Search
University of Massachusetts Amherst

Family Business Center

Steven Little's Seven Irrefutable Rules of Business Growth

by Shel Horowitz

How does Steven Little test a hotel's commitment to its customers? He orders a vanilla milkshake, which is not generally on the room service menu. "I've run that experiment about 50 times a year. 80% of the time, major hotel chains will get it wrong." The order taker "is standing at a point-of-sale screen. If it doesn't say milkshake, there's nothing he can do to make it exist. Is there a blender in the kitchen? No—it's in the bar. The bar staff hates the kitchen staff. I want food and beverage, and they've built two warring factions, fighting for turf. That's a stupid system.

"They will bring me the ice cream, milk, spoon [if he orders them as individual items]—and what I want is a milkshake. As soon as your technology starts leading you around by the nose, your systems make you stupid. Think about where you're saying no, where it would be easier and better to say yes."

Properly harnessing the power of technology is number five in Little's list of seven areas of concentration. He covered all seven in his June presentation to the Family Business Center, as well as in his book, Seven Irrefutable Rules of Small Business Growth, published by John Wiley in 2005:

1. Sense of Purpose

"Sense of purpose starts with you, the growth leader, and it permeates throughout" the organization. "It is never money. Money is a tremendous way to keep score—but it will not get you out of bed long-term. It is the byproduct of a greater calling."

One way to get in touch with your sense of purpose is to make contact with our heroes. Little noted that Henry Ford sought out (and became close friends with) Thomas Edison, and Bob Dylan traveled across the country to visit Woody Guthrie in his last months.

Little himself got to meet one of his own heroes recently: 95-year-old former UCLA basketball coach John Wooden, whose students included Kareem Abdul-Jabar and Bill Walton. "He was, to me the greatest sports coach in US history. He held an audience for an hour and a half and all he talked about was sense of purpose. When he took questions, a woman in the back asked, 'coach, you have accomplished so many things in your life. What is it you want to be remembered for?'

"He took 30 full seconds before he said one word. "I wanted to get it right. I have two competing ideas; can I share both of them with you? First, I never got out of bed to win a championship. They were a byproduct of my sense of purpose: to help young people achieve beyond their own expectations of themselves.' Out of 400 students, he's only lost track of 15. He knows their spouses, their kids. He still talks weekly with Jabar and Walton. But it was the second answer that let me know that he was a hero." But Little kept the audience in suspense until the end of his presentation to find out the second thing that John Wooden wanted to be remembered for.

2. Outstanding Market Intelligence

Absolutely essential if you're going to keep up with change. Smart executives need to "recognize and adapt to fundamental change. To see the changes happening."

3. Effective Growth Planning

"Only 12% of privately held companies in the US have this in place. When we study the Inc 500, it's always over 80%. I'm suggesting there's a correlation. I didn't always do it. When I did it, I grew profitably. When I didn't do it, I grew, but not necessarily profitably. It's the process by which you plan that gets everyone on board. Planning starts at the bottom and percolates to the top."

4. Customer-Driven Processes

Remember Little's frustration when he can't get his milkshake? You don't want to put your customers through that—at least, not if you want to keep them as customers! As a company grows, it's tempting to develop and implement processes that appear to only benefit the company, not the customer. In reality, what these company-centric processes gain in efficiency is lost through customer displeasure, so it's a short-sighted bargain. "To understand that balance is an area where we concentrate time, money and effort."

5. Power of Technology

The milkshake example shows technology running amok: controlling the employees instead of serving them. Learning to properly harness technology is crucial. Little defines technology as "the use of tools in our time. Anthropologists define the human condition by the use of tools: Stone Age, Bronze Age, Iron Age, Information Age. They have always mattered. How do you communicate with the tools of our time? You live in a time where tools matter. If you're in business, you're in the technology business, by definition. Become an expert as it relates to your business. This is not something you want to outsource! You don't have to do the coding of your websites, but you should understand them. You've got to be the expert, to be in the growth business.

"Human beings have been on this planet using tools for about 1.5 million years. And somehow, in the last 100 years, everything has changed—and tools have been a big part of that. The next 10 will make the last 10 seem like slow motion."

6. Best and Brightest

"Ted Turner built the biggest news brand in the world, in just ten years, and he spent half his time sailing boats. He found and kept better people. That's how he did the Braves, everything."

So entrepreneurs can learn from Turner and not work so hard. Just find really good people to whom you can reliably delegate.

"This is your job! The single biggest barrier to growth is that business owners do what they want to do instead of what needs to be done. They do the thing, baking cakes, building homes, selling insurance. This whole thing of hiring, training, and retaining of people gets in the way of doing what you like to do. The way to grow is find people who do the thing better than you do. It's self-fulfilling. Once you decide no one else can do this, no one can do it." So retain your employees; they'll let you retain your customers, and grow your company.

7. Seeing the Future

Little's seventh and final point could have been an entire presentation. He identified several trends that are shaping the current reality of business, and extrapolated them into the future. A few examples:

  • Urbanization worldwide: In 1900, only 12 percent of the world's population lived in cities of a million or more inhabitants; today, it's 50 percent.
  • "Grayification": longer active lifespans. In 1900, life expectancy was 47, and 55 was old. "Social security worked because you were supposed to be dead before you turned 62. Family business succession planning doesn't work. Now it's secession planning, because who's going to wait till they're 60 to take over from the 85 year olds? 70% of discretionary spending is from people over 50. Sean Connory is 76. It's impossible to imagine when I was growing up that we'd have [active, current] movie stars this old."
  • Decentralization. Rogers, Arkansas will be the next Orlando—to name one of many examples.
  • Green business: an easy one to be part of—or be left behind.
  • Growing influences of diversity—especially China worldwide, and the various Hispanic populations in the United States. Little notes that even the conservative British magazine The Economist called China "the greatest wealth creation in the history of mankind."

Remember that Little only gave one of Coach Wooden's answers? Here's the other one: "During the Watts race riots, Los Angeles was on fire with racial tension. Coach had the #1 team in the country. Newscasters asked him if they could interview his players about racial tension on the UCLA basketball team. The young African-American man in the middle stands up and says, 'you don't know Coach Wooden, our coach doesn't see color, and that's the end of the interview.' Coach told 1000 people that's what he wanted to be remembered for."

Oh yes—and you'll get a kick out of the title of Little's next book: The Milkshake Moment: How Stupid Systems, Pointless Policies and Muddled Management Stifle Organizational Growth.

Back to Top