Alfred P. Sloan

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Cover of Time Magazine (December 27, 1926)
Cover of Time Magazine (December 27, 1926)

Alfred Pritchard Sloan, Jr. (May 23, 1875 – February 17, 1966), was long-time president and chairman of General Motors.

Contents

[edit] History

Sloan 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. 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 who was in turn the protege of Pierre du Pont — the DuPont corporation owned 43% of GM.

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 did not compete with each other, and a buyer 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 retains to this day. Under Sloan's direction, GM became the largest and most successful and profitable industrial enterprise the world had ever known.

During Alfred P. Sloan's leadership of GM, many public transport systems of trams in the US were replaced by buses. This conversion was orchestrated by General Motors, Firestone Tire corp., Standard Oil of California, and the Mack Truck Co. in order to increase automobile sales; see General Motors streetcar conspiracy for details.

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 a massive sitdown 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. 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's name is also remembered in the Sloan-Kettering Institute and Cancer Centre 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."

Sloan maintained an office in 30 Rockefeller Plaza in Rockefeller Center, now known as the GE Building.[1] He retired as GM chairman on April 2, 1956 and died in 1966.

Preceded by
Lammot du Pont		 Chairman General Motors
1937 – 1956		 Succeeded by
Albert Bradley
Preceded by
(none)		 CEO General Motors
1923 – 1946		 Succeeded by
Charles Erwin Wilson
Preceded by
Pierre S. du Pont		 President General Motors
1923 – 1937		 Succeeded by
William S. Knudsen

[edit] Criticism

Recently, Sloan's work at GM has come under fire for causing a complicated accounting system to be placed upon American manufacturer's that prevents the implementation of lean manufacturing methods thus leading to companies which can not compete effectively with non-Sloan companies such as Toyota. In a nutshell, the thrust of 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. However, carrying excessive inventory in the long run is detrimental to a company's operation and induces many hidden costs. (Waddell & Bodek 2005)

Another factor in the criticism is that Sloan considered people on the shop floor to be totally expendable as variable cost item to manufacturing. This view is the opposite of how Toyota views employees. Toyota looks for shop floor employees as their main source of cost savings and productivity improvements. (Waddell & Bodek 2005)

[edit] Quotes

"The business of business is business."
“A car for every purse and purpose.”

[edit] Further reading

  • McDonald, John. A Ghost’s Memoir: The Making of Alfred P. Sloan’s 'My Years with General Motors'. MIT Press, 2003, ISBN 0262632853 online review; McDonald was the ghost-writer and Alfred D. Chandler was the researcher
  • Christopher D.McKenna, "Writing the ghost-writer back in: Alfred Sloan, Alfred Chandler, John McDonald and the intellectual origins of corporate strategy" Management and Organizational History 2006, Vol 1(2): 107–126

[edit] References

  • Waddell, William H.; Bodek, Norman [2005]. Rebirth of American Industry - A Study of Lean Management. ISBN 0-9712436-3-8. 
  • Dobbs, Michael. "Ford and GM Scrutinized for Alleged Nazi Collaboration." Washington Post. November 30, 1998.[2]
  • Black, Edwin. "Hitler's carmaker". Jerusalem Post. Dec. 6, 2006. [3]

[edit] See also

[edit] External links

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