Avoid the Lawyer Mentality

Steven Covey wrote in a June 2007 article in Entrepreneur Magazine:

Consider the example of Berkshire Hathaway CEO Warren Buffett in acquiring McLane Distribution–a $23 billion company–from Wal-Mart.  A deal of this size involving public companies would typically take several months to complete and cost several million dollars in due diligence.  But because both parties operated with high trust, this deal was made with one two-hour meeting and a handshake.  In less than a month, it was completed.  Buffett wrote in his annual report: “We did no ‘due diligence.’  We knew everything would be exactly as Wal-Mart said it would be–and it was.”  Imagine–less than one month and no due diligence costs.  High trust, high speed, low cost.

I love this example and recently heard Steven Covey give a speech, citing the same example again.  Covey uses this example to show that it is incredibly important to have trust in business and that this can reduce the costs of transactions and make it easier to advance.  I, however, like this example for another reason as well–a reason that I feel is far more significant: This example shows that without focusing on minutiae, and arguing back and forth about innumerable small details, a great deal more [Read more]