Management By Neglect

Andrew Wilkinson shares his experience with different business management approaches, particularly contrasting his company's usual "management by neglect" style with a failed attempt at nurturing a smaller venture.

• Management Style Philosophy:

  • Successfully operates through "management by neglect" with established businesses
  • Buys businesses, installs CEOs, and lets them run independently
  • This approach works well with stable, established operations

• Failed Investment Lesson ("The Ember"):

  • Bought a small but real business with revenue and profits
  • Required constant attention to grow ("like blowing on an ember")
  • Couldn't attract top talent to run it due to its small size
  • Lost approximately $1 million as the business slowly died out

• Key Learning:

  • "Board a cruise ship, don't try to build your own boat"
  • Better to invest in established businesses that can run themselves
  • Small businesses requiring constant attention don't fit their model
  • Size matters when it comes to attracting quality management talent

• Investment Strategy Adjustment:

  • Focus on larger, established businesses
  • Avoid small operations requiring intensive nurturing
  • Match investment choices to management capabilities and style

This perspective highlights the importance of aligning investment choices with operational capabilities and management style, rather than trying to force a mismatched approach.