Management Minds

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

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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

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