Alfred P. Sloan
Encyclopedia
Alfred Pritchard Sloan, Jr. (May 23, 1875 – February 17, 1966) was an American business executive
in the automotive industry
. He was a long-time president
, chairman, and CEO of General Motors Corporation
. Sloan, first as a senior executive and later as the peak of the organization, helped lead (and grow) GM from the 1920s through the 1950s—decades when concepts such as the annual model change, brand architecture
, industrial design
, automotive design
(styling), and planned obsolescence
transformed the industry, and when the industry changed lifestyles and the built environment
in America and throughout the world.
Sloan's memoir, My Years with General Motors, written in the 1950s but withheld from publishing until an updated version was finally released in 1964, exemplified Sloan's vision of the professional manager and the carefully engineered corporate structure in which he worked. It is considered one of the seminal texts in the field of modern management education, although the state of the art in management science has grown greatly in the half century since.
Sloan is remembered for being a rational, shrewd, and very successful manager, who led GM to become the largest corporation on earth, a position it held for many years after his death. His rationality and shrewdness are also remembered by his critics as extending even to cold, plutocratic detachment or avarice. However, the magnitude of Sloan's philanthropy
suggests that he saw himself differently—a man with greater talents and greater responsibilities than others, who was thus entitled to authority but also obligated to, and committed to, beneficence.
Sloan and the management of GM in the 1930s and early 1940s—the time of the Great Depression
, German re-armament
, fascism
, appeasement
, and World War II
—are part of a larger narrative, tinged with dark elements, about the rapidly growing phenomenon of the truly multinational corporation
, which was still rather novel at the time. GM in America, as a corporate parent to Adam Opel AG
, its German subsidiary, is remembered today for being cozy with Nazism
and for profiting from German re-armament—right up until the attack on Pearl Harbor
, when Germany (via its Axis with Japan) finally became a "real enemy". The war showed how nationality
was not irrelevant to multinational corporations, as the national governments on both sides of the Allied–Axis divide used the industrial capacity of GM and Vauxhall
(Allies) and Opel (Axis) to churn out materiel
for their war efforts. Sloan's role in the 1933-1941 era, as a conservative industrialist with a dim view of the New Deal
and a conspicuously amoral view of German "achievement" under Adolf Hitler
, has generated controversy ever since.
Like Henry Ford
—a contemporary of Sloan with a rather special relationship to him as the other "head man" of an automotive colossus—Sloan is remembered today with a complex mixture of admiration for his accomplishments, appreciation for his philanthropic legacy, and unease or reproach about his attitudes during the interwar period
and World War II.
. He studied electrical engineering
and graduated from the Massachusetts Institute of Technology
in 1895. While attending MIT he joined the Delta Upsilon
fraternity.
He became president and owner of Hyatt Roller Bearing, a company that made roller and ball bearings
, in 1899. Many automakers (large and small) sourced bearings from Hyatt during the next 1.5 decades. In 1916 Hyatt merged with other companies into United Motors Company
, which soon became part of General Motors Corporation. Sloan became Vice-President of GM, then President (1923), and finally Chairman of the Board (1937). In 1934, he established the philanthropic, nonprofit Alfred P. Sloan Foundation
. GM under Sloan became famous for managing diverse operations with financial statistics such as return on investment; these measures were introduced to GM by Donaldson Brown
, a protege of GM vice-president John J. Raskob
. Raskob came to GM as an advisor to Pierre S. du Pont
and the du Pont
corporation; the latter was a principal investor in GM whose executives largely ran GM in the 1920s.
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
—referred to as the ladder of success—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. Under Sloan's direction, GM became the largest industrial enterprise the world had ever known.
In the 1930s GM, long hostile to unionization, confronted its workforce, newly organized and ready for labor rights, in an extended contest for control. Sloan was averse to violence of the sort associated with Henry Ford
. He preferred the subtle use of spying and had built up the best undercover apparatus the business community had ever seen up to that time. When the workers organized the massive Flint Sit-Down Strike
in 1936, Sloan found that espionage had little value in the face of such open tactics.
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
, one of the world's premier business schools. Additional grants established a Sloan Institute of Hospital Administration Sloan Program in Health Administration in 1955 at Cornell University Cornell University
-the first two year graduate program of its type in the US, a Sloan Fellows
Program at Stanford Graduate School of Business
in 1957, and at London Business School
in 1965. They became degree programmes in 1976, awarding the degree of Master of Science in Management. Sloan's name is also remembered in the Sloan-Kettering Institute and Cancer Center
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."
The Alfred P. Sloan Museum, showcasing the evolution of the automobile industry and traveling galleries, is located in Flint, MI.
Sloan maintained an office in 30 Rockefeller Plaza in Rockefeller Center
, now known as the GE Building
. He retired as GM chairman on April 2, 1956. His memoir and management treatise, My Years with General Motors, was more or less finished around this time; but its publication was held up for nearly a decade longer by GM's legal staff, who feared that it would be used to support an antitrust
case against GM. It was finally published in 1964. Sloan died in 1966.
Sloan was inducted into the Junior Achievement
U.S. Business Hall of Fame in 1975.
non-profit organization
established by Sloan in 1934. The Foundation's programs and interests fall into the areas of science
and technology
, standard of living
, economic performance
, and education and careers in science and technology. The total assets of the Sloan Foundation have a market value of about $1.8 billion.
