My Years With General Motors

by Alfred P. Sloan Jr.

  Rather than try to give the picture wholly through recollection, in which it might well be supposed that I would share in the human failing of making it seem more logical than it was, I shall quote here at length a proposal—the key statement, I believe, in the whole affair—which I wrote and circulated to a number of executives of the corporation and obtained approval of during September 1923:

  I have felt for a long time past that if a proper plan could be developed that would have the support of all those interested that a great deal could be gained for the Corporation by co-operation of an engineering nature between our various Operations, particularly our Car Divisions, dealing as they do in so many problems having the same general characteristics. Activities of this type have already been started in the way of purchasing and have been very helpful and I am confident that as time goes on will be justified in a great many different ways beside [s] resulting in very material profit to the Corporation. The activities of our Institutional Advertising Committee have been constructive and Mr. du Pont remarked to me the other day after one of those meetings that even if it was assumed that the value of the advertising was negligible the other benefits accruing to the Corporation by the development of a General Motors atmosphere and the working together spirit of all members of the Committee representing the various phases of the Corporation's activities . . . the cost was well justified. I am quite confident that we all agree as to these principles and assuming that is the case and there is no reason why the same principle does not apply to engineering, it appears to me to be well worth a serious attempt to put the principle into practical operation. I am thoroughly convinced that it can be made a wonderful success. I believe, therefore, that we should at this time establish what might be termed a General Technical Committee which Committee would have certain powers and functions which should be broadly defined at the start and amplified in various ways as the progress of the work seems to justify.

  Before attempting to outline even the general principles upon which I believe a start could be made, I think it should be very clearly set forth and distinctly understood by all that the functions of this Committee would not in any event be to deal with the specific engineering activities of any particular Operation. According to General Motors plan of organization, to which I believe we all heartily subscribe, the activities of any specific Operation are under the absolute control of the General Manager of that Division, subject only to very broad contact with the general officers of the Corporation. I certainly do not want to suggest a departure even to the slightest degree from what I believe to be so thoroughly sound a type of organization. On the contrary I do believe and have believed for a long time that one of the great problems that faces the General Motors Corporation was to add to its present plan of organization some method by which the advantages of the Corporation as a whole could be capitalized to the further benefit of the stockholders. I feel that a proper balance can and must necessarily be established in the course of time between the activities of any particular Operation and that of all our Operations together and as I see the picture at the moment no better way or even as good a way has yet been advanced as to ask those members of each organization who have the same functional relationship to get together and decide for themselves what should be done where coordination is necessary, giving such a group the power to deal with the problem where it is felt that the power can be constructively applied. I believe that such a plan properly developed gives the necessary balance between each Operation and the Corporation itself and will result in all the advantages of co-ordinated action where such action is of benefit in a broader way without in any sense limiting the initiative of independence of action of any component part of the group.

  Assuming that this is correct in principle, I might set forth specifically what the functions in the case of the General Technical Committee would be, although this discussion would, I think, apply equally well to other Committees dealing with all functions common to all manufacturing enterprises.

  1. The Committee would deal in problems which would be of interest to all Divisions and would in dealing with such matters largely formulate the general engineering policies of the Corporation.

  2. The Committee would assume the functions of the already constituted Patent Committee which would be discontinued and in assuming these functions would have the authority to deal with patent matters, already vested in the Patent Committee.

  3. The Committee would not, as to principle, deal with the specific problems of any individual Operation. Each function of that Operation would be under the absolute control of the General Manager of that Division.

  It is to be noted that the functioning of the Patent Section, Advisory Staff, differs materially from that of any other staff activity and is in a sense an exception to General Motors plan of organization in the fact that all patent problems come directly under the control of the Director of the Patent Section. In other words, all patent work is centralized. The Patent Procedure provides, however, for an Inventions Committee and for co-operation with the Director of the Patent Section and the dividing under certain conditions of responsibility in patent matters. In view of the fact that the personnel of the Inventions Committee must necessarily largely parallel that of the General Technical Committee it is thought advisable to consolidate the two for the sake of simplification.

  There is also to be considered the functions of the General Motors Research Corporation at Dayton. I feel that up to the present time the [General Motors] Corporation has failed to capitalize what might be capitalized with a proper system of administration, the advantages that should flow from an organization such as we have at Dayton. In making this statement I feel that there are a number of contributing causes, the most important being a lack of proper administrative policy or, I might say, a lack of getting together which it is hoped that this program will provide not only, as just stated, for better co-ordination with the Research Corporation but better co-ordination also among the Operating Divisions themselves. I believe that we would all agree that many of our research and engineering problems in Dayton can only be capitalized through the acceptance and commercializing of same by the Operating Divisions. I fully believe that a more intimate contact with what the Research Corporation is trying to do will be all that is necessary to effect the desired result and strengthen the whole engineering side of the entire [General Motors] Corporation.

