Introduction/Greatest Achievements
Alfred Pritchard Sloan was the first-ever celebrity CEO. He was famed for bringing General Motors to the height of market domination by utilizing effective productivity as well as stable profitability. More than this he was an icon in the managerial realm and was largely responsible for much of the corporate diligence and structure we see in conglomerate corporations today. His managerial styles are still widely studied and practiced now over 50 years after his death.
Sloane was the mastermind behind General Motors market dominance. Each year out of the 23 that he was president, the company continued to take more and more market share. Even in the most trying of economy’s, like during the Great Depression. For fifty years General Motors dominated the American car industry with a market share of around 50% thanks to the procedures and strategies that Sloan implemented during his time with the company
The Man Who Saved General Motors
While establishing market dominance on a worldwide scale was notoriously shy. He loved the business side of the business, but hated being a public figure. Though he disliked the spotlight he recognized it as a necessary evil and he was never one to shy away from what he believed needed to be done.
It is fascinating to see how he transformed into a political activist when it came to the protection of the business strategies he himself implemented. He negotiated for free commerce and international trade as well as corporate autonomy. He achieved this through intensive public campaigns where he managed to incept the idea that corporations like General Motors were the beating heart of the American economy.
He fervently believed that institutions like General Motors were vital to the nation’s prosperity. Just like that the corporation became American and the American people became the corporation. In that way, communities become the establishment and the establishment becomes the heart of a community.
Sloan had many enormous achievements in addition to his managerial expertise which created huge success for the corporation General Motors and his political activism preserving our society rooted in capitalism. He is credited for the annual model changes associated with most car brands and was also responsible for the financing system we relate to the automotive industry.
He was handsomely accoladed over his lifetime appearing on the cover of Times Magazine for the month of December in 1926. He was awarded by the Hundred Year Association of New York’s Gold Medal Award for his contributions to the city in 1951. Ten years after his death, in 1975, he was inducted into the U.S. Business Hall of Fame.
He left behind a business legacy, a Museum in Flint, Michigan, a world-leading cancer treatment facility and research center and a nonprofit organization that funds scholars in their research pursuits of many practical fields. All of these organizations bear his name.
Early life
Alfred Pritchard Sloane was born May 23, 1875, in New Haven Connecticut to Alfred Pritchard Sloan, Sr. and Katherine Mead Sloan. He was the first of their five children. His father was 25 and his mother was 23 at the time of his birth. Both the family of his mother and father were from upstate New York. Although both lineages had old roots though they were not exceptionally wealthy.
His maternal grandfather had been a minister in the Methodist church and his family remained religious, Alfred Jr, however, was not overtly devout to his spirituality in his adult life. Healthy managerial practices and hard work seemed to be his faith.
His paternal grandfather was a principal at a private charter school. When he grew ill, Alfred Sr. left school in his youth to provide for his family. He did an exceptional job of this and by the time Alfred Jr. was born Alfred Sr. was a successful investor and entrepreneur.
He owned several businesses throughout Alfred Jr’s young life and beyond. The first of these businesses was a coffee and tea import company located in New Haven which was deeply prosperous and provided the start-up capital that allowed for Alfred Jr.’s accomplishments in his early twenties.
As the success of the coffee and tea import company grew, the business was expanded and brought to New York City. It was here that Alfred Jr continued his education. The company’s profitability allowed the Sloan family to raise their children in a comfortable brownstone in Brooklyn. It was here that Alfred picked up his notoriously strong Brooklyn accent which he maintained throughout his life.
Alfred Jr. decided at an early age that he wanted to be an engineer. It was then that his dedication to personal progress and hard work began.
Education
When Alfred Jr. was ten years old his father relocated the company to Brooklyn, NY. The family of seven moved states and all five children attended the public school system in Brooklyn. Alfred was an engaging and inquisitive student who received top grades in primary school and beyond, but only in the subjects he saw use in.
He completed his high school education at Brooklyn Polytechnic Institute which was an all-boys school that focused on education in mechanics which was a field Alfred saw the value. While other children of the day went home to play outside and cause mischief, Alfred would return home to pour over his textbooks.
After his high school graduation, he applied to Columbia University but was seen as far too young for a college education. He next turned his sights on the Massachusetts Institute for Technology. He had an extended waiting period because this school also deemed him too young for higher education.
He persisted and once accepted in 1892, Alfred moved to Providence, where he studied electrical engineering. His father’s wealth and success allowed him to move Alfred Jr. several states away and also support him there. At this time electrical engineering was a budding field with application to most industries.
Electricity was a state of the art innovation in the late 19th century and MIT had a particularly excellent program. Thomas Edison himself donated supplies to the program for further study and research.
He thrived in calculus and thermodynamics receiving perfect grades for the semester. He struggled in his literature, history and art classes that the university required, nearly failing and failing some of them. This was not for lack of smarts but for a lack of effort. Sloan preferred to spend his time acquiring skills he viewed as relatable to his upcoming career. Everything else in his mind was a waste of time.