The Sloan Foundation bankrolled the 1956 Warner Bros.
cartoon Yankee Dood It
, which promotes mass production.
According to Edwin Black
, Sloan was one of the central, behind-the-scenes founders of the American Liberty League
, a political organization whose goal it was to defend the constitution. In turn, the League would finance other groups with openly more extreme agendas. One such group was the Sentinels of the Republic
to which Sloan himself made a $1000 check. After a Congressional investigation into this group went public in 1936, Sloan issued a statement pledging not to further support the Sentinels.
Also according to Black, the GM chief continued to personally fund and organize fund-raising for the National Association of Manufacturers
, which was critical of the New Deal.
The Sloan Foundation has made two grants, of USD 3 million each, to the Wikimedia Foundation
(WMF). These are some of the largest grants that the WMF has received.
In fact, Sloan's memoir and management treatise, My Years With General Motors, foresaw some of these problems. About them, Sloan implied that only vigilant, intelligent management could meet them successfully. He predicted that remaining at the top [of its industry and the economy] would prove a bigger challenge for GM than was getting there; and it turned out that he was right. But he also seemed confident that the management style of GM under his leadership, if continued and adapted, could meet these challenges. He said, "There have been and always will be many opportunities to fail in the automobile industry. The circumstances of the ever-changing market and ever-changing product are capable of breaking any business organization if that organization is unprepared for change—indeed, in my opinion, if it has not provided procedures for anticipating change. [¶] In General Motors these procedures are provided by the central management, which is in a position to appraise the broad long-term trends of the market. […] As the industry has grown and evolved, we have adhered to this policy and have demonstrated an ability to meet competition and the shifts of customer demand." As these words of Sloan 1964 show in juxtaposition with the words of Drucker 1946, Sloan (and his fellow GM executives) never agreed with Drucker on the lessons that Drucker drew from his study of GM management during the war. However, unlike many GM executives, Sloan did not put Drucker on his blacklist for writing the 1946 book; Drucker, in his new introduction [foreword] for the 1990 republishing of Sloan's memoir, said, "When his associates attacked me in a meeting called to discuss the book, Sloan immediately rose to my defense. 'I fully agree with you,' he said to his colleagues. 'Mr. Drucker is dead wrong. But he did precisely what he told us he would do when we asked him in. And he is as entitled to his opinions, wrong though they are, as you or I.'" Drucker related that for 20 years after that meeting, Sloan and Drucker had a good relationship, in which Sloan would invite Drucker to lunch once or twice a year to discuss Sloan's philanthropic plans and the memoir that Sloan was working on assembling (what became My Years). Drucker said, "He asked for my opinions and carefully listened—and he never once took my advice." History seems to have vindicated Drucker in his belief that Sloan's faith in rationality alone—and in the ability of other white-collar managers to be as astute as he himself was in using his style of instruments to keep the ship out of the shoals, as it were—was overardent. In the end, 40 years later, the entitled old men of the management and board of directors who had run the original General Motors Corporation into the ground by 2009 were not "in a position to appraise the broad long-term trends of the market"—or were in that position, perhaps, but not doing the job successfully therein.
O'Toole described Sloan's style as follows: "[W]hereas Taylor
occasionally backs off to justify his ardor for efficiency in human terms, not once does Sloan make reference to any other values. Freedom, equality, humanism, stability, community, tradition, religion, patriotism, family, love, virtue, nature—all are ignored. In the one personal element in the book, he makes passing reference to his wife: he abandons her on the first day of a European vacation to return to business in Detroit. His language is as calculating as that of the engineer-of-old working with calipers and slide rule, as cold as the steel he caused to be bent to form cars: economizing, utility, facts, objectivity, systems, rationality, maximizing—that is the stuff of his vocabulary."
system that prevents the implementation of lean manufacturing
methods. Essentially, the criticism is that by using Sloan's methods a company will value inventory just the same as cash, and thus there is no penalty for building up inventory. Carrying excessive inventory is detrimental to a company's operation and induces significant hidden costs. This criticism must be viewed in the context that it is provided in hindsight. During the period in which Sloan advocated carrying what would now be considered excess inventory, the industrial and transportation infrastructure would not support what is now known as just-in-time inventory. During this period, the auto industry experienced indredible growth as the public eagerly sought to purchase this life-changing utility known as the automobile. The cost of lost sales due to lack of inventory was likely greater than the cost of carrying excess inventory. Sloan's system seems to have been widely adopted because of its significant advancement over previous methods. In his memoir, Sloan (who would freely acknowledge that he was not a trained accountant) said that the system that he implemented in the early 1920s was far better than what it replaced (which was, in so many words, an undesigned cacophony in which financial controls mostly didn't exist). He said that years later, a professional accountant (Albert Bradley, longtime CFO
of GM) "was kind enough to say [that it] was pretty good for a layman." Sloan was far from the sole author of GM's financial and accounting systems, as GM later had many trained minds in accounting and finance; but regardless of authorship, GM's financial controls—at one time considered top-notch—eventually proved to have latent drawbacks. Systems similar to GM's were implemented by other major companies, especially in the United States, and they eventually undermined the ability to compete with companies that used different accounting, according to Waddell & Bodek's 2005 analysis.
