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!

Sources: TheWorkingManager.com, Wikipedia

Edgar (Ed) Schein

Ed Schein, a professor at the MIT Sloan School of Management, is one of the great names of management as well as one of its most original researchers. He worked with Douglas McGregor, Warren Bennis and Chris Argyris and taught Charles Handy and is generally credited with inventing the term corporate culture.

Career anchors are the things which keep people in organizations. An individual who finds his or her technical competence, management approach and way of working suitable to an organization is likely to stay with it because the individual’s sense of self-esteem is reinforced by the values of the company. There is a match between the individual and the company.

Since the values of the company inter-relate with the behaviors of the people in it, a strong sense of culture is created – the way we do things around here. In companies where strong career anchors exist, this culture is passed from generation to generation of managers, the senior teaching the junior, by example as much as by words. Schein points out that there are visible signs of culture – dress codes (often unspoken) and office layouts – and less visible signs such as stories about earlier managers which exhibit the values of the company.

Culture, and career anchors, can be good or bad. They can limit personal growth and prevent a company from exploring new avenues and behaviors. On the other hand, they enable people in organizations to work together, using the unspoken rules and mutual expectations. They reinforce behaviors that are approved of and so if a manager exhibits those behaviors, his or her way of working is constantly reinforced. Organizations that have strong cultures are often those that new recruits either love or hate, either join for ‘life’ or leave immediately. Obvious examples of organizations with recognizably strong cultures have included Ford Motor Company, Xerox, IBM and Shell – each different from the other. In each of these the observer would notice a common way of working, a way that may have felt odd to outsiders but which was not only accepted but valued by insiders.

Mergers and takeovers frequently fail – and one of the reasons that they may do so is that the original cultures of the ‘heritage’ companies, as they are often known today, do not match. Unfortunately, the presence of a strong and differentiating culture is not always or even often recognized by senior management, who may assume that the way they behave is ‘normal.’ Thus, they may have expectations of the to-be-merged culture which are not borne out in fact. Mergers and acquisitions affect the lives of people, not only because they may find themselves with a different job, boss or rank but also because they upset what Schein calls the psychological contract between the organization and the person. Behaviors that have been rewarded and valued may cease to be so.

Schein was one of the first people to diagnose culture and to point out that it was the role of the leadership to manage both the existing culture and cultural change. He identifies three distinct levels in organizational cultures; artifacts and behaviors, espoused values and assumptions

His definition of culture is:

I concluded that the members unknowingly behaved in such a way as not to encourage risk-taking, openness, expression of feelings and cohesive, trusting relationships.”

“A pattern of assumptions, invented, discovered or developed by a given group, as it learns to cope with the problem of external adaption and internal integration, that has worked well enough to be considered valid and be taught to new members, as the correct way to perceive, think and feel …

Sources: TheWorkingManager.com; Wikipedia

Edward De Bono

Edward de Bono (born 1933) is a psychologist and physician. De Bono writes prolifically on subjects of lateral thinking, a concept he pioneered and now holds training seminars in. Both lateral thinking and vertical thinking are concerned with effectiveness. Whenever a solution is found by lateral thinking one can always, with hindsight, see how it could have been arrived at by vertical thinking. But looking back in hindsight, is quite different from finding the solution by that route.

The most famous example is that of the skyscraper built with too few lifts with the result that people became very impatient queuing at peak times. What do you do? Put extra lifts on the outside of the building, put a new lift shafts through the existing floors, stagger working hours?

The lateral thinking answer was to install floor to ceiling mirrors in each lift lobby.

It solved the problem. How? Well you think about it!

De Bono has distinguished between lateral thinking and vertical thinking, the latter being a logical process. In effect the two forms of thinking go together. Lateral thinking is just a little like intuition in that it involves a creative leap without a logical process. Newton’s idea of gravity is a little like this. Before Newton, people had the idea that the natural state of things was to be stationary and what was needed was an explanation of motion. Newton said that the natural state is motion and that what we needed to understand is why things stopped. (Getting your head under a falling apple stops it fairly quick!) Thus, lateral thinking produces the idea and then vertical thinking tests it – the scientific method or creating an hypothesis and then testing it.

