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Buffett: Berkshire Hathaway's main long-term challenge is size, not culture

The top dilemma facing Berkshire Hathaway Inc. is how to manage its growingsize, not whether it can perpetuate its all-important culture, Chairman,President and CEO Warren Buffett said April 30.

The Nebraska-based conglomerate oversees vast holdingsacross several industries, after spending years building itself largely throughacquisitions. That has made Berkshire into one of the world's most successfulcompanies, Buffett said, but it also makes it increasingly difficult for it toadd enough value each year to outperform the broader market.

"Size is the enemy of performance, to a significantdegree," he said at his company's annual shareholders meeting.

Buffett insisted that Berkshire's size and scale providesbenefits to its subsidiaries that they otherwise would not have. But managingBerkshire's continuing growth will be one of the main priorities for hiseventual successor. At the same time, Buffett dismissed concerns about thecompany's ability to maintain its culture once he is no longer in charge.

"I think the chances of us going off the rails in termsof culture are really very, very, very slight," he said.

Buffett has appointed his son, Howard, as Berkshire'snonexecutive chairman and charged him with protecting the company's culture.But he expects the company's board members and managers to also play a majorrole in preserving its broader belief system.

"You have a board, and you'll have successor boardmembers, you'll have managers and you'll have successor managers, and you haveshareholders that clearly recognize the special nature of the culture,"Buffett said.