He graduated early, at the age of 20 years old, with a bachelor’s degree in both electricity and electrical engineering. He was the youngest member of his graduating class of 1895.
Sloane did not have a job lined up after college. He struggled to find a position for a considerable amount of time. He later described the experience as “the most discouraging period of his life”, looking for employment after graduation.
Sloan was attempting to enter the workforce in a time where older, working industrial professionals had no higher education. Because of this they tended to look down upon and mistrust the generation who had taken the time to pursue further schooling instead of entering directly into the workforce and apprenticeships. Alfred applied to hundreds of jobs all of whom told him they weren’t interested in hiring him.
Thanks to his father’s connections in the business world Alfred Jr. scored an interview with a wealthy businessman who had made his fortunes in the sugar refinery industry. John E. Searless was incredibly impressed by Alfred Jr. during their brief interview. He recognized the potential of the 20-year-old man who sat before him and offered him a position at one of the smaller companies he owned, Hyatt Roller Bearings.
Beginning Career
Alfred enjoyed the idea of incorporating the clear-minded and logical approach to engineering to the business and management sides of business even before receiving his first job offer. He longed to revolutionize the dated business practices of the late 19th century.
After a long stint of unemployment, Alfred found his first job within Hyatt Roller Bearings. It was not his dream job working as a draftsman, however, it would prove to be extremely lucrative as the company brought him to General Motors. The bringing together of these two entities would change both forever leaving the two etched in time as they left their mark on the automotive industry.
Hyatt Roller Bearings
Sloan’s first job out of MIT was at Hyatt Roller Bearings as a draftsman in a small shop for the company where they rendered an assortment of parts for cars, boats and numerous other mechanical workings.
The company was located in Newark, New Jersey which was not a particularly nice area and was soon moved to Harrison, New Jersey which turned out to be an even worse location. The company’s location was prone to flooding and the building he later described to be quite shack-like.
Hyatt Roller Bearings was largely unprofitable and struggled most months to even make payroll. Searless usually had to subsidize the meager salaries of its employees. Sloan became more and more frustrated that he had not progressed further in his field as he was attempting to progress to the point that he felt comfortable proposing to the woman who he had been courting since he had entered MIT Irene Jackson.
Hygienic Refrigeration Company
After growing frustrated with the business Sloan made the decision to leave Hyatt Roller Bearings and accepted a position with a startup company called Hygienic Refrigeration Company. The company had just a few employees and was one of the first of its kind.
As a testament to how small the company was, Sloan was put in charge of the sales division and worked as a salesman which did not suit his then quiet and shy demeanor. The company was somewhat profitable and Alfred felt comfortable asking for Irene’s hand in marriage.
Shortly after they wed, the man who owned Hygienic Refrigeration Company died and the company was dissolved. Luckily for Sloan timing was on his side. Searless had made several unwise investment decisions in startup technology companies and was facing bankruptcy. He was fed up with Hyatt Roller Bearings which was consistently losing him money.
At his son’s urging, Alfred Sr. offered John Searless $5,000 for the company which he gladly accepted. He purchased the company solely for the purpose of supporting his eldest son and agreed to supply the capital for six months until the company became profitable.
Hyatt Roller Bearings Part II
At the age of 24 Alfred Jr was appointed president of the company by his father and within 6 months the company had been somewhat turned around. Alfred did this by utilizing a reorganization process which made cost-efficiency better and in turn, they produced a higher quality product that companies like Buick and Cadillac wanted to put in their vehicles.
This did not happen overnight. Sloan worked tirelessly, rarely taking days off for the first four years that the Sloan’s owned the company. He never took vacations and worked 10 hour days (at least) six days out of the week. For the next 18 years, they operated under Sloan’s direction and the company became a huge success.
Gone were the days where they operated in a dated and poorly constructed building where their neighboring businesses were junkyards. Instead, the company had the capital to purchase and operate out of a state of the art manufacturing facility.
A short time after being appointed to his position he realized that the company needed a new innovation to bring in new business. The majority of the products that they sold went to companies that sold farming equipment that was growing dated and less and less used. In fear that their customers would soon be out of business, he knew they needed to diversify their products.
In the emerging world of automobiles, new business markets were popping up to support the automobile. Alfred recognized this opportunity for his company and he encouraged his company to take up the research and development for the newest innovation, anti-friction roller bearings.
Alfred worked incessantly to take advantage of the new market opportunity he had discovered. He diversified the types of companies they sold bearings to by maintaining his current business while pursuing contracts with the large automobile makers.
The company finally achieved this goal of entering the market of selling to automobile manufacturers when they secured a contract with Oldsmobile. Many more automobile companies followed from there. As they expanded their business they got more and more feedback from their contracts.
