Berkshire's Sue Decker: Execution will be more important than capital allocation going forward.

I see there has been some discussion of the above quote. I was also struck by this statement. After decades of Buffett explaining his focus on capital allocation in a business, the power of retained earnings (2019 Letter), and so on, we are shifting gears. After decades of toasting the stewardship of Berkshire by the most celebrated capital allocator on the planet, we are told that this process will be de-emphasized.

I’m not saying this is wrong. Perhaps at the scale of the modern Berkshire and the difficulty of moving the needle, and given even Buffett’s lackluster results in recent years, the best course going forward may be to shoot for a market average rate of return and try to avoid any big blowups. Likewise - at the scale of the modern Berkshire - maybe there are simply too many far-flung operations to continue Buffett’s hands-off approach. And this dramatic juncture in the Berkshire leadership timeline is probably the best opportunity to make the change.

After all the fine talking about consistency of the Berkshire culture, in a sense Greg has flipped the script. He is saying: I don’t have Warren’s gift for capital allocation, though I’m reasonably intelligent and hopefully I won’t muck things up too badly.

But I am taking a much closer look at operations going forward. The subsidiary heads are on notice. There’s a new sheriff in town.