Sloan's memoir, particularly Chapter 8, "The development of financial controls", indicates that Sloan and GM appreciated the financial dangers of excess inventory even as early as the 1920s. However, Waddell & Bodek's 2005 analysis indicates that this theory was not successfully implemented in GM's practice. For all of the intellectual understanding, the reality remained slow inventory turnover and an accounting system that functionally treated inventory similarly to cash.
During Sloan's leadership of GM, many public transport systems of tram
s in the US were replaced by bus
es in what became known as the Great American streetcar scandal. Some critics, such as Edwin Black
, claim that Sloan was also instrumental in the demise of public city transport streetcar throughout the United States GM was found guilty of violating anti-trust laws, but the penalties imposed were nugatory, even for the time: a $5,000 fine for the company and $1 fines for each convicted executive.
Executive officer
An executive officer is generally a person responsible for running an organization, although the exact nature of the role varies depending on the organization.-Administrative law:...
in the automotive industry
Automotive industry
The automotive industry designs, develops, manufactures, markets, and sells motor vehicles, and is one of the world's most important economic sectors by revenue....
. He was a long-time president
President
A president is a leader of an organization, company, trade union, university, or country.Etymologically, a president is one who presides, who sits in leadership...
, chairman, and CEO of General Motors Corporation
General Motors
General Motors Company , commonly known as GM, formerly incorporated as General Motors Corporation, is an American multinational automotive corporation headquartered in Detroit, Michigan and the world's second-largest automaker in 2010...
. Sloan, first as a senior executive and later as the peak of the organization, helped lead (and grow) GM from the 1920s through the 1950s—decades when concepts such as the annual model change, brand architecture
Brand architecture
Brand architecture is the structure of brands within an organizational entity. It is the way in which the brands within a company’s portfolio are related to, and differentiated from, one another...
, industrial design
Industrial design
Industrial design is the use of a combination of applied art and applied science to improve the aesthetics, ergonomics, and usability of a product, but it may also be used to improve the product's marketability and production...
, automotive design
Automotive design
Automotive design is the profession involved in the development of the appearance, and to some extent the ergonomics, of motor vehicles or more specifically road vehicles. This most commonly refers to automobiles but also refers to motorcycles, trucks, buses, coaches, and vans...
(styling), and planned obsolescence
Planned obsolescence
Planned obsolescence or built-in obsolescence in industrial design is a policy of deliberately planning or designing a product with a limited useful life, so it will become obsolete or nonfunctional after a certain period of time...
transformed the industry, and when the industry changed lifestyles and the built environment
Built environment
The term built environment refers to the human-made surroundings that provide the setting for human activity, ranging in scale from personal shelter and buildings to neighborhoods and cities that can often include their supporting infrastructure, such as water supply or energy networks.The built...
in America and throughout the world.
Sloan's memoir, My Years with General Motors, written in the 1950s but withheld from publishing until an updated version was finally released in 1964, exemplified Sloan's vision of the professional manager and the carefully engineered corporate structure in which he worked. It is considered one of the seminal texts in the field of modern management education, although the state of the art in management science has grown greatly in the half century since.
Sloan is remembered for being a rational, shrewd, and very successful manager, who led GM to become the largest corporation on earth, a position it held for many years after his death. His rationality and shrewdness are also remembered by his critics as extending even to cold, plutocratic detachment or avarice. However, the magnitude of Sloan's philanthropy
Philanthropy
Philanthropy etymologically means "the love of humanity"—love in the sense of caring for, nourishing, developing, or enhancing; humanity in the sense of "what it is to be human," or "human potential." In modern practical terms, it is "private initiatives for public good, focusing on quality of...
suggests that he saw himself differently—a man with greater talents and greater responsibilities than others, who was thus entitled to authority but also obligated to, and committed to, beneficence.
Sloan and the management of GM in the 1930s and early 1940s—the time of the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
, German re-armament
German re-armament
The German re-armament was a massive effort led by the NSDAP in the early 1930s in violation of the Treaty of Versailles.During its struggle for power the National Socialist party promised to recover Germany's lost national pride...
, fascism
Fascism
Fascism is a radical authoritarian nationalist political ideology. Fascists seek to rejuvenate their nation based on commitment to the national community as an organic entity, in which individuals are bound together in national identity by suprapersonal connections of ancestry, culture, and blood...
, appeasement
Appeasement
The term appeasement is commonly understood to refer to a diplomatic policy aimed at avoiding war by making concessions to another power. Historian Paul Kennedy defines it as "the policy of settling international quarrels by admitting and satisfying grievances through rational negotiation and...
, and World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
—are part of a larger narrative, tinged with dark elements, about the rapidly growing phenomenon of the truly multinational corporation
Multinational corporation
A multi national corporation or enterprise , is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation...
, which was still rather novel at the time. GM in America, as a corporate parent to Adam Opel AG
Opel
Adam Opel AG, generally shortened to Opel, is a German automobile company founded by Adam Opel in 1862. Opel has been building automobiles since 1899, and became an Aktiengesellschaft in 1929...
, its German subsidiary, is remembered today for being cozy with Nazism
Nazism
Nazism, the common short form name of National Socialism was the ideology and practice of the Nazi Party and of Nazi Germany...
and for profiting from German re-armament—right up until the attack on Pearl Harbor
Attack on Pearl Harbor
The attack on Pearl Harbor was a surprise military strike conducted by the Imperial Japanese Navy against the United States naval base at Pearl Harbor, Hawaii, on the morning of December 7, 1941...
