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I’m guessing your answer to the question above is “no,” but the Oracle of Omaha, Warren Buffett, faced that very decision this week.
As you probably read, Buffett was diagnosed with stage one prostate cancer last week and he announced it today in an open letter to shareholders. Fortunately, the illness is relatively common and not life-threatening, which we’re very glad to hear for Buffett and his family. Nonetheless, my thoughts go out to them during his recovery. And, like most cancer patients, Buffett began his preparation for treatment by issuing a public announcement.
Oh, wait, perhaps you only have to consider that last part when you’re the leader of an organization valued at $200 billion and your personal reputation is inextricably linked to perceptions of its success. So, I’ll ask again, if you were Warren Buffett, would you want to see your prostate on the front page?
Right or not, today’s high-profile leaders of powerful organizations are faced with a harsh reality: shareholders view their direct involvement as integral to success and when that involvement is jeopardized – even by an illness that should be no one’s business but theirs – shareholders will respond. In responding, shareholders can react to the facts or to the absence of facts… and the stories they make up for themselves in the absence of information are almost always worse than the truth.
By issuing an announcement, Buffett has created some uncertainty and we’ll see how that plays out in Berkshire Hathaway’s share price in the coming days. However, the alternative was to wait for news to inevitably leak out this summer about radiation treatment for one of the world’s most powerful executives. That would have prompted assumptions of the worst and caused far greater damage to the company. By all accounts, announcing the illness and fielding questions openly about its impact on the company is the right PR strategy.
Of course, the right PR strategy doesn’t always feel like the right human strategy. I’m sure the last thing Buffett wants is to have the world talking about his prostate. For goodness sake, I heard about it three times before I even arrived at the office. I’ll leave it to those more expert in Reg FD than me to say whether that disclosure was required by law as a “material event,” but I know the detail and candor with which he shared it certainly was not. As a human being, Buffett has a right to his privacy. However, he chose to put the interests of his company, his employees and his shareholders above his own in issuing the announcement. For that, he should be lauded.
Inevitably, events like this shine a spotlight on the succession strategy for organizations with charismatic CEOs tightly linked to perceptions of the company’s success. As Buffett said in his letter to shareholders, he will “let shareholders know immediately should my health situation change. Eventually, of course, it will; but I believe that day is a long way off.”
News reports went on to detail planning for “that day” and the fact that it has been underway for some time – not a strategy quickly hatched the week before the announcement – should further enhance shareholder confidence. However, in my opinion, the best succession plan can’t replicate the candor, honesty and wit Buffett exemplified in issuing this announcement and so many others. I, for one, hope it’s a very “long time” before we have to imagine the world otherwise.