My Years with General Motors

ALFRED P. SLOAN JR.

Reviewed by Jack

When Alfred Sloan, the longtime chairman of General Motors, contributed a management article to Fortune magazine in the spring of 1953, it was so comprehensive that one of the magazine’s writers, John McDonald, suggested he craft it into a book. Sloan and McDonald (who would act as ghostwriter), along with a young researcher, Alfred D. Chandler Jr. (the now distinguished business historian), and Sloan’s longtime assistant, pored over GM’s archives to create the masterpiece My Years with General Motors. Because McDonald had extensive access to Sloan’s files, the book is stocked with reprints of memos, detailed letters, and minutes of meetings, which, while cumbersome at times, help retell Sloan’s years at GM in a uniquely comprehensive manner. In 1946, Peter Drucker published Concept of the Corporation, a detailed study of General Motors, a result of Sloan’s invitation to Drucker to observe (while being paid) the company. Their philosophies matched well; both knew that corporations could not continue to grow unless a theory about how they should be constructed evolved.

In 1899, when GM was still headed by W. A. Durant, Sloan was the president of Hyatt Roller Bearing Company, a supplier to the nascent automobile industry. GM bought Hyatt in 1916, along with many of its other suppliers, and created a group called United Motors. Sloan was made a vice president and given some significant duties. He was also promoted to GM’s board. After World War I, the auto industry faced a significant downturn, and shareholders became concerned. While Durant was regarded as a great visionary when it came to acquisitions and the automotive industry, he was not considered an effective manager. Around this same time, Sloan became head of United Motors and wrote an organization study “as a possible solution for the specific problems created by the expansion of the corporation after World War I” and submitted it to the executive committee. This study is one of the most important business documents ever written, primarily because, in those pages, Sloan revealed an organization that was so efficient, employing such processes as centralized buying and using interchangeable parts to build different GM cars, that they would ensure critical savings for GM at that time of struggle. Sloan succeeded Durant as president in 1922 and later became chairman of the board in 1937. He proved during his time at GM to be one of the management masters of the twentieth century.

During the 1920s, Ford, featuring its Model T, had captured well over 50 percent of the automobile market. Under Durant, GM had lost focus on the business at hand to pursue other sideline challenges, like the creation of a copper-cooled engine. In addition, GM had too many car brands that often cannibalized the other brands’ customers. The new GM, using Sloan’s organizational plan to consolidate car brands, created a concept of providing a customer with cars for a lifetime, as the slogan promoted. The first-time automotive buyer would start with the low-priced Chevrolet while the senior driver would settle back into a Cadillac. At the same time, Ford was slow to update the Model T, so when Sloan’s management practices took hold, GM became the largest manufacturer of cars and trucks and remained so for decades.

“Confidence and caution formed my attitude in 1920. We could not control the environment, or predict its changes precisely, but we could seek the flexibility to survive fluctuations in business.”

It would be an understatement to say that Sloan’s successes were impressive during his forty-five years at GM. In 1922, Sloan captained a company of 25,000 employees; by 1962, Sloan’s final year at GM, that number had grown to 600,000. During that same time, car and truck sales went from 205,000 units to 4,491,000, and total assets grew from $134 million to $9.2 billion. He accomplished this growth, in part, by being the first company to introduce new car models each year. He understood that people wanted a car that didn’t reflect where they were currently, but where they wanted to be. Buyers were inclined to stretch their financial limits, so to expedite the process, he developed the General Motors Acceptance Corporation to finance the new cars.

Sloan’s management style allowed committees to make decisions, while he orchestrated debates within these committees to propel the future plans for the organization. This approach helped Sloan and GM to lead the industry for decades and with it give birth to the concept of “the professional manager,” as Drucker describes Sloan in the book’s introduction.

Full of lengthy excerpts from Sloan’s correspondence and business documents, My Life with General Motors deviates from the usual biography format. The book is ideal for the student of business who wants to learn about managing both large and small groups, as Sloan offers long discourses on decision making and other key organizational issues. This book is a glimpse into the mind and actions of one of the twenty-first century’s masters of business. JC

My Years with General Motors, Currency/Doubleday, Paperback 1990, ISBN 9780385042352

WHERE TO NEXT? Here for more on Sloan’s consultant Here for the revolt against Sloan’s view Here for the evolution in auto production | EVEN MORE: Concept of the Corporation by Peter F. Drucker; Guts by Robert A. Lutz; A Ghost’s Memoir by John McDonald