Textron Founder Royal Little stumbles by overruling his management

Royal Little (1896-1989) is one of the inspirations for this site. He was most famous for founding the conglomerate Textron (still going strong in 2011), but his most meaningful contribution for me was his autobiography, "How to Lose $100,000,000 and Other Valuable Advice." It's out of print now - but perhaps if someone who owns the copyright (it may very well be Harvard Business Press - but when I checked with them a few years ago they didn't think they did) falls in love with this site they'll reprint it. (I offer to write the Foreword!)

Little's book is an autobiography in mistakes. It's a wonderful upending of expectations - an exceptionally successful leader writing about everything he did wrong. It's a terribly human book, funny and sympathetic in a way that no chest-puffing "CEO memoir" ever could be.

Here's one of the stories from the book:

Homelite Four-Cycle Engine

In those days the only other well-known outboard motor company was Champion. Allan Abbott [head of Homelite, a Textron subsidiary] spent some time with them and tested some of their motors but decided against buying the company which, incidentally, had a negative net worth at the time.

A lightweight four-cycle engine was originally developed for the small Crossley car, which was to have been made right after World War II. Somehow or other the engine got to Twin Coach where its development was carried on further by Lou Fageol. Finally Twin Coach decided they couldn't handle it, so Lou Fageol and a partner, Crofton, took it over and carried on the development.

Lon Casler somehow heard of Lou Fageol and got enthused about their engine. In addition to the four-cycle outboard, Lou apparently had a design for an inboard-outboard motor and may have had a patent; and, of course, Homelite made a deal that involved a purchase and some royalties. This was done at my insistence with Allan Abbott objecting and predicting failure - but I was determined to get into outboards.... Incidentally, Lon Casler was Textron's acquisition vice-president and a tower of strength to me.

The lightweight four-cycle outboard engine had many advantages: it was much quieter than two-cycle engines, it eliminated the regular outboard's exhaust problem (it wasn't a "stink pot"), and the engine could be run efficiently at any speed. The owners loved them but it cost so much more than the two-cycle engine that the market was very limited.

The deal was made in 1957, but after about three months, Homelite concluded the project should be killed. But I decided that Homelite should continue - at least for another year - which was against their better judgment. Among our reasons for asking Homelite to continue was the fact that the engine had been featured on the cover of Textron's annual report. How's that for an excuse to continue a loser?

When we all agreed to let Homelite abandon the outboard business, Dick Fisher, who was the founder and principal owner of the Boston Whaler Company, was reluctant to see the engine go out of production, so he formed a new company, which bought it for some cash and some notes.

So the Homelite four-cycle engine was a hell of a development which lost a lot of money for a lot of people. Allan Abbott tells me it cost Textron at least $5 million.

Advice: Don't force a division president to take on a product that he's not sold on. He will undoubtedly know more of its potential than you ever will.

pp. 183-184

(c) 1979 Royal Little and the Harvard University Graduate School of Business Administration