The Way It Was: Alfred Sloan, General Motors

By February 3, 2008The Way It Was

The%20Way%20It%20Was.jpgNo chronicle of American industry can be complete without discussion of the pivotal role of Alfred Sloan.

Sloan joined General Motors as a vice president of operations in 1918. He found a management mess. Financial controls were nowhere to be seen. He was tasked to design an effective reorganization.

Sloan believed strongly in decentralization to promote initiative, responsibility, and development of personnel. He wanted flexibility and decisions close to the facts – coordinated from a strong central office. He ended up creating five car divisions – Buick, Cadillac, Chevrolet, Oldsmobile and Pontiac, each division aimed at different price ranges, each free to create new models.

The first year of Sloan’s reorganization was 1922 when GM sold 457,000 vehicles versus 215,000 the year before. The next year GM sold 800,000 cars. Sloan became President and CEO in 1923. By the late 1920s, GM had overtaken Ford in sales, in part because Ford stuck with the Model T and stopped offering new models.

Sloan’s focus on decentralization helped GM weather tough times. Sales dropped dramatically during the Great Depression, but GM made a profit and paid a dividend each year.

Sloan was ahead of his time in management philosophy which was collaborative and inclusive. “I got better results by selling my ideas than by telling people what to do,” he said.

Sloan build GM into the world’s largest corporation before he retired in 1956.

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