‘The institutional imperative’

巴菲特

The “most surprising discovery,” he wrote, is “the overwhelming importance in business of an unseen force that we might call ‘the institutional imperative.’ In?business school, I was given no hint of the imperative’s existence, and I did not intuitively understand it when I entered the business world.”

The billionaire continued: “I then thought that decent, intelligent and experienced managers would automatically make rational business decisions. But I learned over time that isn’t so. Instead, rationality frequently wilts when the institutional imperative comes into play.”

Buffett explained that the institutional imperative can manifest when, for example, “any business craving of the leader, however foolish, will be quickly supported by detailed rate-of-return and strategic studies prepared by his troops.”

It can also occur when “executives mindlessly imitate the behavior of their peer companies — whether they are expanding, acquiring, setting executive compensation or whatever — no matter how foolish it may be to do so.”