, when Germany (via its Axis with Japan) finally became a "real enemy". The war showed how nationality
Nationality
Nationality is membership of a nation or sovereign state, usually determined by their citizenship, but sometimes by ethnicity or place of residence, or based on their sense of national identity....
was not irrelevant to multinational corporations, as the national governments on both sides of the Allied–Axis divide used the industrial capacity of GM and Vauxhall
Vauxhall Motors
Vauxhall Motors is a British automotive company owned by General Motors and headquartered in Luton. It was founded in 1857 as a pump and marine engine manufacturer, began manufacturing cars in 1903 and was acquired by GM in 1925. It has been the second-largest selling car brand in the UK for...
(Allies) and Opel (Axis) to churn out materiel
Materiel
Materiel is a term used in English to refer to the equipment and supplies in military and commercial supply chain management....
for their war efforts. Sloan's role in the 1933-1941 era, as a conservative industrialist with a dim view of the New Deal
New Deal
The New Deal was a series of economic programs implemented in the United States between 1933 and 1936. They were passed by the U.S. Congress during the first term of President Franklin D. Roosevelt. The programs were Roosevelt's responses to the Great Depression, and focused on what historians call...
and a conspicuously amoral view of German "achievement" under Adolf Hitler
Adolf Hitler
Adolf Hitler was an Austrian-born German politician and the leader of the National Socialist German Workers Party , commonly referred to as the Nazi Party). He was Chancellor of Germany from 1933 to 1945, and head of state from 1934 to 1945...
, has generated controversy ever since.
Like Henry Ford
Henry Ford
Henry Ford was an American industrialist, the founder of the Ford Motor Company, and sponsor of the development of the assembly line technique of mass production. His introduction of the Model T automobile revolutionized transportation and American industry...
—a contemporary of Sloan with a rather special relationship to him as the other "head man" of an automotive colossus—Sloan is remembered today with a complex mixture of admiration for his accomplishments, appreciation for his philanthropic legacy, and unease or reproach about his attitudes during the interwar period
Interwar period
Interwar period can refer to any period between two wars. The Interbellum is understood to be the period between the end of the Great War or First World War and the beginning of the Second World War in Europe....
and World War II.
Biography
Sloan was born in New Haven, ConnecticutNew Haven, Connecticut
New Haven is the second-largest city in Connecticut and the sixth-largest in New England. According to the 2010 Census, New Haven's population increased by 5.0% between 2000 and 2010, a rate higher than that of the State of Connecticut, and higher than that of the state's five largest cities, and...
. He studied electrical engineering
Electrical engineering
Electrical engineering is a field of engineering that generally deals with the study and application of electricity, electronics and electromagnetism. The field first became an identifiable occupation in the late nineteenth century after commercialization of the electric telegraph and electrical...
and graduated from the Massachusetts Institute of Technology
Massachusetts Institute of Technology
The Massachusetts Institute of Technology is a private research university located in Cambridge, Massachusetts. MIT has five schools and one college, containing a total of 32 academic departments, with a strong emphasis on scientific and technological education and research.Founded in 1861 in...
in 1895. While attending MIT he joined the Delta Upsilon
Delta Upsilon
Delta Upsilon is the sixth oldest international, all-male, college Greek-letter organization, and is the oldest non-secret fraternity in North America...
fraternity.
He became president and owner of Hyatt Roller Bearing, a company that made roller and ball bearings
Rolling-element bearing
A rolling-element bearing, also known as a rolling bearing, is a bearing which carries a load by placing round elements between the two pieces...
, in 1899. Many automakers (large and small) sourced bearings from Hyatt during the next 1.5 decades. In 1916 Hyatt merged with other companies into United Motors Company
United Motors Company
ACDelco is an American automotive parts company. Over its long history it has been known by various names such as United Motors Corporation, United Motors Service, United Delco, merged with AC Spark Plug and known as AC-Delco....
, which soon became part of General Motors Corporation. Sloan became Vice-President of GM, then President (1923), and finally Chairman of the Board (1937). In 1934, he established the philanthropic, nonprofit Alfred P. Sloan Foundation
Alfred P. Sloan Foundation
The Alfred P. Sloan Foundation is a philanthropic non-profit organization in the United States. It was established in 1934 by Alfred P. Sloan, Jr., then-President and Chief Executive Officer of General Motors.-Overview:...
. GM under Sloan became famous for managing diverse operations with financial statistics such as return on investment; these measures were introduced to GM by Donaldson Brown
Donaldson Brown
Frank Donaldson Brown was a financial executive and corporate director with both DuPont and General Motors Corporation. He graduated from Virginia Tech in 1902 with a Bachelor of Science degree in Electrical Engineering...
, a protege of GM vice-president John J. Raskob
John J. Raskob
John Jakob Raskob, KCSG was a financial executive and businessman for DuPont and General Motors, and the builder of the Empire State Building. He was chairman of the Democratic National Committee from 1928 to 1932 and a key supporter of Alfred E. Smith's candidacy for President of the United...
. Raskob came to GM as an advisor to Pierre S. du Pont
Pierre S. du Pont
Pierre Samuel du Pont was president of the E. I. du Pont de Nemours and Company from 1915 to 1919, and served on its Board of Directors until 1940...
and the du Pont
DuPont
E. I. du Pont de Nemours and Company , commonly referred to as DuPont, is an American chemical company that was founded in July 1802 as a gunpowder mill by Eleuthère Irénée du Pont. DuPont was the world's third largest chemical company based on market capitalization and ninth based on revenue in 2009...
corporation; the latter was a principal investor in GM whose executives largely ran GM in the 1920s.