An important lesson that Alfred Sloan learned was given to him in a conversation with the general manager of Cadillac, Henry Leland, which was at this time in 1916 an independent automobile maker.
The contract was very important to the future profitability to the company, so when Leland contacted Sloan seething, Sloan made it a point to get on the first train to New York to attempt to smooth over the wrinkle in their relationship.
Leland had rejected the first shipment of ball bearings because they did not meet Cadillac’s quality parameters. He had been assured by Hyatt Roller Bearings salesman Steenstrup that they would be accurate to size within a thousandth of an inch. After Sloan attempted to defend the company’s product and was interrupted by his angry client, he decided to take a different approach and listen to what Leland had to say.
In the conversation he raged at Alfred stating “Mr. Sloan, Cadillacs are made to run, not just to sell!” Alfred Sloan later in life credited Henry Leland for teaching him an incredibly important lesson about quality and maintaining relationships that day.
Sloan was a young man who had the ability to see the wisdom of older men and learn from them. It was one of his greatest strengths. “I was determined to be as fanatical as he in obtaining precision in our work. An entirely different standard had been established for Hyatt Roller Bearings.”
From that point forward Sloan worked relentlessly to ensure the quality and reliability of Hyatt Roller Bearing’s products. Soon their ball bearings became the industry standard and the market leader in sales.
United Motor Corporation
In the year 1916 Hyatt Roller Bearings was rolled into United Motor Corporation with many other parts manufacturers and mechanical and electrical engineering companies. Alfred Sloan was named president of the Corporation and shortly after he met his lifelong friend and colleague Charles Kettering.
General Motors
Two years after the corporation was formed, William Durant the founder and then newly reinstated President of General Motors purchased United Motor Corporation as an investment in an effort to have full control over his parts suppliers.
Durant had a nasty habit of overextending the liquidity and assets of General Motors by purchasing subsidiary companies. While this business practice was actually pioneered by Durant and made him fabulously wealthy while riveting the business sectors across America and the world, it also eventually led to the company ending up almost bankrupt.
It’s obviously not that simple but the gist of this was that William Durant was not making sound business choices consistently, or even half the time, especially in his second term as president of the corporation. Most of his investments were flops, however United Motor Corp was not one of them.
Many of the upper-level executives in the company were growing more and more aggravated with William Durant and his spending habits within the company. He would make decisions based on a whim or a stroke of genius and would hear no devils advocacy against purchasing the company.
Included in those that grew frustrated with Durant and left General Motors was Walter P Chrysler. When he left he claimed he was tired of how the business was being run and all he was concerned about was selling his shares in the company. No one could talk him out of leaving
Even Alfred Sloan was on the verge of resigning himself at this time. Pushed to his wits end with the president who seemed to see no reason and made business decisions merited only as flashes of brilliance, Sloan took an extended vacation to Europe. When he returned he sensed a change in the company and decided to stay. That change was the attitude that Durant was once again on his way out of the company.
After the end of WWI General Motors had anticipated a post-war peacetime boom which unfortunately never made its way to the automobile industry. They were betting on this boom and were amidst a large expansion project when it failed to come.
At this point large General Motors stockholders began to unload their stock driving down the share price. Durant attempted to protect the stock price and his own 105 million dollars in holdings, but to no avail. The stock price continued to slide until J P Morgan bought out the company’s remaining 28 million in shares.
In 1920 Durant had once again rode General Motors to the ground with his poor investment choices. He was again voted out of the corporation and was bailed out of his debt by Pierre Du Pont and Morgan Bank under the condition he would not work for General Motors Company again.
Durant was succeeded by Pierre Du Pont and Alfred Sloan was voted in as Vice President of operations in 1920. General Motors, despite owning a couple successful car brands and parts manufacturers, was having an identity crisis.
Due to prior mentioned loosely regulated investing practices, General Motors seemed to have a lot going on outside of the automobile realm. Most of the company was largely unprofitable keeping their existing healthy companies too lean to focus on expansion and growth.
It was up to Du Pont and Sloan to weed out the seemingly endless pile of subsidiary companies, determining the good from the bad. General Motors invested around 42 million dollars into research and development of tractors and purchasing manufacturing and distribution centers around 1916. The entire project was scrapped by the duo shortly after taking their positions in 1920.
Sloan worked to no end to continue to lean out the corporation helping the corporation’s profitability to soar.
Sloan for President
The company and his peers noticed his efforts and expertise and Sloan became president of General Motors Corporation in 1923 succeeding Pierre Du Pont. No one could deny Alfred Sloan was the right man for the job. Du Pont gave him a great deal of recognition and respect in his final speech as president of the company.
“The greater part of the successful development of the Corporation’s operations and the building of a strong manufacturing and sales organization is due to Mr. Sloan. His election to the presidency is a natural and well-merited recognition of his untiring and able efforts and successful achievement.”
The biggest responsibility Sloan needed to tackle was examining the seemingly endless facets that General Motors had become. He slowly began eliminating the departments and subsidiaries that did not make sense with his plan for General Motors.
