Table of Contents
Preface
Introduction
Chapter 1 - The Great Opportunity—I
Chapter 2 - The Great Opportunity — II
Chapter 3 - Concept Of The Organization
Chapter 4 - Product Policy And Its Origins
Chapter 5 - The "Copper-Cooled" Engine
Chapter 6 - Stabilization
Chapter 7 - Co-Ordination By Committee
Chapter 8 - The Development Of Financial Controls
Chapter 9 - Transformation Of The Automobile Market
Chapter 10 - Policy Creation
Chapter 11 - Financial Growth
Chapter 12 - Evolution Of The Automobile
Chapter 13 - The Annual Model Change
Chapter 14 - The Technical Staffs
Chapter 15 - Styling
Chapter 16 - Distribution And The Dealers
Chapter 17 - GMAC
Chapter 18 - The Corporation Overseas
Chapter 19 - Nonautomotive Diesel Electric Locomotives, Appliances, Aviation
Chapter 20 - Contributions To National Defense
Chapter 21 - Personnel And Labor Relations
Chapter 22 - Incentive Compensation
Chapter 23 The Management: How It Works
Chapter 24 - Change And Progress
Illustrations
Footnotes
MY YEARS WITH GENERAL MOTORS
by
Alfred P. Sloan, Jr.
Edited by John McDonald with Catharine Stevens
Garden City, New York
Doubleday & Company, Inc.
1964 .
Preface
That this book tells the story of General Motors in good part from my point of view is reasonably justified, I trust, by the circumstance that, as chief executive officer of the corporation for twenty-three years, and as a member of the board and a participant in its committees for forty-five years, I have been situated at the focal point of major policy making and administration. I trust, too, that the use made of materials from the past, which I either wrote or was responsible for, is justified for a similar reason. They either made or influenced policy and thereby bear a relation to the events of history. This approach to the book made it necessary to do a substantial amount of research, and it should not be surprising therefore that considerable collaboration was required.
I am indebted first of all to John McDonald of Fortune magazine, who worked closely with me in conceiving the book and in helping me to set down on paper what I know about General Motors—including, I might say, many things that I did not know, or had forgotten, when we began this project a number of years ago. I asked Mr. McDonald to work with me, and the editors of Fortune kindly granted him a leave of absence. Our first intention was to write a series of essays on American business with special reference to General Motors. As we got into a study of the facts, the project grew far beyond our original concept. We felt compelled, stage by stage, to stay with it to the end. The designation of Mr. McDonald as editor, which he chose, is broadly defined as I have indicated. Mr. McDonald's scholarship, craftsmanship, imagination, professional standards, and understanding of business strategy made possible the creation of this book.
I am indebted equally to Catharine Stevens, who has served as close associate to me and Mr. McDonald from the beginning. We were fortunate to receive the benefit of her spirit and intelligence and her versatile capabilities in organizing and managing a project of such magnitude and complexity. She was, you might say, as well, our editor. John, Catharine, and myself were the motivating force that kept the work in motion to completion. And we had help from other quarters.
To our editorial and technical assistants Felice Faust, Barbara Mullen, and Mary Ross, I give my admiration and thanks for their loyalty and high performance over the long period of their service on the project. I also wish to thank Doris Foster, Lynne Goree, and Margaret Breckenridge for their fine contributions.
To Alfred D. Chandler, associate professor of history, Massachusetts Institute of Technology, I am indebted for his assistance as our consulting historian and research associate. One of our major studies of the evolution of General Motors was most creatively carried out by him, and he has given his good mind to reviewing successive drafts of the manuscript.
From time to time in one place or another I have called upon a number of professional talents. Among those whose contributions are importantly reflected in the book are Daniel Seligman of Fortune, whose editorial skill and judgment helped to solve a number of thorny problems; and William Whipple, who gave fine editorial assistance throughout the book.
I want to record my thanks for the substantial aid of Sanford S. Parker of Fortune, who applied his powers of economic analysis and editorial organization to several areas of study, notably the automobile market and its history.
I am also grateful for the special assistance of Charles E. Silberman of Fortune; Franc M. Ricciardi, formerly of the American Management Association, now of Monroe Calculating Machine Company (Litton); Nathan Glazer, the sociologist; Louis Banks of Fortune; Ruth Miller, formerly of Fortune; Francis Wilson of John Wiley & Sons; and Sidney S. Alexander of the Massachusetts Institute of Technology; and for the interest of Jason Epstein. Mary Grace of Fortune gave her meticulous eye to reviewing the manuscript, and Ralph Stein, author of Sports Cars of the World, kindly advised us with his special knowledge of early automobiles. The distinguished photographer Walker Evans was our picture editor.
