In 1998 Berkshire Hathaway acquired a reinsurance company called General Re. “The only significant staff change that followed the merger was the elimination of General Re’s investment unit. Some 150 people had been in charge of deciding where to invest the company’s funds; they were replaced with just one individual – Warren Buffett.”
Robert G. Hagstrom in, “The Warren Buffett Way.”
Following on from yesterday’s post about Warren Buffett’s prioritisation techniques and the recent series about the “frenzy of doing,” I was reminded of the staggering story at General Re described above.
Buffett was able to replace 150 people, and significantly outperform them, because they were performing (relatively) small value, high volume transactions and he was, well, the opposite.
OSS implementation and long-play investing are obviously very different in terms of resource requirements, but if we were to draw on this story, how would we replace whole OSS teams with just one person (or a small handful of people)?
Most CSPs have vast numbers of people who build and maintain their OSS. For most of those CSPs, the OSS isn’t the core business; in fact OSS is a cost of doing business; so does it really even make sense to have so many OSS people on staff?
How do you think this analogy stacks up:
- Remove the legions of resources who are performing high volume, low value, transactional updates to the OSS
- Replace them with one person who has a mindset of simplification, long-term outcomes and only betting big on the most strategic of changes
- Outsource operations of the OSS to partners who have a strong track record of return on capital, just as Buffett avoids having to manage the companies he acquires by only investing if they are led by strong management teams who have a proven ability to deliver returns
One major chink in this strategy is that it is much easier to divest of bad stocks and wait until the right investment comes along, as opposed to making in-flight transformation of the tools a CSP needs to run all parts of its business (eg sales, engineering, field-work, etc).
If you were told you HAD to replace a team of 150 OSS implementers with one person, what would your strategy be?
Even if not being quite so drastic, could elements of your strategy work within your current OSS environment?
Alternatively, if you represent an OSS vendor that offers managed services, do you have the data to prove that you deliver strong returns on a customer’s invested capital?Read the Passionate About OSS Blog for more or Subscribe to the Passionate About OSS Blog by Email