With years and years of making disciplined business decisions and reselling its unprofitable companies that did not directly relate to the company’s greater goal, he transformed General Motors into the organized and coordinated conglomerate of parts manufacturers and automobile lines we see today.
One of the management choices that Sloan made that helped General Motors seize the majority of the market share includes dividing the company into separate autonomous divisions who operate independently of each other. The one source of corporate control came from a small centralized staff who subject financial and policy standards uniformly throughout the subdivisions.
Alfred P. Sloan was also the first CEO to ever implement the concept of systematic strategic planning to the corporate workplace. Systematic strategic planning is the management style that outlines the current path and status of the company in alignment with its desired future status.
What this does is forces a company to outline what its main objectives are, then allows management to make appropriate decisions to make this objective achievable. Today it makes total sense to identify your goals when running a company, but the idea was not widely practiced in the early 1920s and was definitely not structured.
In the 1930’s General Motors surpassed even Ford who had been the industry leader in the United States for 25 years. This was for several reasons, some of which included these groundbreaking innovations that Alfred P. Sloane introduced the company to.
Sloan was a firm believer in giving Americans the car they wanted which made him very different from his competitor Henry Ford who believed he could pick the single best automobile for everyone.
Outside of General Motors’ control, which contributed to their success was Ford’s lack of foresight into the changing ways of the American car market. He continued to make only one car, and though you could now purchase it in more than one color, the American car owner had progressed and expected their vehicles to progress as well.
Sloan took advantage of this by updating every model of vehicle that General Motors produced on a yearly basis. He also made sure that the cars were targeted towards different customers. Sloan realized that different people had unique needs for their vehicles and he aimed to provide that for them by diversifying the product lines of his five automobile manufacturers. Not only did he have the advantage of multiple brands to target various income brackets, they also each produced a variety of vehicles to meet the needs of their customers.
Sloan was one of the first executives in the industry to accurately predict that one day the standard American household would likely have at least two cars and they would likely want different things from these vehicles.
When Sloan took over as President of General Motors the company could equate for about 12% of the American car market in comparison to Ford Motor Company’s 60%.Within six years the corporation had nearly tripled its revenues. By 1929 General Motors surpassed Ford and every year after for the next 50 they took more and more of the market share.
Sloan held many positions during his career at General Motors. He was president of the company from 1923-1937. Chief Executive Officer from 1923 to 1946. Finally, he was elected chairman of the board in 1937 and remained until 1956.
Many people called Alfred “Silent Sloan” in reference to his management style where he liked to stay behind the scenes. This was different from the walking style of management that was popular when Sloan took his position.
His management style was disciplined and professional and encouraged decentralized operations with coordinated centralized policy control. He was a fervent believer in challenging the way people thought and behaved.
In a board meeting while his executives proposed a business decision Sloan famously said:
“Gentlemen, I take it we are all in complete agreement on the decision here,” he started, and everyone nodded their heads in agreement. “Then,” he went on, “I propose we postpone further discussion of this matter until the next meeting to give ourselves time to develop a disagreement, and perhaps gain some understanding of what the decision is all about.”
Alfred stayed on as CEO of the company for 23 years and the company prospered. General Motors swallowed up a greater and greater market share in the United States and abroad with each year that Sloan was at the helm.
Greatest Achievements
Some of Alfred Sloan’s greatest contributions included the yearly model changes as well as the incorporation of bank financing. These changes encouraged customers to upgrade their vehicles more frequently in a manner they could afford.
Bank financing allowed customers to purchase a car they would not ordinarily be able to pay for upfront, allowing the company to charge even more for the vehicles which could be paid off over several years. What this did was took a saturated car market and allowed for a higher turnover rate of vehicles skyrocketing profits.
He also made it a point of organizing each of his automobile manufacturers at a different price point. He realized that General Motors could do better with a stepped ladder of brands. He longed to see “a car for every purse and every purpose” to come out of General Motors. He achieved his goal. Chevrolet was their reasonably priced vehicle at the lowest end of their purchase range. Next came Pontiac which was slightly more expensive and targeted XYZ. Then Oldsmobile followed by Buick. Finally, Cadillac was their high-end brand reaching a luxury target market.
This kept General Motors brands from cannibalizing market share from each other. Instead, each was strategically positioned to take up a share of the market that was unique to the other car lines General Motors owned.
It also encouraged people to continue buying a General Motors vehicle despite growing changes in taste and style not to mention income levels and needs. People could count on the fact that any of their General Motors vehicles would be reliable.
Sloan was one of the first executives to push his company toward research of consumer behavior and buying trends. He used dealership reports as well as consumer surveys to find out what the people wanted and then made an effort to provide a product that fits that want. It was no easy feat changing the manufacturing lines for General Motors simply because the company was so big, however, he realized the potential profitability and made it happen.