Although this book represents my own personal views and is not a corporation matter, I am indebted to all the divisions and the general offices of General Motors for their co-operation. The number of individuals is so large that I can only salute them here as a group and send each of them my warm appreciation of their valued personal contributions to my effort. Among many old friends and associates whom I consulted are Donaldson Brown, the late Harlow H. Curtice, Harley J. Earl, Paul Garrett, the late Richard H. Grant, Ormond E. Hunt, Charles Stewart Mott, the late James D. Mooney, John L. Pratt, Meyer L. Prentis, John J. Schumann, Jr., the late Edgar W. Smith, the late Charles E. Wilson, Walter S. Carpenter, Jr., the late George Whitney, and Henry C. Alexander.
Quite a number of people in different walks of life corresponded with me or came to see me to assist with one matter or another that came up in the book. I wish especially to thank Win Murphy, formerly secretary to W. C. Durant, for a number of recollections going back before 1920; Frank A. Howard for helpful talks on the evolution of concepts of research; William Zeckendorf for a conversation in which he gave me some inspiring thoughts on Mr. Durant; Eddie Rickenbacker for his recollection of the sale to him of Eastern Air Lines; the late James H. Kindelberger for kindly reviewing a portion of the text dealing with our interest in North American Aviation; Dr. Arnold J. Zurcher for valued comments; Hedley Donovan for wise observations on our earliest manuscript; and my brother Raymond for reading and commenting on the entire book.
With all that we have done in research and checking, in our effort to cover the subject accurately, we recognize, as everyone who researches and writes must recognize, the limits of human visibility. I can only say we have done the best we could to present an accurate picture. Although the number of persons who assisted me is large and many of their contributions are directly reflected in the book, I am of course personally responsible for the conclusions and opinions expressed here and for the book as a whole.
Alfred P. Sloan, Jr.
New York City
October 1963
Introduction
I have undertaken in this book to give an account of the progress of General Motors. There is much to say about the world's largest private indust
rial enterprise. Its history covers the present century and many parts of the earth, wherever there is a road to travel. It involves a good deal of the modern development of the engineering arts. Tangibly, the corporation is represented in the market by Chevrolet, Pontiac, Oldsmobile, Buick, Cadillac, and GMC Truck & Coach, jointly the producers of about half the passenger cars and trucks manufactured in the United States and Canada today. Our overseas operations—Vauxhall in England, Adam Opel in Germany, General Motors-Holden's in Australia, and our manufacturing plants in Argentina and Brazil—produced in 1962 about one tenth of the passenger cars and trucks made outside the United States and Canada in the free world. The corporation also produces a substantial quantity of the world's locomotives, diesel and gas-turbine engines, and household appliances. Since General Motors is mainly a producer of automotive products—about 90 per cent of current civilian business— I have stayed for the most part in that area. I have, however, given separate chapters to the nonautomotive area and to General Motors' role in war and defense.
My impressions of all this after more than sixty-five years in and around the automobile industry—forty-five of them in General Motors proper—are the basis of this book. However, the long period covered in the story, the scale of the subject itself, and the limitations of human memory led me to base the story on the record as well as on my impressions of the past. I have also turned often to the memories of my associates. To bring all this into focus I have centered my thoughts on certain elements which seem to me to have influenced most importantly the evolution of the enterprise —broadly speaking, the origin and development of General Motors' scheme of decentralized organization, its financial controls, and its concept of the business as expressed in its approach to the intensely competitive automobile market. These three elements, as I see it, form the foundation of General Motors' way of doing business.
As to history, I have sketched the full span of General Motors' life, from its founding by the industrial genius W. C. Durant in 1908—and earlier events—to the present. But I have concerned myself mainly with the period after 1920, or what I have called the modern corporation, and more particularly the period from 1923 to 1946, when, as president and then chairman, I was chief executive officer of the corporation. In this period the corporation developed some of the basic characteristics which it has today. I have described the old, pre-1921 corporation to show what we began with when we set out to build the modern corporation.
As to autobiography, I have sketched my early history in the industry and the way I happened to come into the corporation in 1918. General Motors and the Hyatt Roller Bearing Company, an enterprise of which I was the head and part-owner before it became a part of United Motors Corporation and later of General Motors, have been almost the sole interests of my business life. Since joining the corporation I have been a substantial shareholder in it. For a long time I was one of its largest individual shareholders, with about 1 per cent of the common stock. Almost all of the fortune that this represents has gone and is going into the charitable foundation which bears my name, and from there into education and scientific research in medical and other fields.
Thus the shareholder's point of view is natural to me. I have always taken a strong stand for the shareholder, especially in such matters as representation on the board of directors and its committees, and the payment of dividends. Yet I have also considered myself as one of the breed that we now call the "executive." Management has been my specialization. On many occasions when I was chief executive officer I had individual responsibility for initiating policy. However, it is doctrine in General Motors that, while policy may originate anywhere, it must be appraised and approved by committees before being administered by individuals. In other words, General Motors has been a group management comprised of very competent individuals. And so I shall often say "we" instead of "I," and sometimes when I say "I," I may mean "we."