Sloan is credited with establishing annual styling changes, from which came the concept of planned obsolescence
Planned obsolescence
Planned obsolescence or built-in obsolescence in industrial design is a policy of deliberately planning or designing a product with a limited useful life, so it will become obsolete or nonfunctional after a certain period of time...
. He also established a pricing structure in which (from lowest to highest priced) Chevrolet
Chevrolet
Chevrolet , also known as Chevy , is a brand of vehicle produced by General Motors Company . Founded by Louis Chevrolet and ousted GM founder William C. Durant on November 3, 1911, General Motors acquired Chevrolet in 1918...
, Pontiac
Pontiac
Pontiac was an automobile brand that was established in 1926 as a companion make for General Motors' Oakland. Quickly overtaking its parent in popularity, it supplanted the Oakland brand entirely by 1933 and, for most of its life, became a companion make for Chevrolet. Pontiac was sold in the...
, Oldsmobile
Oldsmobile
Oldsmobile was a brand of American automobile produced for most of its existence by General Motors. It was founded by Ransom E. Olds in 1897. In its 107-year history, it produced 35.2 million cars, including at least 14 million built at its Lansing, Michigan factory...
, Buick
Buick
Buick is a premium brand of General Motors . Buick models are sold in the United States, Canada, Mexico, China, Taiwan, and Israel, with China being its largest market. Buick holds the distinction as the oldest active American make...
and Cadillac
Cadillac
Cadillac is an American luxury vehicle marque owned by General Motors . Cadillac vehicles are sold in over 50 countries and territories, but mostly in North America. Cadillac is currently the second oldest American automobile manufacturer behind fellow GM marque Buick and is among the oldest...
—referred to as the ladder of success—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. Under Sloan's direction, GM became the largest industrial enterprise the world had ever known.
In the 1930s GM, long hostile to unionization, confronted its workforce, newly organized and ready for labor rights, in an extended contest for control. Sloan was averse to violence of the sort associated with Henry Ford
Henry Ford
Henry Ford was an American industrialist, the founder of the Ford Motor Company, and sponsor of the development of the assembly line technique of mass production. His introduction of the Model T automobile revolutionized transportation and American industry...
. He preferred the subtle use of spying and had built up the best undercover apparatus the business community had ever seen up to that time. When the workers organized the massive Flint Sit-Down Strike
Flint Sit-Down Strike
The 1936–1937 Flint Sit-Down Strike changed the United Automobile Workers from a collection of isolated locals on the fringes of the industry into a major labor union and led to the unionization of the domestic United States automobile industry....
in 1936, Sloan found that espionage had little value in the face of such open tactics.
The world's first university-based executive education program—the Sloan Fellows
Sloan Fellows
The Sloan Fellows program is a mid-career master's degree in general management and leadership supported by a grant from the Alfred P. Sloan Foundation. It is targeted at experienced managers who have already demonstrated a significant degree of career success . Alfred P...
—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
MIT Sloan School of Management
The MIT Sloan School of Management is the business school of the Massachusetts Institute of Technology, in Cambridge, Massachusetts....
, one of the world's premier business schools. Additional grants established a Sloan Institute of Hospital Administration Sloan Program in Health Administration in 1955 at Cornell University Cornell University
Cornell University
Cornell University is an Ivy League university located in Ithaca, New York, United States. It is a private land-grant university, receiving annual funding from the State of New York for certain educational missions...
-the first two year graduate program of its type in the US, a Sloan Fellows
Sloan Fellows
The Sloan Fellows program is a mid-career master's degree in general management and leadership supported by a grant from the Alfred P. Sloan Foundation. It is targeted at experienced managers who have already demonstrated a significant degree of career success . Alfred P...
Program at Stanford Graduate School of Business
Stanford Graduate School of Business
The Stanford Graduate School of Business is one of the professional schools of Stanford University, in Stanford, California and is broadly regarded as one of the best business schools in the world.The Stanford GSB offers a general management Master of Business Administration degree, the Sloan...
in 1957, and at London Business School
London Business School
London Business School is an international business school and a constituent college of the federal University of London, located in central London, beside Regent's Park...
in 1965. They became degree programmes in 1976, awarding the degree of Master of Science in Management. Sloan's name is also remembered in the Sloan-Kettering Institute and Cancer Center
Memorial Sloan-Kettering Cancer Center
Memorial Sloan–Kettering Cancer Center is a cancer treatment and research institution founded in 1884 as the New York Cancer Hospital...
in New York. In 1951, Sloan received The Hundred Year Association of New York
The Hundred Year Association of New York
The Hundred Year Association of New York, founded in 1927, is a non-profit organization in New York City aimed at recognizing and rewarding dedication and service to the City of New York by businesses and organizations that have been in operation in the city for a century or more and by individuals...
's Gold Medal Award "in recognition of outstanding contributions to the City of New York."
The Alfred P. Sloan Museum, showcasing the evolution of the automobile industry and traveling galleries, is located in Flint, MI.