De Bono proposes five ways to help one think laterally:

  • avoid cliche
  • challenge assumptions
  • generate alternatives
  • jump to new ideas
  • then follow them to a conclusion
  • enter the problem from a new direction.

Such thinking processes are not normal in business which lives on cliche and jargon, likes to start from well trodden paths and is suspicious of new ideas. However, they are the processes necessary for the knowledge industry of the future.

Source: TheWorkingManager.com

David McClelland

3 Types of Need or Motivation
Over the years behavioral scientists have observed that some people have an intense need to achieve; others, perhaps the majority, do not seem to be as concerned about achievement. This phenomenon has fascinated David C. McClelland. For over twenty years he and his associates at Harvard University studied this urge to achieve.

McClelland’s research led him to believe that the need for achievement is a distinct human motive that can be distinguished from other needs. More important, the achievement motive can be isolated and assessed in any group.

While focusing on the need for achievement, McClelland in fact draws a distinction between three types of need or motivation:

  • The need for achievement (n-ach) – seeking personal responsibility, attainable but challenging goals and feedback on performance.
  • The need for affiliation (n-affil) – a desire for friendly relationships, sensitivity to the feelings of others, preference for roles with human interaction.
  • The need for power (n-pow) – a desire to make an impact, to be influential and effective.

He argues that, on the basis of his research, that n-affil (a desire to be liked) handicaps managers who are led to make exceptions when they should not. He describes the n-pow manager as being dedicated to the organization, committed to the work ethic with energy and devotion. The best leader, he argues, is the n-ach individual.

Need for Achievement and Risk
Achievement-motivated people are not gamblers. They prefer to work on a problem rather than leave the outcome to chance. With managers, setting moderately difficult but potentially achievable goals may be translated into an attitude toward risks. Many people tend to be extreme in their attitude toward risks, either favoring wild speculative gambling or minimizing their exposure to losses.

  • Gamblers seem to choose the big risk because the outcome is beyond their power and, therefore, they can easily rationalize away their personal responsibility if they lose.
  • The conservative individual chooses tiny risks where the gain is small but secure, perhaps because there is little danger of anything going wrong for which that person might be blamed.
  • Achievement-motivated people take the middle ground, preferring a moderate degree of risk because they feel their efforts and abilities will probably influence the outcome. In business, this aggressive realism is the mark of the successful entrepreneur.

Managing Achievement-Motivated People
Achievement-motivated people tend to be more concerned with personal achievement than with the rewards of success. They do not reject rewards, but the rewards are not as essential as the accomplishment itself. They get a bigger “kick” out of winning or solving a difficult problem than they get from any money or praise they receive.

Money, to achievement-motivated people, is valuable primarily as a measurement of their performance. It provides them with a means of assessing their progress and comparing their achievements with those of other people. They normally do not seek money for status or economic security.

A desire by people with a high need for achievement to seek situations in which they get concrete feedback on how well they are doing is closely related to this concern for personal accomplishment. Consequently, achievement-motivated people are often found in sales jobs or as owners and managers of their own businesses.

Achievement-Motivated People as Managers
People with a high need for achievement get ahead because as individuals they are producers they get things done. However, when they are promoted, when their success depends not only on their own work but on the activities of others, they may be less effective. Since they are highly job-oriented and work to their capacity, they tend to expect others to do the same. As a result, they sometimes lack the human skills and patience necessary for being effective managers of people who are competent but have a higher need for affiliation than they do. In this situation, their overemphasis on producing frustrates these people and prevents them from maximizing their own potential.

Thus, while achievement-motivated people are needed in organizations, they do not always make the best managers unless they develop their human skills. Being a good producer is not sufficient to make an effective manager.

The Herzberg link?
McClelland’s concept of achievement motivation is also related to Herzberg’s motivation-hygiene theory.

