Thinking Like an Owner

When you own something and are responsible for it, you want it to survive and thrive, but most importantly, you want it to survive.

Thinking like an owner is an idea that I came into contact with as I was reading about Berkshire Hathaway, Warren Buffet, and Charlie Munger. The story and modus operandi of Berkshire is no secret, as it is one of the most successful companies in the history of the world. However, you can always find instances where businesses go against the values and practices of thinking like an owner and inevitably blow up or fail.

Thinking like an owner means prioritizing long-term over short-term. Owning something means you want to keep it around as long as possible, and if you are a decision-maker, your job is to have good judgment. One thing I often read about is good decision-makers who wind up blowing up because they know they are good decision-makers. A thousand good decisions don't mean anything if you make one that kills you. You can't let your ego get the better of you, especially if you're making judgment calls; you have to constantly ask why, why, why, and then what, then what, then what. Having a critical frame of mind will help protect you from fooling yourself.

You have to be credible and good enough to show that short-term pain is worth long-term gain. 

Alignment is critical when you're thinking like an owner; you need to be aligned with your business partners and your employees and keep them aligned with each other. As the pie gets bigger it becomes harder to keep everyone aligned because they will inevitably want to find ways to get a bigger piece for themselves. This is ok if they do that through eating what they kill and drawing resources from outside the organization, but it's not ok when they politick and push co-workers down to get to a better position. Resentment builds, and that can destroy a team. Make sure everyone knows the one thing that's most important to the organization; be extremely clear, and if they disagree, they can leave.                  

The long-term bent. Ultimately, thinking long-term is about filtering out information. What really matters, and what is just unimportant noise that is distracting. You need to set priorities and determine what is most important. Usually, what is not important will work itself out in time, and what is important needs ample time and attention. You need time to deliberate and think about the really important things. Attention is very important because, in today's world, people move on quickly, and they multitask. Don't multitask; be present in the moment, and really devote your full attention to what is at hand. If you’re multitasking, you’re half-assing, and you will probably have to go back and deal with the same problem. Do things right the first time so you don't have to waste time going back. When you’re making decisions for the long term, you are making decisions that will be very hard to reverse because of the sunk cost fallacy and loss aversion. Once the consequences of the decision are set in motion, people will cling to their new roles and new processes, or worse, they will stay clinging to their old roles and old processes. So, on the really important decisions, try your hardest to get them right on the first try. The caveat is the smaller and more nimble your organization, the easier it is to change course; this is called pivoting when talking about startups. Maybe the decision is to quickly experiment, keep an open mind, and see what works best.