Sloan maintained an office in 30 Rockefeller Plaza in Rockefeller Center
Rockefeller Center
Rockefeller Center is a complex of 19 commercial buildings covering between 48th and 51st streets in New York City, United States. Built by the Rockefeller family, it is located in the center of Midtown Manhattan, spanning the area between Fifth Avenue and Sixth Avenue. It was declared a National...
, now known as the GE Building
GE Building
The GE Building is an Art Deco skyscraper that forms the centerpiece of Rockefeller Center in the midtown Manhattan section of New York City. Known as the RCA Building until 1988, it is most famous for housing the headquarters of the television network NBC...
. He retired as GM chairman on April 2, 1956. His memoir and management treatise, My Years with General Motors, was more or less finished around this time; but its publication was held up for nearly a decade longer by GM's legal staff, who feared that it would be used to support an antitrust
Competition law
Competition law, known in the United States as antitrust law, is law that promotes or maintains market competition by regulating anti-competitive conduct by companies....
case against GM. It was finally published in 1964. Sloan died in 1966.
Sloan was inducted into the Junior Achievement
Junior Achievement
Junior Achievement or JA or JA Worldwide is a non-profit youth organization that was founded in 1919 by Horace A. Moses, Theodore Vail, and senator Winthrop M. Crane. JA focuses on educating kids in K-12 about the free enterprise system...
U.S. Business Hall of Fame in 1975.
Philanthropy
The Alfred P. Sloan Foundation is a philanthropicPhilanthropy
Philanthropy etymologically means "the love of humanity"—love in the sense of caring for, nourishing, developing, or enhancing; humanity in the sense of "what it is to be human," or "human potential." In modern practical terms, it is "private initiatives for public good, focusing on quality of...
non-profit organization
Non-profit organization
Nonprofit organization is neither a legal nor technical definition but generally refers to an organization that uses surplus revenues to achieve its goals, rather than distributing them as profit or dividends...
established by Sloan in 1934. The Foundation's programs and interests fall into the areas of science
Science
Science is a systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions about the universe...
and technology
Technology
Technology is the making, usage, and knowledge of tools, machines, techniques, crafts, systems or methods of organization in order to solve a problem or perform a specific function. It can also refer to the collection of such tools, machinery, and procedures. The word technology comes ;...
, standard of living
Standard of living
Standard of living is generally measured by standards such as real income per person and poverty rate. Other measures such as access and quality of health care, income growth inequality and educational standards are also used. Examples are access to certain goods , or measures of health such as...
, economic performance
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, and education and careers in science and technology. The total assets of the Sloan Foundation have a market value of about $1.8 billion.
The Sloan Foundation bankrolled the 1956 Warner Bros.
Warner Bros.
Warner Bros. Entertainment, Inc., also known as Warner Bros. Pictures or simply Warner Bros. , is an American producer of film and television entertainment.One of the major film studios, it is a subsidiary of Time Warner, with its headquarters in Burbank,...
cartoon Yankee Dood It
Yankee Dood It
Yankee Dood It is a Warner Brothers Looney Tunes theatrical cartoon short released in 1956 and directed by Friz Freleng and written by Warren Foster. The title is a pun on Red Skelton's famous "I Dood It" line from the Mean Widdle Kid routine....
, which promotes mass production.
According to Edwin Black
Edwin Black
Edwin Black is an American Jewish syndicated columnist, and journalist specializing in the historical interplay between economics and politics in the Middle East, petroleum policy, the abuses practiced by corporations, and the financial underpinnings of Nazi Germany, among other topics...
, Sloan was one of the central, behind-the-scenes founders of the American Liberty League
American Liberty League
The American Liberty League was an American political organization formed in 1934 by conservative Democrats to oppose the New Deal of Franklin D. Roosevelt. It was active for just two years...
, a political organization whose goal it was to defend the constitution. In turn, the League would finance other groups with openly more extreme agendas. One such group was the Sentinels of the Republic
Sentinels of the Republic
The Sentinels of the Republic was a national organization that opposed what it saw as federal encroachment on the rights of the States and of the individual. Politically right-wing, the group was highly active in the 1920s and 1930s, during which it worked against child labor legislation and the...
to which Sloan himself made a $1000 check. After a Congressional investigation into this group went public in 1936, Sloan issued a statement pledging not to further support the Sentinels.
Also according to Black, the GM chief continued to personally fund and organize fund-raising for the National Association of Manufacturers
National Association of Manufacturers
The National Association of Manufacturers is an advocacy group headquartered in Washington, D.C. with 10 additional offices across the country...
, which was critical of the New Deal.
The Sloan Foundation has made two grants, of USD 3 million each, to the Wikimedia Foundation
Wikimedia Foundation
Wikimedia Foundation, Inc. is an American non-profit charitable organization headquartered in San Francisco, California, United States, and organized under the laws of the state of Florida, where it was initially based...
(WMF). These are some of the largest grants that the WMF has received.
