A company’s success will depend to a large extent on the quality of the management team, and more particularly, on the quality of the chief executive.

Just look at some of the greatest success stories in business – General Electric, Microsoft, Virgin, Amazon, Dell, Facebook. The company’s greatest periods of success coincided with the tenure of great leaders: Jack Welch, Bill Gates, Richard Branson, Jeff Bezos, Michael Dell and Mark Zuckerberg.

Some great companies have come upon hard times following a change at the top. John Sculley was hired to take Apple to the next level, but the marketing-orientated approach which had served him so well at Pepsi Cola did not translate to a technology-centred business like Apple. His decision to effectively fire Steve Jobs was disastrous and Apple did not recover until Sculley was gone and Jobs was once more at the helm.

Recognising the importance of great management is one thing. But can we pin down those qualities that make the best managers?

Some great managers are autocratic, while others like to build upon consensus. Some great managers focus on technology. Others see the customer as their main priority. Many great businesses owe their success to an empowered, committed workforce where managers place a high premium on employee welfare. Other successful businesses operate on a ‘hire and fire’ basis where low paid staff are motivated by a fear of redundancy.

Costco and Amazon are both great success stories in modern retailing, but the management styles of Jim Sinegal and Jeff Bezos couldn’t be more different.

In truth, the only way to identify a great manager is to judge them by results. It was not through mean-spiritedness that Jobs was kept from the CEO job at Apple. His odd habits and maniacal focus on detail were sure signs to most observers that he would be a disaster as a CEO. But as it turned out, Apple’s great success was not in spite of Jobs’ leadership, it was because of it.

So from the quiet Henry Singleton at Teledyne to the superhero style of Elon Musk at Tesla, there is only one thing that distinguishes outstanding management – outstanding results.

In assessing a company’s management, therefore, the first thing to look at is track record. What has the CEO achieved? Prior to the current appointment, does the CEO have a long record of success? Has this success been achieved in related industries?

The CEO’s outlook and point of view is also an important factor. Not because it will affect the performance of the business, but because it may affect how you feel about the investment. We will look at how you can develop an investment style in chapter twelve. But for now, it is enough to say that it will be difficult for you to support an investment in a business if your own point of view conflicts markedly with the business philosophy of the CEO.

Management is a prime consideration in evaluating an investment, but as Buffett once said, ‘When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact’.

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