Brilliant Chairman as Single Point of Failure

“alone credit is due for bringing it from its humble beginnings to its pres- ent size, and, acknowledging his quite exceptional mental powers, the fact remains that except for those years in which conditions were abnormally favourable he has never been able to translate his brilliance into anything commensurate in the way of earnings; but for the shareholders these, in the long run, far transcend in importance the pleasure they may derive from witnessing feats of virtuosity on the part of the Chairman. Mr. Little, in fact, has the defects of his qualities. To the same extent that he is bold and imaginative, he is impulsive and unpredictable. He moves with great speed and determination, and on many occasions the Directors have been presented with what were, in effect, faits accomplis which they have accepted through acquiescence rather than conviction. The resultant mistakes have been on such a scale that they have more than outweighed the successes, and this has been repeated so regularly that it has formed a pattern. The moral of the tale is that the Directors must take a more positive and critical attitude towards the conduct of the business. They must not assume that because a new project is recommended to them in persuasive terms that all is for the best in the best of worlds. It should be an invari- able rule that no proposal be adopted without the unanimous consent of the Board, and if any single member expresses disapproval, or even doubt, it should be immediately dropped. This does not mean that Textron will ever be a quality Company for its limitations are becoming increasingly clear, but at least it should be possible to avoid a repetition of such farci- cal situations as the S.S. LEILANI. What is suggested above is only a defensive measure. If anything of a more constructive nature could be devised that would be an additional source of strength to the Company.”

“There was therefore no misunderstanding on your part of the essential fact of the situation, which was that Royal would have cheerfully gone ahead with the idea, to the great detriment of the interests of existing shareholders, if other considerations had not caused him to drop it. It was and remains a thoroughly upsetting incident, not only in itself, but in its wider implications. If you prefer to ignore realities and live in an imaginary world, you are free to do so, but it seems to me that one should learn something from ex- perience. Among these things are that Royal, while a likeable person with unusual abilities, has a positively Rooseveltian delight in treating his po- sition as an amusing personal hobby. For him business is one exciting ad- venture after another, and he experiments, improvises and goes off at any tangent that occurs to him. The effect of this on the fortunes of his share- holders is to him purely incidental, and he has not the slightest hesitation in sacrificing them to the passing whim. No one has had more experience of this than yourself.”

“Group—Do Not Compete with a Single Brand Business The last character of this section, “Group,” means “group strategy.” While focusing on one single-minded goal is important in both life and business, relying only on the core job or business is dangerous because if it hits a dead end, it will be “game over” all at once.”

“However, once you surpass a certain scale or dimension of business, you should not adopt such a method. As an executive who should form and organize a lineup, if one component of your business dramatically changes due to market or situational shifts, it could lead to a complete collapse. It’s foolish to wait idly for danger. Therefore, I adopt a group strategy. Always have multiple business lines, and create a formation that allows them to have synergistic effects. Even if one business line fails, I want to always be prepared with risk diversification so that the main body will never collapse by sufficiently covering with other lines.”