In accounting for the progress of General Motors a number of diverse elements must be recognized in the background. General Motors could hardly be imagined to exist anywhere but in this country, with its very active and enterprising people; its resources, including its science and technology and its business and industrial know-how; its vast spaces, roads, and rich markets; its characteristics of change, mobility, and mass production; its great industrial expansion in this century, and its system of freedom in general and free competitive enterprise in particular. Adapting to the distinctive character of the American automobile market has been a critical and rather complex element in General Motors' progress. If in turn we have contributed to the style of the United States as expressed in the automobile, this has been by interaction.
Consider, for example, that survival in the automobile industry in the United States has depended upon winning the favor of buyers of new cars each year. Part and parcel of this is the annual model, the spur to which the organization must respond or die. The urge to satisfy this requirement is the dynamism of General Motors. Many things regarding the progress of the enterprise and the industry fall into place through an understanding of the annual model— its origin and evolution, and the associated concept of upgrading cars, in which General Motors played a prominent role in contrast to the early Ford organization.
I cannot fail to note, too, that the automobile presented one of the greatest industrial opportunities in modern times. General Motors was fortunate to be in on the ground floor. From this thought has come the concept of the first two chapters dealing with the early period of General Motors. Furthermore, the automobile, by giving General Motors an intimate association with the development of the internal-combustion engine, enabled us logically to participate in the application of this type of prime mover to a variety of power needs, notably the airplane and the locomotive. Our growth has been almost exclusively in the mass production of vehicles powered by the internal-combustion engine. It will not come as a surprise to anyone that I am enthusiastic about General Motors and its performance. But I think I am objective in saying that General Motors has capitalized its historic opportunity to the satisfaction of the interests in and around the enterprise, from the shareholder and employees at one end to the consumer at the other.
However, being the largest of private industrial enterprises—with over one million shareholders, some 600,000 employees, $9.2 billion in assets, $14.6 billion in sales, and $1.46 billion in profits in 1962— is a distinction that sometimes makes the corporation a political target. I am glad to meet the issue of size, for to my mind the size of a competitive enterprise is the outcome of its competitive performance; and when it comes to making things like automobiles and locomotives in large numbers for a large home country and the world market, a large size is fitting. It should not be forgotten that the dollar value of these products is relatively high; even a "small" automobile producer may rank among the first hundred largest industrial corporations in the United States.
Growth, or striving for it, is, I believe, essential to the good health of an enterprise. Deliberately to stop growing is to suffocate. We have had examples of that in American industry. In the automobile industry, and in a number of others, the process of growth has given us large-scale enterprise, which is now characteristic of our society. We do things in a big way in the United States. I have always believed in planning big, and I have always discovered after the fact that, if anything, we didn't plan big enough. But I did not foresee the size of General Motors or have size in mind as an objective. I simply took the view that we should go at the job vigorously and without hampering restrictions. I put no ceiling on progress.
Growth and progress are related, for there is no resting place for an enterprise in a competitive economy. Obstacles, conflicts, new problems in various shapes, and new horizons arise to stir the imagination and continue the progress of industry. Success, however, may bring self-satisfaction. In that event, the urge for competitive survival, the strongest of all economic incentives, is dulled. The spirit of venture is lost in the inertia of the mind
against change. When such influences develop, growth may be arrested or a decline may set in, caused by the failure to recognize advancing technology or altered consumer needs, or perhaps by competition that is more virile and aggressive. The perpetuation of an unusual success or the maintenance of an unusually high standard of leadership in any industry is sometimes more difficult than the attainment of that success or leadership in the first place. This is the greatest challenge to be met by the leader of an industry. It is a challenge to be met by the General Motors of the future.
It should be clear from this that I do not regard size as a barrier. To me it is only a problem of management. My thoughts on that have always revolved around one concept which contains considerable complexity in theory and in reality—the concept that goes by the oversimplified name of decentralization. The General Motors type of organization—co-ordinated in policy and decentralized in administration—not only has worked well for us, but also has become standard practice in a large part of American industry. Combined with the proper financial incentive, this concept is the cornerstone of General Motors' organizational policy.
An essential aspect of our management philosophy is the factual approach to business judgment. The final act of business judgment is of course intuitive. Perhaps there are formal ways of improving the logic of business strategy, or policy making. But the big work behind business judgment is in finding and acknowledging the facts and circumstances concerning technology, the market, and the like in their continuously changing forms. The rapidity of modern technological change makes the search for facts a permanently necessary feature of the industry. That seems obvious, but some of the biggest changes of position in the industry came about in part because someone got an idea he thought was eternal.
It takes more than the structural design of an organization, however, to ensure sound management. No organization is sounder than the men who run it and delegate others to run it. They are in a position to tip the balance in a decentralized organization toward centralization and even one-man rule. General Motors' long-term survival depends upon its being operated in both the spirit and the substance of decentralization.
My Years With General Motors Page 1