Alfred Sloan knew that to stay relevant you had to be able to shake up your industry. In the year 1927, he hired Harley Earl, who was a legend in the automotive industry, in an attempt to keep General Motors from growing stagnant and for a fresh take. Together they created the Art and Color section of General Motors
Prior to the establishment of this sector of the corporation, General Motors nor any other automobile placed very much value or concern on the appearance or styling of cars. Prior to this time, the vehicles were built by engineers who were guided only by functionality and cost.
Corporate executives scoffed at Earl’s project calling his section of the company the beauty parlor. Laugh all they would, Earl got the last laugh when his project skyrocketed the revenues of General Motors.
Ten years later the sector was renamed the Styling Section and Alfred promoted Harley to vice president of the company making him the first individual of styling background to become vice president of any corporation.
Under Harley’s direction, the company created bold new trends in the automotive industry keeping them fresh like tailfins on the Cadillac and the introduction of the Chevy Corvette.
In the 1930’s, amidst labor upheavals, Alfred Sloan also made the decision to promote himself to CEO and left the day to day operations of General Motors to be managed by William “Big Bill” Knudsen. He had hired William directly out of Ford Motor Company.
In 1937 he became chairman of the board at General Motors. He continued on as Chief Executive Officer in addition to this new role until 1946 when he made the difficult decision of retiring from General Motors.
Under these and other business decisions General Motors became the leading industry seller in the United States and abroad.
How General Motors Changed Alfred P. Sloan
The 1940s are considered the dark years for corporate America where free international trade and the ability of a corporation to act autonomous of the government began to be threatened by Franklin Roosevelt’s proposed New Deal.
At this point, Alfred Sloan had to step into more of a public role as the face of the company. A job he neither predicted or wanted for. It was at this point that Sloan became a more private individual while still operating as the speaker for the corporation as he fought for the rights of the company to continue to be independent of the United States government.
David Farber, the author of Alfred P. Sloan and the Triumph of General Motors, was incredibly insightful in this section of his book. He suggests that Sloan believed that in protecting the private sector he was also guarding the values that Americans treasured the most. His thought process here was that private profits allowed national prosperity which allowed for equality, democracy, and liberty.
He says that Alfred Sloan believed that the economic prosperity of the country depended on men like himself. He believed that his job was providing the freedom and well being of Americans. This was the truth that Alfred Sloan lived by and it is a truth still present in our world today.
He stayed on as the chairman of the board for ten more years. He retired entirely in 1956. The board, in honor of Sloan’s tireless dedication to the corporation and brilliant management strategies, made Alfred a permanent honorary chairman of the board.
“The Board of Directors has acceded to Mr. Sloan’s wish to retire as Chairman. He has served the corporation long and magnificently. His analysis and grasp of the foundation have made possible the growth and progress of General Motors over the years.”
He exercised this position on occasion until his death in 1966.
Family and personal life
Alfred Sloan married Irene Jackson who was originally from Roxbury Massachusetts in 1898. They lived together in their upscale apartment in New York City off of Fifth Avenue. Their apartment was impeccably decorated thanks to Mrs. Sloan who was responsible for the housekeeping and decor. Their bathroom fixtures were plated in gold, but Alfred did not care much about these things. He was a simple man who had survived the Great Depression.
He and Mrs. Sloan were wed for just over fifty-eight years when she died in 1956. It is said that he had always hoped to share more time with Mrs. Sloan but never was able to due to the dedication he gave his career. He was commonly away on business visiting various manufacturing facilities across the country or traveling to Detroit for his bi-monthly visits.
Though the couple longed to have children, they were unable to. There is no record kept on whether or not the couple decided to attempt to adopt. They never did and they bore no children. Upon his passing, the 300 million dollar fortune was left to various charities.
Sloan allowed his personal life to get in the way of his career very little. Even his wife who he loved dearly did not distract him from his work.
In later life, the year after Irene’s passing, the older Sloan broke down while interviewing the candidate he wished to appoint as president of the Sloan Foundation, Warren Weaver. It happened when Weaver expressed a desire for limited travel as a condition for taking the job so that he could spend more time with his beloved wife. Sloan responded,
“If I ever ask you to do anything that limits your companionship with your wife, you just tell me to go to hell. I understand completely. For many years, I was too completely absorbed in my business. I always said I would cut down on this and spend more time with my wife. But Warren, I waited too long.”
There were no personal papers left behind after Alfred passed which seriously limits the information on the more intimate relationships that he had with his father, mother, siblings and his few friends. Even the officials at his Alfred P. Sloan Foundation claim on the company website to have no information to give insight to the man who founded the company’s early years.
It is suggested that Sloan did not leave behind documents concerning his early life because he did not trust the public to interpret information or data without guidance. Perhaps he did not want to leave the history of his legacy in the hands of others. He knew that, through his life’s work, he would be remembered long after he had left the world.