Overly rational and profit-driven orientation
According to O'Toole (1995), Sloan built a very objective organization, a company that paid significant attention to "policies, systems, and structures and not enough to people, principles, and values. Sloan, the quintessential engineer, had worked out all the intricacies and contingencies of a foolproof system." But this system left out employees and society. One consequence of this management philosophy was a culture that resisted change, which explains many of the difficulties and troubles that the company suffered some years later.In fact, Sloan's memoir and management treatise, My Years With General Motors, foresaw some of these problems. About them, Sloan implied that only vigilant, intelligent management could meet them successfully. He predicted that remaining at the top [of its industry and the economy] would prove a bigger challenge for GM than was getting there; and it turned out that he was right. But he also seemed confident that the management style of GM under his leadership, if continued and adapted, could meet these challenges. He said, "There have been and always will be many opportunities to fail in the automobile industry. The circumstances of the ever-changing market and ever-changing product are capable of breaking any business organization if that organization is unprepared for change—indeed, in my opinion, if it has not provided procedures for anticipating change. [¶] In General Motors these procedures are provided by the central management, which is in a position to appraise the broad long-term trends of the market. […] As the industry has grown and evolved, we have adhered to this policy and have demonstrated an ability to meet competition and the shifts of customer demand." As these words of Sloan 1964 show in juxtaposition with the words of Drucker 1946, Sloan (and his fellow GM executives) never agreed with Drucker on the lessons that Drucker drew from his study of GM management during the war. However, unlike many GM executives, Sloan did not put Drucker on his blacklist for writing the 1946 book; Drucker, in his new introduction [foreword] for the 1990 republishing of Sloan's memoir, said, "When his associates attacked me in a meeting called to discuss the book, Sloan immediately rose to my defense. 'I fully agree with you,' he said to his colleagues. 'Mr. Drucker is dead wrong. But he did precisely what he told us he would do when we asked him in. And he is as entitled to his opinions, wrong though they are, as you or I.'" Drucker related that for 20 years after that meeting, Sloan and Drucker had a good relationship, in which Sloan would invite Drucker to lunch once or twice a year to discuss Sloan's philanthropic plans and the memoir that Sloan was working on assembling (what became My Years). Drucker said, "He asked for my opinions and carefully listened—and he never once took my advice." History seems to have vindicated Drucker in his belief that Sloan's faith in rationality alone—and in the ability of other white-collar managers to be as astute as he himself was in using his style of instruments to keep the ship out of the shoals, as it were—was overardent. In the end, 40 years later, the entitled old men of the management and board of directors who had run the original General Motors Corporation into the ground by 2009 were not "in a position to appraise the broad long-term trends of the market"—or were in that position, perhaps, but not doing the job successfully therein.
O'Toole described Sloan's style as follows: "[W]hereas Taylor
Frederick Winslow Taylor
Frederick Winslow Taylor was an American mechanical engineer who sought to improve industrial efficiency. He is regarded as the father of scientific management and was one of the first management consultants...
occasionally backs off to justify his ardor for efficiency in human terms, not once does Sloan make reference to any other values. Freedom, equality, humanism, stability, community, tradition, religion, patriotism, family, love, virtue, nature—all are ignored. In the one personal element in the book, he makes passing reference to his wife: he abandons her on the first day of a European vacation to return to business in Detroit. His language is as calculating as that of the engineer-of-old working with calipers and slide rule, as cold as the steel he caused to be bent to form cars: economizing, utility, facts, objectivity, systems, rationality, maximizing—that is the stuff of his vocabulary."
Accounting system drawbacks
In 2005, Sloan's work at GM came under criticism for creating a complicated accountingAccountancy
Accountancy is the process of communicating financial information about a business entity to users such as shareholders and managers. The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management; the art lies in...
system that prevents the implementation of lean manufacturing
Lean manufacturing
Lean manufacturing, lean enterprise, or lean production, often simply, "Lean," is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination...
methods. Essentially, the criticism is that by using Sloan's methods a company will value inventory just the same as cash, and thus there is no penalty for building up inventory. Carrying excessive inventory is detrimental to a company's operation and induces significant hidden costs. This criticism must be viewed in the context that it is provided in hindsight. During the period in which Sloan advocated carrying what would now be considered excess inventory, the industrial and transportation infrastructure would not support what is now known as just-in-time inventory. During this period, the auto industry experienced indredible growth as the public eagerly sought to purchase this life-changing utility known as the automobile. The cost of lost sales due to lack of inventory was likely greater than the cost of carrying excess inventory. Sloan's system seems to have been widely adopted because of its significant advancement over previous methods. In his memoir, Sloan (who would freely acknowledge that he was not a trained accountant) said that the system that he implemented in the early 1920s was far better than what it replaced (which was, in so many words, an undesigned cacophony in which financial controls mostly didn't exist). He said that years later, a professional accountant (Albert Bradley, longtime CFO
Chief financial officer
The chief financial officer or Chief financial and operating officer is a corporate officer primarily responsible for managing the financial risks of the corporation. This officer is also responsible for financial planning and record-keeping, as well as financial reporting to higher management...
of GM) "was kind enough to say [that it] was pretty good for a layman." Sloan was far from the sole author of GM's financial and accounting systems, as GM later had many trained minds in accounting and finance; but regardless of authorship, GM's financial controls—at one time considered top-notch—eventually proved to have latent drawbacks. Systems similar to GM's were implemented by other major companies, especially in the United States, and they eventually undermined the ability to compete with companies that used different accounting, according to Waddell & Bodek's 2005 analysis.
Sloan's memoir, particularly Chapter 8, "The development of financial controls", indicates that Sloan and GM appreciated the financial dangers of excess inventory even as early as the 1920s. However, Waddell & Bodek's 2005 analysis indicates that this theory was not successfully implemented in GM's practice. For all of the intellectual understanding, the reality remained slow inventory turnover and an accounting system that functionally treated inventory similarly to cash.
