102: Executive Leadership - Sloan's "My Years at General Motors"

102: Executive Leadership — Sloan’s “My Years at General Motors”

Today, one may take cars and other automobiles for granted, but back in the early 20th century, they were anything but. Cars were seen as luxury items, yet they were open-sided and exposed riders to the elements. Most roads were still unpaved outside the cities, and the cars were noisy, bumpy, shaky, and difficult to operate. But above all, the dominant manufacturer in the industry, Ford, had built its initial success on mass production but of only one variety of car, the Model T, painted in only one color, black. In a matter of a couple decades, this would change drastically to a world where cars were produced in then-unimaginable numbers of varieties and styles catered to both the rich and those on tight budgets. Roads were everywhere and driving became an ordinary part of life. And everything from transmissions and gasoline to exterior paints and modeling underwent significant technological improvements.

The road to this transformational growth and change in the industry was hardly smooth, and it took visionary leadership to pave the way. Alfred Sloan chronicles his story of these events in the memoir My Years at General Motors, published in 1964. Sloan served as the President, Chairman, and CEO of General Motors from the 1920s to the 1950s and oversaw the growth of General Motors from a disjointed mix of companies in the 1910s to corporate leader and powerhouse. During this time, Sloan faced a continuous series of challenges that plagued other competitors, starting with several economic crises in the 1920s, the Great Depression, World War II and the post-war recession, and the automotive boom of the 1950s.
Sloan’s formula for success, which he had formulated early in his career, was coordinated decentralization. Sloan felt it was inappropriate and ineffective to establish a unitary central corporate industry over the disparate divisions he inherited and instead shaped them into discrete and separate companies manufacturing cars targeting unique sectors of society. These different makes produced cars at different prices that avoid competition with each other and provided options and opportunities for buyers whose fortunes fluctuated with the times.

Moreover, Sloan was credited with many initiatives surrounding the products, the buying experience, and marketing. He created the concept of the annual model and trade-in that allowed buyers to purchase new cars with new features while recouping some of the costs of older, obsolete models. He built a financing system to help buyers gain credit without having to rely on banks. He incorporated advances in fueling technologies and engineering to quiet the engines, enclose the body of the car for more pleasant rides, and make the cars more visually appealing.

While My Years at General Motors may now be required reading for many business students and Sloan’s name now adorns the school of management at the Massachusetts Institute of Technology, but it nearly was not published. For years, General Motors’ legal staff feared that exposing GM’s actions during those decades would open up the firm to antitrust litigation and other legal issues. Thankfully for all of us, none of that came to pass after the book’s release.