We do know that Alfred was particularly close with his half brother, Raymond, who was 18 years younger than his oldest brother. They were good friends until Raymond’s sudden death in the 1940s.
By the time he was in his early 90’s Alfred was an extremely wealthy man. His shares of the privately-owned General Motors had slowly piled up over his 40 years with the company making him one of the richest men in the world at the time of his death.
By the time of his death, he had leftover 305 million dollars to The Alfred P. Sloan Foundation, which in today’s currency is in the upwards of 2-3 billion dollars. He had donated tens of millions of dollars in addition to his contributions to the foundation that bore his name in personal gifts as well as a hefty 23 million dollar donation to his Alma Mater the Massachusetts Institute of Technology which developed the Sloan School of Management in his name.
Sloan and politics
Alfred Sloan was a huge advocate of international free trade. He believed that the American business was the backbone of the country’s commerce and was a guarantor of the nation’s prosperity. Because of this, he advocated for an unregulated marketplace.
Sloan had a strong opinion on the role of the American corporation in the life of the public. He fought especially hard in the 1940s to push back at the introduction of the New Deal to keep large corporations like General Motors free of government regulation. He believed that companies that were left unbothered by the muttering of the government produced profit-minded corporate managers which he viewed as a positive. He believed that a private sector that remained independent of the United States government was responsible for national security, economic prosperity, and a well-working society.
Kettering and Sloan.
Friendship, accomplishments, a person relevant to Alfred’s success was Charles Kettering, the long time head of research and development at General Motors. Sloan and Kettering were a brilliant duo and both are given and deserve an immense amount of credit in establishing General Motors as a world dominator of the industry.
They were also exceptionally close friends and like-minded individuals. The clear-headed engineering style to their management. Charles and Alfred understood each other.
They were brought to the company at the same time when General Motors purchased United Motor Corp. Both Kettering’s company Delco and Sloan’s Hyatt Roller Bearings were acquired by UMC at the same time. What positions did they hold at UMC for the three years before it became a part of General Motors? Did they work together?
The two friends were also dedicated to making the world a better place through research. True scientists, they left most of their legacies individually to different non-profit organizations dedicated to funding research in fields they saw as valuable such as mathematics, engineering, science, biology, and medicine.
They even funded their own charity and research facility together. The Sloan- Kettering cancer center was founded in 1945 in New York City. The passion behind this particular research center surrounded the emotional losses of close family members to various forms of the disease.
Later career/ Legacy
After his retirement from his positions at General Motors in 1946, Alfred remained on as honorary chairman of the board until his death.
Historians to this day argue the positives and negatives that Sloan left behind. In many ways, he was the pioneer who developed the conglomerate style massive corporations that we have in our country and across the world today.
Harold Livesay claims he “bureaucratized the entrepreneurial function” essentially this means that he brought the concept of risk-taking to decentralized, rule-bound corporations.
Another business practice that Sloan pioneered and remains a large part of corporate business around the world was the implementation of accounting and statistical analysis as a tool for company growth.
Finally, Alfred P. Sloan turned General Motors into one of the largest advertisers in the world, sparking the corporate spending trend in marketing and advertising we see today.
In his late years Sloan had a fascination with the television. He considered it an exciting contraption of wonderful technical workings that successfully brought together a combination of entertaining programming and clever advertising practices. Sloan encouraged General Motors to dump endless money into encouraging consumers to purchase one of their cars. Other companies followed in their path.
The company had been advertising mildly over print but in the early days, most car manufacturers just advertised the price and mechanical workings of the vehicles. When Sloan came to be the president of General Motors he slowly started ramping up the advertising budget. After eliminating the unprofitable companies that the corporation held, there were more liquid funds to do this.
During the Great Depression, car manufacturing halted almost 75% due to the economy and necessity. General Motors continued to boost it’s advertising investments during this time. It was not until then that style and striking artwork was used to lure customers into purchasing a vehicle from the corporation. This directly correlates with the hiring of Harley Earl in the late 1920s.
Philanthropy:
By the time he was in his early 90’s Alfred was an extremely wealthy man. His shares of the privately-owned General Motors had slowly piled up over his 40 years with the company making him one of the richest men in the world at the time of his death. He had no children and his fortunes were left mostly to various charities.
By the time of his death, he had left over 305 million dollars to The Alfred P. Sloan Foundation, which in today’s currency is in the upwards of 2-3 billion dollars. He had donated tens of millions of dollars in addition to his contributions to the foundation that bore his name in personal gifts as well as a hefty 23 million dollar donation to his Alma Mater the Massachusetts Institute of Technology. The Sloan School of Management is still on its campus today educating young professionals.
Alfred P. Sloan Foundation
Established in 1934, this foundation funds research and education that marked its creator’s interests: science, technology, engineering, mathematics, and economics.
It has funded projects concerning DNA barcoding and deep carbon studies alike. Overall it has accumulated over 1.9 billion dollars in assets as of a 2017 study.
