Transformationsin Leadership

Dr. Edward J. Kelly

WARREN BUFFETT

From Buffett the Investor, to Business Leader,to Elder Statesman.

SUMMARY

My developmental biography of the investor and businessman Warren Buffett demonstrates how much his underlying meaning-making has developed over his adult life. This can be seen clearly from tracking the changes in his underlying ‘perspective taking, awareness of time, openness to feedback and use of power’ across thirty-two examples from his life. Further, changes in his meaning-making have directly impacted his effectiveness as a leader. These are reflected in the three big transitions in his career; Buffett the investor in the early years, Buffett the business leader in the mid to later years and Buffett the elder statesman in more recent years.

This research makes a number of contributions to the study of leadership and development:

1. Buffett’s development highlights the paradox of leadership development, i.e. that you can’t pursue the benefits of leadership, rather the benefits of leadership ensue from your development. In addition to the competencies, skills, knowledge and experience in a particular field, the capacities associated with transformational leadership only emerge with development. These include an expansion in cognition, emotional maturation and increasing ability to engage with others.

2. This longitudinal research, which is the most complete piece of longitudinal research in the developmental literature, helps us to better understand the developmental process itself, i.e. the mix of internal and external push and pull factors that are present in our transformation from one action-logic stage to the next.

3. In addition to existing measures of vertical development, such as the LDF/GLP and SCTi, a developmental biography of someone else’s life or a developmental autobiography of your own life, can provide new insights into how personal development impacts leadership, in whatever leadership role you find yourself; as a parent, a teacher, a consultant or coach, a community worker or workplace manager.

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DATA & METHOD OF INQUIRY

The data comes from thirty-two ramdomly selected examples from across Buffett’s life, equally weighted over the early years up to the end of the Buffett Partnership in 1969, the mid to later years as Chairman and CEO of Berkshire Hathaway and more recent years during which Buffett plays a ‘sage’ like role in the wider community. The method of inquiry follows a dialectical approach, i.e. it looks for developmental as well as non-developmental (vertical as well as horizontal) factors influencing each example. It starts by highlighting his ‘action’ in each example, then ‘inquires’ into his underlying meaning-making by applying the four developmental variables:

- What perspective(s) is Buffett operating from in his action? - What timeframe is he aware of in his action? - How open is he to feedback in his action? And, - How does he use his power in action?

His underlying meaning-making is then matched to one or more of the seven action-logic stages in developmental theory (see Appendix 1). In addition, other ‘non-developmental’, first-, second- and third-person factors are also considered; such as his intelligence and temperament, his culture and background, the influence of significant others, his first wife Susie and his business partner Charlie Munger, the use of his Graham inspired investment method and the circumstances he found himself in.

Transformations in Leadership © Dr. Edward J. Kelly 2014

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1, 23, 6,22

4, 5, 7, 8,9, 10, 11,

12, 13,14, 18

20, 23,28, 29

31, 3215, 16,17, 19,

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AlchemistStrategist

IndividualistAchiever

ExpertDiplomat

Opportunist

24, 25,26, 27,

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Transformation

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meaning-m

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Early YearsMid Years

Later Years

THE RESULTS

!e research shows that Bu"ett’s underlying meaning-making (his action-logic) is a primary, secondary or contributory factor, in#uencing his actions, in each of the thirty-two examples. It is a primary factor in twenty-seven examples but there are only $ve examples where it is the only primary factor (examples, 2, 6, 16, 17, 18). !ere are twenty-one other examples where it is equally as important as non-developmental factors (examples, 1, 3, 7, 8, 9&10, 11, 12, 13, 14, 15, 19, 20, 21, 22, 24, 25, 27, 30, 31 and 32) and six other examples where it is a secondary or contributory factor (examples 4, 5, 22, 26, 28 and 29). !us there is no sense in which Bu"ett’s action-logic is the only thing in#uencing his actions. !e development in his meaning-making however, had a disproportionate impact on his leadership, which is seen in the transitions from Bu"ett the investor to Bu"ett the business leader to Bu"ett the elder statesman.

Results from the thirty-two examplesTransformations in Leadership © Dr. Edward J. Kelly 2014

B U F F E T T ’ SC A R E E R

Personalitydevelopment

Characterdevelopment

Letting go

L I F ES TAG E

P S YC H O LO G I C A L D E V E LO P M E N T

F O C U S O FAT T E N T I O N

Dependent(Diplomat, Expert)

Independent(Achiever, Individualist)

Inter-Independent(Strategist, Alchemist)

First Act

Second Act

Third-Act

Buffett theInvestor

Buffett theBusiness Leader

Buffett theElder Statesman

THREE MAJOR TRANSFORMATIONS

In developmental terms, these three big transformations correspond with a dependent phase in his development in the $rst act of his career, an Independent phase in the second-act and an Inter-Independent phase in the third-act. In action-logic terms, the dependent phase is associated with the Diplomat and Expert, the Independent phase with the Achiever and Individualist, and the Inter-Independent phase with the Strategist and Alchemist. Each of these also aligns with a di"erent locus of attention; on personality development in the $rst-act, on character development in the second-act and on letting go in the third-act.

