Sublime

Each quarter we try to study an admirable company and discuss it with our Operating Group managers and board members. We focus on high performance conglomerates that have demonstrated at least a decade of superior shareholder returns.

In the most direct human terms, LTCM’s problem was group-think. Under John Meriwether, there was an organizational culture in which questions of risk were pressed only so far. This appears to have led to systematically rosy projections. Too little of the fund’s brainpower went to skeptical probing of what could have gone wrong.

“End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.”

It traditionally assumed that firms were independent, and so changes would be independent, and so their sizes and aggregate effects would be distributed normally.

In finding his way, Grove had followed the trail of a legendary, Vienna-born gadfly, the first great “modern” business management thinker: Peter Drucker.

Redundant