The mission of this organization today: “The Alfred P. Sloan Foundation makes grants primarily to support original research and education related to science, technology, engineering, mathematics, and economics. The Foundation believes that these fields—and the scholars and practitioners who work in them—are chief drivers of the nation’s health and prosperity. The Foundation also believes that a reasoned, systematic understanding of the forces of nature and society, when applied inventively and wisely, can lead to a better world for all.”
The foundation has the following to say on the life of its founder:
“Mr. Sloan, a realist as well as a humanist and philanthropist, looked upon the Foundation as an extension of his own life and work. Although he recognized the inevitability of change that might dictate a different course, he expected that the Foundation would “continue as an operating facility indefinitely in the future…to represent my accomplishments in this life.” His accomplishments during his lifetime were of the highest order, and in themselves provide the most dramatic and lasting tribute to his extraordinary talent. Through the Foundation, his accomplishments have been extended and expanded”
The foundation gives out the Alfred P. Sloan prize every year at the sundance film festival as well as the Sloan Research Fellowship which has been given out every year since 1955 to “provide support and recognition to early-career scientists and scholars”.
The Sloan-Kettering Institute for Cancer Center
In 1945 Alfred and his long time friend and colleague Charles Kettering decided to further extend their philanthropic efforts together. In 1945 the then President and Vice President/Head of Research and Development at General Motors together sponsored a medical research facility that is today known as The Sloan Kettering Cancer Center and is located in New York, New York.
Sloan paid 4 million dollars to fund the institution in 1945. Charles agreed to oversee the organization in terms of the research side of the center. Their funding brought about the construction of a treatment center. The originally independent research facility was then a neighbor to their treatment center as the building was constructed next door.
Today, the memorial center is one of the top 2 ranked cancer research and treatment facilities in the world. It has 500 beds and over 1200 physicians. They treat over 400 types of cancer each year at their location 1275 York Ave, New York, NY 10065.
Criticism
People criticized Sloan’s accounting policies: in 2005 some of the accounting practices that General Motors had been implementing for over fifty years came under question. The system was valuing its assets in the same way that it valued cash and gave no penalty for lack of liquidity.
This criticism is only relevant to today’s business network. The supply chains at the time were simply not as reliable and General Motors hedged risk of running out of parts by keeping an excess of materials ready to go. Today the automobile industry is saturated. 70 years ago it was still booming. The loss of sales as a result of running out of product was far more costly than keeping too much inventory laying around.
It may not have been the perfect answer, but Sloan was no accountant. The procedure which it replaced was basically no procedure at all, financial controls didn’t exist. This makes sense when you consider that they were designed by William Durant who’s fatal flaw was poor cash investment.
Overly rational as a trait: as a result of Sloan’s management style was a company that resisted change because it was so wrapped up in adhering to its policies and systems.
Quotes
“The ability to get people to work together is of the greatest importance.” – Alfred Pritchard Sloan
“There has to be this pioneer, the individual who has the courage, the ambition to overcome the obstacles that always develop when one tries to do something worthwhile, especially when it is new and different.” – Alfred Pritchard Sloan
“The greatest real thrill that life offers is to create, to construct, to develop something useful. Too often we fail to recognize and pay tribute to the creative spirit. It is that spirit that creates our jobs.” – Alfred Pritchard Sloan
“Take my assets – but leave me my organization and in five years I’ll have it all back.” – Alfred Pritchard Sloan
“It is impossible to get the measure of what an individual can accomplish unless the responsibility is given him.” – Alfred Pritchard Sloan
“Work hard. There is no short cut.” – Alfred Pritchard Sloan
“A car for every purse and purpose.”- Alfred Pritchard Sloan
“It is astonishing what you can do when you have a lot of energy, ambition and plenty of ignorance.”- Alfred Pritchard Sloan
“The business of business is business.”- Alfred Pritchard Sloan
“Some have an idea that the reason we in this country discard things so readily is because we have so much. The facts are exactly opposite-the reason we have so much is simply because we discard things so readily. We replace the old in return for something that will serve us better.”- Alfred Pritchard Sloan
“Bedside manners are no substitute for the right diagnosis.”- Alfred Pritchard Sloan
“Too often we fail to recognize and pay tribute to the creative spirit. It is that spirit that creates our jobs.” – Alfred Pritchard Sloan
“The final act of business judgment is intuitive.”- Alfred Pritchard Sloan
“Give a man a clear-cut job and let him do it.”- Alfred Pritchard Sloan
“Advanced engineering always, like advanced everything else, brings down upon it the discredit of ridicule of minds who cannot see so far.”- Alfred Pritchard Sloan
“There is no resting place for an enterprise in a competitive economy.“- Alfred Pritchard Sloan
“Never make a personal judgment the first time it comes up.”- Alfred Pritchard Sloan
“Only in more production and in new production can the American standard of living be increased and the economy be sound.” – Alfred Pritchard Sloan
“If you do it right 51 percent of the time you will end up a hero.” – Alfred Pritchard Sloan
“In any organization men would move up from the bottom to the top. That develops loyalty, ambition and talent, because there is a chance for promotion.”- Alfred Pritchard Sloan
“Competition is the final price determinant and competitive prices may result in profits which force you to accept a rate of return less than you hoped for, or for that matter to accept temporary losses”- Alfred Pritchard Sloan
“I have never issued an order since I have been the operating head of the corporation.”- Alfred Pritchard Sloan
“Never inject a man into the top, if it can be avoided. In a big organization, to have to do that, I think, is a reflection on management, Of course, there are always exceptional cases.” – Alfred Pritchard Sloan
Unionization
Unionization of the automotive industry was long and hostile in the mid-1930s. Each president of the big automotive producers handled the unionization process differently. Alfred Sloan preferred spies to violence unlike Henry Ford, who was caught in several scandals to be encouraging violent acts against the leaders of the union movement.