Streetcar scandal
- See also Great American streetcar scandal and History of General Motors > Criticism > Great American streetcar scandal.
During Sloan's leadership of GM, many public transport systems of tram
Tram
A tram is a passenger rail vehicle which runs on tracks along public urban streets and also sometimes on separate rights of way. It may also run between cities and/or towns , and/or partially grade separated even in the cities...
s in the US were replaced by bus
Bus
A bus is a road vehicle designed to carry passengers. Buses can have a capacity as high as 300 passengers. The most common type of bus is the single-decker bus, with larger loads carried by double-decker buses and articulated buses, and smaller loads carried by midibuses and minibuses; coaches are...
es in what became known as the Great American streetcar scandal. Some critics, such as Edwin Black
Edwin Black
Edwin Black is an American Jewish syndicated columnist, and journalist specializing in the historical interplay between economics and politics in the Middle East, petroleum policy, the abuses practiced by corporations, and the financial underpinnings of Nazi Germany, among other topics...
, claim that Sloan was also instrumental in the demise of public city transport streetcar throughout the United States GM was found guilty of violating anti-trust laws, but the penalties imposed were nugatory, even for the time: a $5,000 fine for the company and $1 fines for each convicted executive.
Nazi collaboration
- See History of General Motors > Criticism > Collaboration with Nazi Germany.
Quotes
- "The business of business is business."
- "A car for every purse and purpose". (Sloan 1963, p. 438)
- "I am sure we all realize that this struggle that is going on through the World is really nothing more or less than a conflict between two opposing technocracies manifesting itself to the capitalization of economic resources and products and all that sort of thing."—May 1941
- "It seems clear that the Allies are outclassed on mechanical equipment, and it is foolish to talk about modernizing their Armies in times like these, they ought to have thought of that five years ago. There is no excuse for them not thinking of that except for the unintelligent, in fact, stupid, narrow-minded and selfish leadership which the democracies of the world are cursed with… But when some other system develops stronger leadership, works hard and long, and intelligently and aggressively—which are good traits—and, superimposed upon that, develops the instinct of a racketeer, there is nothing for the democracies to do but fold up. And that is about what it looks as if they are going to do."—June 1940
- "Technological progress-and it is a pity more do not appreciate it-is the one sound approach to increased employment and higher wages. There is no other way." (Sloan 1941, p. 10)
- "General Motors was becoming large through a process of evolution, but only because it was rendering a service to community. As its volume of business expanded it became able to do more for workers, stockholders and customers." (Sloan 1941, p 144)
- “Scientific management means a constant search for the facts, the true actualities, and their intelligent, unprejudiced analysis. Thus, and in no other way, policies and their administration are determined. I keep saying to the General Motors organization that we are prepared to spend any proper amount of money to get the facts. Only by increased knowledge can we progress, perhaps I had better say survive.” (Sloan 1941)
See also
- The Alfred P. Sloan PrizeAlfred P. Sloan PrizeThe Alfred P. Sloan Prize is an award given each year, starting in 2003, to a film at the Sundance Film Festival. The prize is given to a feature film that focuses on science or technology as a theme, or depicts a scientist, engineer, or mathematician as a major character.Each winner is presented...
. Given to films dealing with science and technology by the Alfred P. Sloan FoundationAlfred P. Sloan FoundationThe Alfred P. Sloan Foundation is a philanthropic non-profit organization in the United States. It was established in 1934 by Alfred P. Sloan, Jr., then-President and Chief Executive Officer of General Motors.-Overview:...
each year at the Sundance Film FestivalSundance Film FestivalThe Sundance Film Festival is a film festival that takes place annually in Utah, in the United States. It is the largest independent cinema festival in the United States. Held in January in Park City, Salt Lake City, and Ogden, as well as at the Sundance Resort, the festival is a showcase for new...
. - Sloan was a member of The CrusadersThe Crusaders (repeal of alcohol prohibition)The Crusaders was an organization founded to promote the repeal of prohibition in the United States. Prominent Crusaders included Alfred Sloan, Jr., Sewell Avery, Cleveland Dodge, and Wallage Alexander....
, an organization that promoted the repeal of National ProhibitionProhibitionProhibition of alcohol, often referred to simply as prohibition, is the practice of prohibiting the manufacture, transportation, import, export, sale, and consumption of alcohol and alcoholic beverages. The term can also apply to the periods in the histories of the countries during which the...
of alcohol in the US. - List of people on the cover of Time Magazine: 1920s - 27 Dec. 1926
External links
- Alfred P. Sloan Foundation, whose total assets had a market value of over $1.5 billion in 2005
- Official Generations of GM Wiki site: Sloan, Alfred Pritchard, Jr.
- Review of Klein and Olson's film Taken for a Ride
- Contribution of Alfred P. Sloan to changes in rapid transit systems
- Extract from Bradford C. Snell, American Ground Transport: A Proposal for Restructuring the Automobile, Truck, Bus and Rail Industries. Report presented to the Committee of the Judiciary, Subcommittee on Antitrust and Monopoly, United States Senate, February 26, 1974, United States Government Printing Office, Washington, 1974, pp. 16-24.
- Hitler's Carmaker: The inside story of how General Motors helped mobilize the Third Reich
- Find Law
- Taken for a Ride