Rather than shortchange Warren Buffett and write an article for clickbait, here is what he wrote about share buybacks in his report to shareholders this year (2023).
It would be my contention that "anytime" a writer uses the words "all" or "every" or "always" that the reader should raise their level of distrust ... just a bit ... to catch a possible misleading generalization. Rarely is anyone always or in every way, one thing or another ... be skeptical and inquisitive.
Select the image above or the icon below to read an IBM Case Study: Do Share Buybacks Work?No, all repurchases aren't harmful, but historically some have been, and Warren Buffett--at one time--bought into IBM's share buyback strategy, and then got out. He should have used IBM as an example to ensure we all are not . . .
. . . economically illiterate!
- Peter E.
IBM's 20th Century Corporate Constitution was referred to as "The Basic Beliefs."
Whatever form a corporate constitution takes it must provide three things: (1) It must provide a consistent, ever-present, guiding light—a “north star” by which individuals navigate rough organizational terrain; (2) It must provide the mechanism by which the organization defines its objectives—goals that aren’t necessarily monetary but—if achieved—rewards success with a monetary gain; (3) It must provide an internal mechanism that demands an ever-constant evolution—it should institutionalize change.
For the last three decades, IBM has been industry-leading in this measurement.
Charts of IBM's history of performance in this area and an overview of the IBM-Samsung positioning of themselves for patent leadership is available by following the link below or selecting the image above.
Peter E. Greulich
Dangers of Data Centralization Circa 1971
“In this scatteration lies our protection. But put everything in one place, computerize it, and add to it without limit, and a thieving electronic blackmailer would have just one electronic safe to crack to get a victim's complete dossier—tough as that job would be.
"And a malevolent Big Brother would not even have to do that, he could sit in his office, punch a few keys, and arm himself with all he needed to know to crush any citizen who threatened his power.
“Along with the bugged olive in the Martini, the psychological test, and the spike microphone, the critics have seen ‘data surveillance’ as an ultimate destroyer of the individual American citizen's right to privacy--his right to call his soul his own.”
This was included in a statement from Robert P. Bigelow, Attorney at Law, Boston, quoting Thomas J. Watson Jr. before a U.S. Senate Congressional Hearing: "Federal Data Bank, Computers, and the Bill of Rights" on March 10, 1971
At the end of 2021, every single 21st Century IBM employee produced 25% less revenue and when adjusted for inflation, 54% less; every single 21st Century IBM employee produced 14% less profit and when adjusted for inflation, 47% less.
Or as Tom Watson used to say, "Employee enthusiasm matters."
Mr. Buck Rodgers, an amazing IBM executive marketing manager, defined the type of Wild Duck that was known within IBM as a "Royal Dissenter."
After years of study and experience around Wild Ducks, I often wonder: What is harder:
For me it is the latter.
I do believe, though, that IBMers of the 20th Century had an easier time being a wild duck than today's employees. Why? Because in a Watson Sr., Watson Jr., T. Vincent Learson, or Frank T. Cary administration, we knew the corner office had our backs.
Come hell or high water, they had our backs!
I think 21st Century Royal Dissenters at IBM would be wise to follow Kierkegaard's advice:
"If what the wild goose tried to do is to be commended in any way, then it must above all watch out for one thing--that it hold on to itself. As soon as it notices that the tame geese have any kind of power over it, then away, away in migratory flight."
In simple words: Find another company to work for! Fly away from the tame ducks—geese.
As has become custom, Peter E. has updated IBM's and Arvind Krishna's key performance indicators (KPIs) through the end of 2021. They are summarized on the "Arvind Krishna Overall Performance Home Page."
IBM released its 2021 Annual Report in March 2022 and these pages were updated in early April 2022. The next set of updates to these specific pages should be in April 2023 after the release of the IBM 2022 Annual Report.
Contact Peter E. Greulich if you would like to utilize any of his information or have him prepare a unique IBM article or graph to your organization's unique specifications.
Each year after IBM releases its annual report, I update this chart to document the difference between two sets of IBM chief executive officers: (1) Two 20th Century leaders who managed a business and (2) Four 21st Century leaders who are managing a business to a stock price or to a stock price metric such as earnings-per-share.
Over the last sixteen years how have IBM's chief executive officers performed against some similar critical key performance metrics? The answer should not be a surprise to any IBMer or analyst that understands what it took to build the 20th Century IBM. The Watsons invested in making people more productive, processes more effective and products more valuable.
This is what happens when you invest in paper (stock buybacks/repurchases) instead.
This is a story adapted from an insight by Charles M. Schwab. The executive tale provides a unique perspective into what made the 20th Century IBM so great--building cathedrals, and what is causing the slow deterioration of the 21st Century IBM--laying brick:
Have you asked three employees what they are doing today? Are they earning a paycheck or building cathedrals? Yes, your employees own their self-motivation, but executives own the surrounding, cultural atmosphere that gives purpose to "laying brick."
Thomas J. Watson Sr. created at IBM an atmosphere of "Democracy in Business." Download and read this free article by Peter E. Greulich. It is his research into Watson Sr.'s philosophy of instilling a democratic spirit into his business--the 20th Century IBM.
"Democracy" can and should be your corporate atmosphere.
Build cathedrals: Manage By Wandering Around!
Select the image above or the menu item below.
Two men—J. C. (James Cash) Penney and Thomas J. Watson Sr.—from uniquely different backgrounds founded two of the 20th Century’s greatest corporate brands. These two men seemed unlikely kindred spirits.
Select the image above or the link below to read the rest of the story: A Corporate 101 story.
Peter E. Greulich
Pete has been studying IBM and early American corporate history since his retirement in 2011. These are his thoughts and musings, and of those whose biographies he has read with links to articles and book reviews on this website.