In the end, the unionization and benefits that General Motors was forced to give out to their employees nearly bankrupt the company in recent years, along with other poor business decisions of course. They were giving out benefits to ten people for each individual who actually worked at General Motors in the 1990s.
In the 1930’s the United Automobile Workers held a sit down strike where they occupied the companies manufacturing facilities halting production. Sloan was unwilling to negotiate with them. It was during this time that Sloan stepped down as president of General Motors and ceased to manage the day to day operations.
The strike helped found the United Auto Workers union protecting the rights and compensation of workers in the automotive industry.
Alfred P Sloan Museum
Located in Flint Michigan and caters to those curious about the automotive industry and its history. The museum specifically focuses on the history of Genesee County and the Flint area’s economics due to the rise and fall of the American car industry.
Most of the exhibits at the museum rotate seasonally. One of their permanent exhibits is a display dedicated to the Flint Sit Down Strike which took place in late 1936 and shaped the treatment and compensation history of the automotive workers in Flint and beyond.
Sloan As An Author
Alfred wrote his own memoir of his career at General motors. This was finished right around the time he retired with the help of a ghostwriter. The book was the first of its kind and was the precursor for the endless stream of books written by CEOs sharing their “wisdom” with the world.
The book was a first-hand look at the time Sloan spent at General Motors and the business practices that encouraged the company’s success. For better or worse for the nation’s people and economy, no one could deny the market dominance that General Motors achieved while Sloan was at the helm.
My Years with General Motors was released by Sloan when he was 89 years old. It was an account of his management decisions over his years with the company. It was not a heartfelt work of art, but rather a logical and detailed journal of the business decisions from the point of view of the CEO. It was almost instantly regarded as a classic work of text in the research of managerial science. The book is completely void of quotes, anecdotes or any opinions, it was nothing more than a detailed telling of the decisions that Sloan made while leading General Motors and the situations that led them there.
In the autobiography, there is very little content concerning the personal life of Alfred P. Sloan and this could be as a result that there was very little to write about outside of the company because of his incessant involvement in business activities. The few times Mr. and Mrs. Sloan entertained guests there was always some form of networking and business interactions going on.
Criticism for Sloan’s book includes that he leaves out his attempts to sway political movements on public policy with his wealth and the force of General Motors behind him. He did what he could to thwart Franklin Rosevelt and the New Deal’s attempts to place constraints on corporate power.
Sloan’s opinions on post-war economics
Some individuals predicted that after WWII the economy would once more slide back into a great depression. In fact, a lot of those people assumed it was going to be even worse. Sloan disagreed and pointed to the savings that most soldiers would have upon returning home from war. He predicted a rise in the standard of living and a jump in the national average income. He was right and the economy boomed in post-war America from 1945-1973
Closing
It is impossible to overstate the influence of Alfred Sloan in practically all areas of the automotive industry and beyond. The man left a lasting impact on the workings of American corporations everywhere.
Timeline:
1875- Born May 23, to Alfred Pritchard Sloan Sr and Katherine Mead Sloan as the first of their five children in New Haven Connecticut
1895– Graduated from MIT with a degree in electrical engineering at the age of 20
1895 – got his first job after some effort at Hyatt Roller Bearings as a draftsman
1898– Married Irene Jackson of Roxbury Massachusetts
1899 – Purchased and became General Manager Hyatt Roller Bearings
1936– unionization
1931 – Sloan Fellows was founded (find out more)
1934– Established the Alfred P. Sloan foundation
1940’s – half brother died who he was exceptionally close with. Raymond was 18 years younger than Alfred
1945– Alfred P. Sloan invested four million dollars to purchase the now Sloan-Kettering Cancer Center located in New York, New York
1956– His wife Ireen Sloan died
1966– Alfred Sloan suffered from a heart attack February 17,1966 he later died of complications at the Sloan Kettering Institute for Cancer Center
Resources
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