Jul 10th 2006 Alfred Pritchard Sloan, Jr.
Alfred Pritchard Sloan, Jr. (May 23, 1875 – February 17, 1966), long-time president and chairman of General Motors, was born in New Haven, Connecticut. He studied electrical engineering and graduated from the Massachusetts Institute of Technology in 1892.
He became president of a machine shop making ball bearings in 1899. In 1916 his company merged with United Motors Corporation which eventually became part of General Motors Corporation. He became Vice-President, then President (1923), and finally Chairman of the Board (1937) of GM. In 1934, he established the philanthropic, nonprofit Alfred P. Sloan Foundation.
Sloan, the man credited with the invention of the modern corporation, has had a profound influence on management thinking in America and much of the Western world. Much like John Harvey-Jones, here is a man who has done it all and done it extremely successfully. His thoughts on management are worth much more than the theories of most academics who have never been managers.
Sloan created the divisional corporate structure of General Motors. His book My Years with General Motors (1963) is essential reading if you want to understand modern business and the large corporation.
Sloan took over the leadership of General Motors in a marketplace dominated by Ford, which concentrated on the mass market. Avoiding head to head competition, Sloan decided to go for, indeed create, the middle market. He reduced the range of cars produced by GM and created five specific ranges – Chevrolet, Buick, Pontiac, Oldsmobile and Cadillac – each to be aimed a specific section of the market. Each range would be constantly updated and offered in several colors (from which came the concept of “planned obsolescence”). Ford, at the time, insisted upon producing just one type of car, the Model-T, and then only in black.
The culture and structure of GM, at the time a loose confederation of companies, was inimical to such a strategy. Sloan’s genius was in creating a organizational structure, not something that anyone had really thought about before, which he called federal decentralization. Essentially, a central staff was responsible for strategy while operational decisions were made within the divisions. Within the central strategy, operational leaders were completely responsible for everything to do with market share and profitability. Physically, in a way almost commonplace today, the five divisions used common parts on common floor pans to produce their own version suitable to their own market and profit margins.
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. 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 retired as chairman on April 2, 1956 and died in 1966.
Interesting Note: Peter Drucker worked for GM as a consultant for a time. Sloan rejected his report!