Warren Buffett Warns ‘Thumbsucking’ is ‘the Cardinal Sin’ in Business Because It’s ‘Delaying the Correction of Mistakes’
Warren Buffett, the renowned chairman and CEO of Berkshire Hathaway (BRK.B) (BRK.A), has long been celebrated for his disciplined, value-driven investment strategy and his pragmatic approach to business leadership. Every year, the “Oracle of Omaha” pens an extensive letter to shareholders, detailing the state of the company, which is packed with vital knowledge for both aspiring and seasoned investors.
In his most recent 2024 shareholders’ letter, Buffett offered a candid reflection on personnel decisions. “A decent batting average in personnel decisions is all that can be hoped for. The cardinal sin is delaying the correction of mistakes or what Charlie Munger called ‘thumb-sucking,’” Buffett said. He continued, “Problems, he would tell me, cannot be wished away. They require action, however uncomfortable that may be.”
This statement encapsulates a central tenet of Buffett’s management philosophy: while perfection in leadership decisions is unattainable, the real failure lies in avoiding or postponing necessary corrective actions. This insight is deeply rooted in the culture of Berkshire Hathaway, shaped over decades by Buffett’s partnership with the late Charlie Munger, his longtime business partner.
Berkshire’s approach to corporate governance has always prioritized transparency, accountability, and the empowerment of talented managers. Their strategy involves identifying exceptional leaders, granting them autonomy, and minimizing interference — a model that has yielded significant returns for Berkshire’s diverse portfolio of companies. Yet, as Buffett’s quote highlights, even the best systems encounter personnel missteps. The key, according to Buffett, is to address these issues promptly rather than allowing discomfort or indecision to prolong problems.
The late Charlie Munger’s influence on Buffett extended beyond investment strategy to decision-making frameworks. Munger championed the use of mental models and advocated for a multidisciplinary approach to problem-solving, which helped Berkshire avoid many common corporate pitfalls. He also stressed the importance of staying within one’s circle of competence and acting decisively when mistakes became apparent. This mindset is echoed in Buffett’s warning against “thumb-sucking” — a metaphor for indecision or wishful thinking in the face of clear problems.
The authority of Buffett’s perspective is reinforced by Berkshire Hathaway’s long-term success. The company’s ability to adapt, correct errors, and empower capable managers has allowed it to navigate market cycles, economic shocks, and industry disruptions. Buffett’s insistence on confronting uncomfortable truths head-on, rather than hoping issues resolve themselves, has become a hallmark of Berkshire’s enduring corporate culture.
In today’s business environment — where rapid change and uncertainty are constants — Buffett’s advice remains as relevant as ever. His emphasis on decisive action, personal responsibility, and continuous improvement serves as a guide for leaders facing the inevitable challenges of managing people and organizations. The legacy of Buffett and Munger’s partnership is not just in their investment acumen, but in their unwavering commitment to ethical, accountable, and proactive leadership.
On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com