Management Gurus: Alfred Sloan. Part 5.
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Henry Ford’s ideas had worked very well in the early days of his company, but he had refused to move with the times. His Model T car had been such a success that he didn’t want to change it in any way. In fact, when one of his engineers showed him an improved model, Henry Ford kicked it until it fell to pieces! So in the years before the war, while GM was changing its cars every year, Ford was falling further and further behind.
Henry Ford’s ideas about management had also created problems. While Sloan was building an organization which accepted competition, Henry Ford was trying to increase his central control. Ford had spies everywhere in the company who told him about any new ideas or plans. The result was that his managers were afraid of taking any decisions.
Nothing really changed when Henry Ford’s son, Edsel, replaced him as boss of the company and when Edsel died in 1944, the Ford Motor Company was in serious trouble. Its next boss was Henry Ford’s grandson, Henry Ford II. He was just twenty-six years old and had no experience of the car business. He hadn’t even finished his university education.
For General Motors it seemed like a great opportunity. It was a chance for them to finish their biggest competitor. But Alfred Sloan didn’t see it that way.
A successful business needs strong competition,’ he said. He was also worried about the US government. What would it do if GM became too big and too powerful? Sloan decided, secretly, to help Henry Ford II whenever he could. He even arranged for him to employ some of GM’s best managers.
Ford was soon a strong company again and, as Alfred Sloan had thought, GM grew stronger because of the competition. The years after the war were great times for the US car business.
In the 1920s Sloan had said that GM should make changes to its cars every year. He wanted people to buy a new car not because it didn’t work any more, but because it had gone out of fashion. The result was that GM added more and more new details to its cars and they started to look stranger and stranger.
In the 1940s and 1950s, the person responsible for the look of GM’s cars was a man called Harley Earl. He had started his working life in Los Angeles, where he created cars for Hollywood films. When he moved to General Motors, he brought his showbusiness attitude with him. While most managers at General Motors wore a white shirt and a blue suit, Earl always arrived at the office in a white suit and a blue shirt. His ideas for GM’s cars were just as crazy.
Earl wasn’t worried about safety or speed, he only cared about style. GM’s cars got longer and lower. They also got heavier as he added more and more things, like special lights and shiny metal handles. He even copied parts of planes and spaceships and put them on to GM’s new cars. By the end of the 1950s, a GM Cadillac had two large tails on the back and swept through the streets of US cities like a machine from another world.
Of course, many people criticized them. The leader of the Soviet Union, Nikita Kruschev, couldn’t understand them at all.
‘What do these things do?’ he asked, when he saw a GM car for the first time.
US religious leaders hated them.
‘Who are the madmen who build these cars?’ asked one of them.
A Ford manager described a GM car of the time as ‘a piece of soap with wheels on’.
But the American people loved them. They were the cars of the American dream. Films were made about them. Pop stars like Eddie Cochran sang songs about them. General Motors was not just the biggest, it was not just the richest, it was also the most famous company in the world.
In the years to come, General Motors started to face problems. Alfred Sloan’s method of organization meant that managers spent a long time in meetings and that the company often took decisions slowly. Until the end of the 1960s this hadn’t been a special problem. But as the speed of business life got faster, GM sometimes found that it was too slow to solve the problems and take the opportunities of the modern world. Its huge beautiful cars were also expensive and used too much petrol. When the price of petrol rose suddenly in the early 1970s, more and more people started driving smaller cheaper cars from Japan.
But when Alfred Sloan died in 1966 that was all in the future. When people looked back on his life at that time, few could find fault with his leadership of General Motors. He had controlled the direction of the company and its finances, and he had also allowed its car companies to work as separate organizations. He had introduced the idea of the manager as a professional, like a doctor or a dentist, who puts facts before emotions when taking a decision. He had also thought about the market in a new way. Before Sloan, people thought that they simply had to sell the right product to the right people; after Sloan, people realized that a new product creates a new market.
Everyone agreed that Sloan had been the perfect company man.
Go back to Part 4