Constancy of Purpose (The Financial Athlete #27)

After a rewarding private lesson of tennis, I said to my tennis instructor, “Adults like me will never turn pro. Wouldn’t you prefer to develop a child into a world class player?”
He replied with a story. “One of my favorite students was an old woman in her 80s. She had a limited range of motion, so we would work on doing more with less. One day we were practicing volleys. It was a very hot day, about 100 degrees Fahrenheit. All the other players on the other courts could not stand the heat and left. Only the old woman and I remained. After a rally, she walked with short steps to the net and said, ‘It’s hot today, isn’t it? I replied, ‘Oh, yeah!’ Without another word spoken, she walked back to her spot and we continued to volley.”
“She played with heart,” I added.
“Not just heart, PURPOSE. Some who left those courts in the heat also play with heart, but for this old woman tennis gave her purpose in life itself. I don’t seek youth in students, I enjoy most teaching people who play with heart and a sense of purpose.”

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When I invest in a small to medium size companies, I seek a strong sense of purpose and direction in management. Management guru W. Edwards Deming called this “Constancy of Purpose”. It is the first and foremost of his famous 14 Points (see below). To have constancy of purpose is to maintain focus on the long term vision, not be tossed to and fro with short-term circumstances.

A starting point to determine constancy of purpose is to read the Mission Statement. For many companies, a Mission Statement is nothing more than a creative writing exercise. Virtually all companies have them, but few are driven with a true sense of mission. The same can be said of people. How many of us really live a purposeful life?

To try to get a more accurate perception if the stated ‘raison d’etre’ (reason to be) in the Mission Statement of a small to medium size company is actually being adopted, I call management on the phone, or better yet, meet them face-to-face. I’m careful to not confuse hype for purpose. Both are spoken by CEOs with enthusiasm. Hype centers around discussion of anticipated higher stock prices. Purpose centers around discussion of long-term business development to fulfill the mission.

Seeking a sense of purpose in management sets your mind on buying businesses, not stocks. This is a very important distinction.

“Whenever Charlie and I buy common stocks for Berkshire’s insurance companies (leaving aside arbitrage purchases) we approach the transaction as if we were buying into a private business. We look at the economic prospects of the business, the people in charge of running it, and the price must pay.”
–Warren Buffet

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One Response to “Constancy of Purpose (The Financial Athlete #27)”

  1. Sue Massey Says:

    I finally decided to write a comment on your blog. I just wanted to say good job. I really enjoy reading your posts.

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