Alfred P. Sloan

The man behind GM General Motors

Under Sloan's direction, GM became the largest and most successful and profitable industrial enterprise the world had ever known. see Automobile Industry

Sloan is credited with establishing annual styling changes, from which came the concept of planned obsolescence. He also established a pricing structure in which (from lowest to highest priced) Chevrolet, Pontiac, Oldsmobile, Buick and Cadillac did not compete with each other, and buyers could be kept in the GM "family" as their buying power and preferences changed as they aged. These concepts, along with Ford's resistance to the change in the 1920s, propelled GM to industry sales leadership by the early 1930s, a position it retained for over 70 years.

Background

Sloan was born in New Haven, Connecticut, to wealthy parents. He was a great student, and went on to MIT. He studied electrical engineering and graduated from the Massachusetts Institute of Technology in 1892 (in just 3 years). Compared to Henry Ford, Sloan was seen as a "city boy from the East". Sloan took a job with a small company of 25 employees, and just $2000 in monthly sales (Hyatt Roller Bearing). When the company went through hard times, Sloans father helped them through. He became president of a Hyatt Roller Bearing a company that made roller and ball bearings in 1899. In 1916 his company merged (was purchased by) with United Motors Corporation which eventually became part of General Motors Corporation.

At the time, GM was a mess. Buick was making most of the money to subsidize the other divisions. This policy pissed off the great leaders of Buick (Charles Nash, and Walter Chrysler), both of whom left to start their own companies. Sloan later became Vice-President, then President (1923), and finally Chairman of the Board (1937) of GM.

A different kind of leader

As compared to Henry Ford, Sloan avoided publicity. He didn't have a public life, nor even much of a family life. He basically lived to work. A writer from "Fortune" described Sloan as "He displays an almost infectious enthusiasm for the facts. Never, in committee or out, does he give an order in the ordinary sense, saying "I want you to do this", rather he reviews the data and the sells an idea, pointing out "here is what could be done.", Brought to consider the facts in open discussion, all men, he feels, are on equal footing."

Keys to success

1. He recognized that marketing was just as important as manufacturing (in direct opposition to the philosophy of Henry Ford.

2. He offered financing to his customers and dealers (Ford) did not. Note, Ford was actually squeezing their dealers at this time because Ford had just taken his company private, and was short of financing.

3. He recognized the shift in consumers away from new car purchases to trade-ins.

4. He saw the value of having a "family" of products that consumers could upgrade as they became more wealthy, offering the entry level Pontiac, and upwards to the Oldsmobile, Buick, and finally the top - Cadillac.

5. He designed a business structure around people (the "multi-division" model) where individuals are concerned with both manufacturing and marketing of a product.

Legacy

**Business*

What Henry Ford was to physical production (revolution), Alfred Sloan did for management of business. Sloan was an innovator of business design.

• Philanthropy

• Education

The world's first university-based executive education program — the Sloan Fellows — was created in 1931 at MIT under the sponsorship of Sloan. A Sloan Foundation grant established the MIT School of Industrial Management in 1952 with the charge of educating the "ideal manager", and the school was renamed in Sloan's honor as the Alfred P. Sloan School of Management at MIT , one of the world's premier business schools. A second grant established a Sloan Fellows Program at Stanford Graduate School of Business in 1957. The program became the Stanford Sloan Master's Program in 1976, awarding the degree of Master of Science in Management. Sloan's name is also remembered in the Sloan-Kettering Institute and Cancer Centre in New York. In 1951, Sloan received The Hundred Year Association of New York's Gold Medal Award "in recognition of outstanding contributions to the City of New York."

Recommended reading

Sloan's autobiography - one of the best business books ever written.

Links

 Wikipedia article