What Did Warren Buffett Learn from Charles Darwin
by
Syd Stewart
Published on this site: February 13th, 2004
The simple principle of natural selection or 'survival of the fittest' was first
revealed by Charles Darwin in the 19th century and has now been confirmed by the
science of genetics. Nature by applying these principles has created powerful,
elegant, awe-inspiring organisms that have remained resilient and successful for
millions of years.
Nature's environment is always slowly changing - the
only thing that is certain is change. Periodically, fast and dramatic changes
also occur in nature. Business has a similar environment to nature e.g. technological
improvements, economic downturns, and wars.
So what can businesses learn
from nature?
If businesses can't respond to these changes, they will struggle
and become extinct, especially if the changes are fast and dramatic.
So
what did Warren Buffett, the billionaire US investor, the Sage of Omaha, learn
from Charles Darwin?
He invests in businesses that operate in environments
or sectors that are enduring and are likely to stay in fashion even during tough
times.
He carefully selects sectors such as food, water, electricity, health,
booze and companies such as Gillette, Coca Cola, he 'naturally selects'
his
environment.
Darwin also concluded that natural selection needs diversity
to work.
You need a spread of features or capabilities to cope with the changing
environment. If you had all your eggs in one basket and bottom dropped out of
the basket - you'll perish. With a spread of features or products some are likely
to survive a crisis.
You therefore need a broad selection of these types
of enduring products to ensure your survival.
These Darwin principles not
only apply to selecting stocks and shares but to running a business. To become
a 'genetic manager or leader' you need to:
- Create or find products
that sell in enduring markets
- Have at two to three different
products operating in different enduring markets.
In business and
investment 'you make your own rules' so learn from nature and try to apply these
'survival of the fittest' principles. Follow Charles Darwin's lead and Warren
Buffett's success.
Syd Stewart is the author of "Smiling Owner How to Build a Great
Small Business An Evolutionary Business E-Handbook". He has been an owner
and manager for over 30 years. He Knows What Works and What Doesn't. Visit his
site to find out how you can 'Build a Great Small Business' at http://www.smilingowner.com.
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