ALFRED SLOAN JR. SHAPED GENERAL MOTORS CORP. INTO A TOP WORLD-CLASS ORGANISATION
Learning from the greatest business leaders of the world
Alfred Pritchard Sloan, Jr. (May 23, 1875 – February 17, 1966) was a long-time President, Chairman and CEO of General Motors Corporation (GM). He started as a Senior Executive and later as the head of the organisation. He helped GM grow from the 1920s through the 1950s, introducing new concepts such as the annual model change, brand architecture, industrial design, automotive design and planned obsolescence.
Sloan’s memoir, ‘My Years with General Motors’, finally released in 1964, exemplified his vision of the professional manager and the carefully engineered corporate structure in which he worked. It is considered one of the seminal texts in the field of modern management education.
Sloan is remembered for being a rational, shrewd and very successful manager, who led GM to become the largest corporation on Earth, a position it held for many years after his death.
Henry Ford was a contemporary of Sloan and both of them had a rather special relationship. Both of them were ‘head men’ of the automotive industry. Sloan is remembered today with a complex mixture of admiration for his accomplishments and appreciation for his philanthropic legacy.
Life and career
Born in New Haven, Connecticut, Sloan studied electrical engineering initially at Brooklyn Polytechnic Institute, then transferred to and graduated from the Massachusetts Institute of Technology in 1895. While attending MIT, he joined the Delta Upsilon fraternity.
(The Delta Upsilon is the very old non-secret fraternity, in Delta Upsilon, who stand by four Founding Principles of Promotion of Friendship, Development of Character, Diffusion of Liberal Culture and the Advancement of Justice and each remains a cornerstone in everything members do).
In 1899, his father and another investor bought out Hyatt Roller Bearing, a company that made rollerand ball-bearing from the previous owner. Sloan became President of the company at the age of 26. He built up the business as a supplier of roller bearings to the growing American automobile industry. Hyatt was later acquired by GM and Sloan became a GM Vice President and member of the executive committee in 1918.
Sloan was named a Vice President of GM in 1920 and when Pierre S. Du Pont and John J. Raskob wrested control of GM from William C. Durant in 1920, Sloan became the company’s Operating Vice President. He became President and Chief Executive Officer of GM in 1923.
Sloan was an administrative genius and he transformed GM from a loose cluster of business units into an archetype of the modern business enterprise, giving it an organisational structure that was emulated by many other corporations through much of the 20th century. He reorganised the company into five different automobile divisions, with each producing cars in a different price range.
He decentralised production, giving each operating division the freedom of initiative to compete for more business, while he centralised administration, creating a strong central office that had large financial and advisory staffs in order to devise and coordinate overall company policies.
Under Sloan, GM surpassed the Ford Motor Company in American automobile sales in the late 1920s and eventually became the largest business corporation in the world. GM came to dominate the market, accounting for more than half of American auto sales.
Sloan relinquished the presidency and became Chairman of the board of GM in 1937 after he refused to negotiate with the United Automobile Workers when they staged sit-down strikes in GM plants. He ceased to be Chief Executive Officer in 1946 and he retired from the chairmanship in 1956, though remaining as honorary Chairman. He outlined his management policy in My Years with General Motors (1964) and also wrote (with Boyden Sparkes) Adventures of a White-collar Man (1941).
In the late 1930s, Sloan endowed the foundation named for him. He supported various philanthropies, including the Memorial Sloan-kettering Cancer Centre in New York City, a centre for advanced engineering study at the Massachusetts Institute of Technology and a school of management there.
Additional grants established a Sloan Institute of Hospital Administration in 1955 at Cornell University –the first two-year graduate programme of its type in the US, a Sloan Fellows Programme at Stanford Graduate School of Business in 1957 and at London Business School in 1965.
They became degree programmes in 1976, awarding the degree of Master of Science in Management. Sloan’s name also lives on in the Sloan-kettering Institute and Cancer Centre in New York.
Sloan was inducted into the Junior Achievement U.S. Business Hall of Fame in 1975.
The Alfred P. Sloan Foundation is a philanthropic non-profit organisation established by Sloan in 1934. The foundation’s programmes and interests fall into the areas of science and technology, standard of living, economic performance and education and careers in science and technology. The total assets of the Sloan Foundation have a market value of about US $ 1.8 billion.
What can we learn from Alfred Sloan’s unique career?
Among the many lessons:
Question conventional wisdom
Sloan recognised that the management practices of his day were not adequate to the needs of growing companies. His patient, methodical approach to the basic tools of management solved the paradox of imposing central control without stifling divisional freedom.
Never ignore basic changes in your market
While Henry Ford clung stubbornly to his vision of the automobile as a transportation appliance, Sloan perceived that the customers had begun to want more from their cars – including comfort, convenience and prestige. His response to that insight was the beginning of modern car.
When life gives you lemons, make lemonade
The collection of automobiles assembled at GM was, in fact, a dog’s breakfast of competitors, all fighting for the same customers. Sloan rearranged them as a hierarchy of brands offering buyers “a car for every purse and purpose”. Without curbing each division’s autonomy, he saw to it that the five brands didn’t compete with each other but gave his customers a ‘ladder of success’ reflecting their status in the world.
As a manager, your first duty is to your company
The company is your client and it comes first; rank imposes responsibility. Sloan went further than most would advise in concealing his own human qualities to highlight his role as a model manager and even he came to see his workaholic style as unhealthy. But all managers must be prepared to make personal sacrifices or give up the job.
In assessing your people, performance is what counts
Sloan could relate to and respect people of all sorts, from the mercurial Billy Durant to the rough-hewn Walter Chrysler; Chrysler, in many ways his direct opposite, was his best friend. He knew that he didn’t have to like the people who worked for him or change them to fit his notions of good managers. They simply had to meet his standards of performance.
Once, when Peter Drucker remarked on how different two divisional chiefs were, Sloan told him, “You are quite mistaken. These two men were very much alike – both performed.
Integrity and character are far more important than charisma and showmanship.
With Sloan, facts were allimportant. As he said, “Bedside manners are no substitute for the right diagnosis.” He managed to win loyalty and respect from the fiercely independent entrepreneurs who headed the divisions they had formerly owned by setting an example of hard work, keeping his promises and imposing discipline without stifling their creative talents.
Welcome disagreement
Dissent, Sloan knew, is not disloyalty; open debate is necessary to sort out all the factors in a decision and arrive at the best answer. A manager’s greatest danger may be the yes-person who tells him what he wants to hear and blocks a real understanding of the situation.