  It is my idea that the General Technical Committee should be independent in character and in addition to developing through its Secretary, as hereafter described, a program for its meetings, which it is believed would be helpful and beneficial to all the members of the Committee, would conduct studies and investigations of such a character and scope as its judgment would dictate as desirable and for that purpose would use the facilities of the Research Corporation or of any Operating Division or of any outside source that in its judgment would lead to the most beneficial result. Projects of this character would be presented to the Committee by any member of the Committee itself, by the Research Corporation or by any member of the General Motors Corporation through the Committee's Secretary. Beginning January 1, 1924 the cost of operating the General Motors Corporation will be under the control of a budget system and funds will be provided in that budget to cover this purpose.

  I have presented the above ideas at an Operations Committee meeting of which all the General Managers of the Car Divisions primarily interested in this matter and the Group Vice Presidents are members and they all seemed to think that the step was a constructive one and would have the support of all.

  In order, therefore, that all the above may be crystallized in a few principal points which will be sufficient to form a starting point, I propose the following:—

  1. That co-operation shall be established between the Car Divisions and the Engineering Departments within the Corporation, including the engineering and research activities of the General Motors Research Corporation and that co-operation shall take the form of a
Committee to be established to be termed the General Technical Committee.

  2. The Committee will consist as to principle, of the Chief Engineers of each Car Division and certain additional members . . .

  Thus formed, the General Technical Committee became the highest advisory body on engineering in the corporation. It brought together the very persons who had parted over the copper-cooled engine: the divisional chief engineers, including, notably, Mr. Hunt; staff engineers, including, notably, Mr. Kettering; and a number of the general officers of the corporation, including myself as the committee's chairman. It was, as my proposal stated, an independent staff organization with its own secretary and budget. It held its first meeting on September 14, 1923. I was pleased to sit among those fine men—Mr. Kettering, who had the research responsibility; Mr. Hunt, who had a production-engineering responsibility at Chevrolet; Henry Crane, who was my assistant on engineering matters; and the others— all of whom met in a friendly atmosphere and entered afresh into the future development of the automobile.

  The General Technical Committee raised the prestige of the engineering group in the corporation and supported its efforts to acquire more adequate facilities and personnel. Its activities emphasized the importance of product integrity as the basic requirement for the future success of the business. It had a remarkable effect in stimulating interest and action everywhere in the corporation in matters of product appeal and product improvement, and produced a free exchange of new and progressive ideas and experience among division engineers. In short, it co-ordinated information.

  A number of specific functions were given to the General Technical Committee. For a while it dealt with patent matters, but these were soon turned over to a special New Devices Committee. More important was the committee's role as a kind of board of directors of the great new Proving Ground that we built at Milford, Michigan. Testing had clearly become a crucial question for the future of our products. The Proving Ground, with its controlled conditions, was the logical step away from testing on public roads, which the industry up to that time had practiced. The committee saw to it that the Proving Ground developed standardized test procedures and measuring equipment, and that it became the corporation's center for making independent comparisons of division products and the products of competition. Although engine testing was not assigned to the Proving Ground, the committee was charged with developing an engine test code that would produce uniformity in the engine testing practices of the various divisions.

  And yet the General Technical Committee was the mildest kind of organization. Its most important role was that of a study group. It got to be known as a seminar. Its meetings usually were opened with the reading of one or two papers on a specific engineering problem or device, and these would then be the center of a general discussion. Sometimes the committee's discussion would conclude with the approval of a new device or method, or a recommendation on engineering policy and procedure, but more often the results were simply that information was transmitted from one to all. The members returned to their divisions with a broader understanding of new developments and current problems of automotive engineering and with knowledge of what their associates in other areas of the corporation were doing.