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A DEVELOPMENTAL BIOGRAPHY

A developmental biography or autobiography is a unique way of exploring the plateaus and transitions in development. A plateau refers to a relatively stable period in which Buffett’s underlying meaning-making remains steady at one action-logic stage. A transition refers to a relatively unstable period in which his underlying meaning-making is changing. We identify the ‘plateaus’ by inquiring into the underlying meaning-making in his actions at particular times in his life and explore the ‘transitions’ by examining the mix of internal and external factors were present in his transformation from one action-logic stage to the next.

Plateau

Transition

Alchemist

StrategistIndividualist

Achiever

Expert

Diplomat

Opportunist

MentalComplexity

Time

AC T I O N - LO G I C AG E Y E A R S L I F E S TAG EO p p o r t u n i s tD i p l o m a tE x p e r tAc h i e ve rI n d i v i d u a l i s tS t r a t e g i s tA l c h e m i s t

1 1 - 1 51 5 - 2 02 0 - 2 92 9 - 4 04 0 - 4 54 5 - 7 27 2 - 8 4

459

1 15

2 71 2

Te e n a g e rU n d e rg r a dB e n G r a h a m I nve s t i n gB u f fe t t Pa r t n e r s h i pG o i t a l o n eB e r k s h i r e Ye a r sE l d e r S t a t e s m a n

PLATEAUS AND TRANSITIONS IN DEVEL OPMENT

Transformations in Leadership © Dr. Edward J. Kelly 2014

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Dr. Edward J Kelly

Edward brings his recent experience as a researcher in the $eld of adult development to his previous experience as an entrepreneur and adventurer. To this he adds his skill as a facilitator. In the past few years, he has led over forty workshops in Intel, Accenture, Google, and others. He is also a regular presenter at the MBA and Innovation programmes at University College Dublin (UCD) and has published articles on adult development in the ILR and JITP. He can be contacted at ekelly11@gmail.com and on +353 86 810 2000.

What is Buffett saying?

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Seven Action-Logics

1.Perspectives

2.Timeframe

3.Feedback

4.Power

OpportunistA sel!sh !rst-person perspective, what’s in this for me?

Weeks to months. (No conscious awareness of time)

Not open to feedback.

Power motivated by own needs. Morality of authority - Unilateral power (Dependent).

DiplomatSecond-person perspective of others; peer group, family, culture or religion.

Months to 1 year.(No conscious awareness of time)

Not open to feedback.Receives feedback as criticism or ‘disapproval’

Diplomatic-power and the morality of association (thy will not mine). Social norms rule personal needs (Dependent power).

Expert

Self is immersed in the logic of their own belief system. A primarily third-person perspective.

1-2 years.(Beginning conscious awareness of durational time)

Open to feedback from Experts in the !eld of their primary interest.

Logistical-power and the morality of principle (the system is right). Craft-logic rules social norms (Dependent power)

Achiever

Self is operating from an expanded third-person perspective. Sees itself & others in linear time, past to future. E"ective and results orientated.

2-5 yearsConsciously thinks about linear time - a one-dimensional linear awareness (past to future).

Pragmatic. Open to feedback if it helps achieve goals. A kind of single-loop feedback that leads to !rst-order change in behaviour.

Systematic-productive power and the morality of ‘authority, association and principle’. Makes goal orientated contractual/pragmatic agreements. System e"ectiveness rules Craft-Logic (Independent power)

Individualist

Self is operating from a fourth-person perspective, one that turns inwards & sees the “myth of objective reality”, the subjectivity behind objectivity. Meaning is relative & constructed.

5-10 years. Emerging awareness of here and now (present time) as well as longer term durational time (past and future).

Welcomes feedback as necessary for self-knowledge and to uncover hidden aspects of own behaviour.

Visionary-power. Concerned with balancing earlier forms of Coercive, Diplomatic, Logistical and Systematic power. Adapt, create, explore new rules were appropriate. Relativism rules Systematic e"ectiveness of any single system (Independent power)

Strategist

Self is operating from an expanded fourth-person perspective. Relative & constructed gives ways to a new “post-objective-synthetic integrated theory”.

10-20 yearsA two-dimensional awareness of time (adds awareness of present time to thinking in durational time, past to future).

Invites feedback for self-actualisation. A kind of Double-loop feedback which can lead to second-order change in behaviour & strategy (thinking).

Praxis-power. Power directed outwards towards optimizing interaction of people and systems. Concerned with reframing, reinterpreting situation so that decisions support overall principle. Most valuable principles rule relativism (Inter-Independent power).

Alchemist

Self is operating from a !fth to nth-person perspective. Sees the limits of all representational maps, including integrated ones. Ego becomes transparent & a limit to further growth. May access a ‘direct mode of knowing’.

Up to 100 years (multi-generational).A three-dimensional awareness of time (durational time, non-durational present time, seeing oneself living in the present among others intentionally in#uencing one anothers’ futures’).

Views feedback as a natural part of living systems. Open to a kind of Triple-loop feedback which can lead to a third-order change in behaviour, strategy and overall goal or mission which changes and dissolves into a sense of connectedness to ‘whole’.

Mutually-transforming power. Creating transformational opportunities for self and others. Deep processes and inter-systemic evolution rule principles (Inter-Independent power).

Appendix 1. !e four ‘developmental’ variables

Adapted from: Cook!Greuter, "#$$%&, Fisher, Rooke & Torbert, "#$$'&; Harthill, "#$$(&, Kelly, "#$))&, Torbert & Ass., "#$$*&; McCauley et al. "#$$+&