Sources: Accel-Team.com, TheWorkingManager

Solomon Asch

Asch reported, in 1965, a study on the power of group pressure.

He gathered a series of groups of seven or eight subjects together for a purported experiment on visual acuity under varying conditions. In fact, only one individual was a genuine subject. The others were confederates of Asch. The experiment involved showing a series of sets of three straight lines to the group, adding a fourth line and asking them which line the fourth one was equal to. In all cases, the answer was obvious. The subject was last to answer in each case.

After several trials, where everyone gave the right answer to establish an atmosphere of normality, the confederates started to give answers that were incorrect. The subject, remember, was always last to answer. Despite the fact that the answers now being given by the other people were wrong and obviously wrong, 33% of subjects would go with the group. Peer pressure towards conformity with the group is extremely powerful.

Asch found that personality type had an effect on results. Some people were swayed by group opinion much of the time while others remained more independent

The need to conform, to be accepted by a group, is at the basis of the Asch experiments. Some people feel this need more than others. Perhaps, as Maslow tells us, for many people such a need exists only for as long as it is unsatisfied and until other needs become ‘preponent’ as he put it. Reddin, in paraphrasing Maslow, inserted a ‘need for independence’ above the need for affiliation in Maslow’s hierarchy. Nevertheless, such a need is at the basis of team spirit, teamwork and the whole nature of the affiliative society. Less excitingly perhaps, it is the basis of the fashion industry and indeed much of the consumer society in which people measure themselves by whether they are wearing the right clothes or have the right consumer goods.

It has also been the basis of more dangerous aspects of human life. One might argue that social conformity is necessary for any political movement to survive and there is little doubt that uncritical conformity was the villain in the outbreak of National Socialism in Germany.

The willingness of people to cause pain to others was studied by Milgram in 1967. In a series of very unpleasant experiments, he invited volunteers to participate in a study on the effects of punishment on learning. Volunteers sat at a desk and operated what seemed to be a mechanism for administering electric shocks to someone opposite who was ostensibly another volunteer. The mechanism was ‘administered’ levels of shock and was clearly marked with labels such as ‘slight shock’ and ‘danger – severe shock.’ The volunteer operating the mechanism was instructed to administer increasing levels of shock each time the other person answered a question wrongly. Despite the agonized reactions of the person opposite, volunteers were willing to administer what appeared to be 200 volt shocks. If they demurred, the experimenter would say ‘The experiment requires that you continue,’ and most did. Naturally the other person was not a volunteer but an actor who received no shock at all and acted out a response.

Source: TheWorkingManager.com

Chris Argyris

One of the key figures in the Human Relations Movement, which reached its peak in the 60’s and 70’s, Argyris argues for the recognition that organisational goals and personal goals of the employees are (usually) in conflict.

In the formal organisation, he says that employees are expected to be passive and subordinate, to accept little control over their work, to have a short term outlook, and are expected to produce under conditions leading to psychological failure. He says that these characteristics are incongruent to the ones that healthy human beings are postulated to desire.

He went on to argue for less structured forms of organisation that enabled people to express themselves within a company, not just to conform to it. He argued that most organisations were run on the basis of coercive power which tends to make them rigid. He calls for organisations to be run on the basis of knowledgeable groups and says that the matrix organisation is designed less around power and more around who has the relevant information. As early as 1967, he wrote

“Groups are necessary for executive decision making because computer technology now makes it possible to generate and organise information that is beyond the capacity of one man to understand much less to evaluate, and because they can generate internal commitment to decisions.”

Looking back, we would say that in 1967 computing was in its infancy. How more true today is Argyris’ comment when we are used to the internet, intranets and the fact that one of the most important companies in the world, Oracle, sells essentially a database system?

Argyris says, in his study of the decision making processes at the top of a large firm,

“I concluded that the members unknowingly behaved in such a way as not to encourage risk-taking, openness, expression of feelings and cohesive, trusting relationships.”

One of his major works is Organisational Learning which introduced the difference between single and double loop learning.

Source: TheWorkingManager