  In its reports, papers, and discussions the General Technical Committee studied such short-range engineering problems as those concerning brakes, fuel consumption, lubrication, changes required in the steering mechanism as a result of the development of four wheel brakes and "balloon" tires (this led to a subcommittee conferring with the rubber companies) , and the condensation of products of combustion that resulted in internal rust and oil sludge (which was finally eliminated by proper crankcase ventilation) . In 1924 and 1925 the committee gave attention to the education of the dealers and sales departments on the advertising and sales value of current engineering developments. I asked the committee to develop a series of criteria by which "car value" of the different makes and models might be objectively determined. In 1924, too, I gave the committee the task of setting up the broad specifications of the different cars to assist in our efforts to keep the several General Motors' cars distinct and separate products and in a proper price and cost relationship to one another.

  Mr. Kettering's staff made most of the long-range investigations and submitted most of the reports during the early years of the committee. They discussed such matters as control of cylinder-wall temperature, cylinder heads, sleeve-valve engines, intake manifolds, tetraethyl lead for gasoline, and transmissions. Fundamentally the subject matters were fuels and metallurgy, the two areas which have furnished the most important improvements in the performance of the automobile since that time.

  A meeting on September 17, 1924, in which the subject of transmissions was considered, is a good example of the committee at work. I rely on the minutes for this description. Mr. Kettering began by describing the relative merits and demerits of various types of transmissions. This was followed by a long discussion on the practicality of the inertia-type transmission from an engineering standpoint. Mr. Hunt discussed the different types from the "commercial angle." The growing traffic problem, he said, was calling for a car which "has real acceleration, and in addition it has to have real brakes." After some give and take around the table, I closed this part of the meeting by saying: "I take it that the sentiment of the Committee is something like this: First, that we should look to the ultimate, which is directly a Research problem, and that the inertia type [transmission] is the one which offers the greatest possibilities. (Note 7-1.) This being strictly a Research problem, should not the Committee charge Mr. Kettering with doing everything possible toward its development? . . . Second, for the present we must have minimum inertia and minimum friction in our clutch and transmission elements at our various divisions, and this problem is their own."

  In such manner we separated the function of the Research Corporation from that of the divisions. The divisions in those days, however, also had long-term projects; Chevrolet, for example, developed a six-cylinder low-priced car.

  That summer I wrote Mr. Kettering about a session of the Technical Committee in Oshawa, Canada. This passage gives the general idea:

  . . . We had a splendid meeting not only so far as the meeting itself went but the boys stayed over Saturday and some of them Sunday and some went fishing and others played golf and that helps a lot in bringing men who are thinking in the same direction, more closely together. I can't help but feel, considering the magnitude of our picture and all that sort of thing, that this co-operation in engineering is working out just splendidly. We must be patient, but I am sure that as time goes on we are going to be fully repaid for the way we have handled it as compared with a more military style which I do not think would have ever put us anywhere.

  The inter-divisional committee, tried in a rudimentary way in purchasing and advertising, and applied more intensively in the General Technical Committee, was the first big idea for co-ordination in the corporation. We went on from the General Technical Committee to apply the concept to most of the principal functional activities of the divisions. The next inter-divisional committee to be formed was in sales. The sales area was relatively unexplored, for the industry in the mid-twenties for the first time had entered its commercial phase. I therefore arranged to set up the General Sales Committee, made up of the sales managers of the car and truck divisions, sales-staff members, and general officers of the corporation. As its chairman, I opened its first meeting on March 6, 1924, with the following remarks:

  While General Motors is definitely committed to a decentralized plan of operation, it is nevertheless obvious that from time to time general plans and policies beneficial to the Corporation and its stockholders, as well as to the individual divisions, can best be accomplished through concerted effort.

  The necessity for concerted action on the broader phases of our activities is emphasized by the likelihood of some of our competitors merging their interests—perhaps in the near future. This, as you know, is t
he trend of the industry. Narrowing profits will add impetus to such a tendency and under the highly competitive conditions of the near future we may expect a decidedly different situation in the field.

  General Motors, as you know, has made quite a lot of progress in lining up its products into different price groups, which, relatively speaking, are non-competitive. From the standpoint of design and manufacture we have, through the cooperation of our Division Managers and Engineers, made wonderful progress in the direction of coordination.

  Much is to be gained through a similar coordination of sales activities. I think that we, in General Motors, have all got to recognize that the "neck of the bottle" is going to be the sales end. This is perfectly natural in any industry; it eventually gets down to the sales end, and certainly the automotive industry is beginning to reach that period— if it has not already arrived.

  It is our idea that this Committee will take in hand all those major sales problems which [a] fleet the Corporation as a whole. It is your Committee. You can feel perfectly free to bring up any sales problems that seem to require general discussion and concerted effort. Whatever general policies or actions you may decide upon will be fully supported by the parent Corporation.