffett: a good management is the key to success.

1 comment:

Regina said...

Muy bien , y en ingles me gusta. Sigue escribiendolos en ingles BRO.