Alfred Sloan Leadership
Alfred Sloan (1875-1966)
American leader of General Motors or GM 1923-46 (pictured right), who made it the world’s most
successful and profitable car company ever.
His autobiography, My Years with General Motors (1963) is Bill
Gates’s favourite business book.
Why was he a great leader?
1. Customer satisfaction
He was sensitive to the needs of different customers, wanting to create “a car for every purse and
This is why he beat Henry Ford (pictured right),
who offered only his Model T.
Instead, Sloan sold five products with different prices, colours and styles:
- Buick (a 1924 Buick Sedan is pictured right).
- Cadillac (the 1930 Cadillac used by the Chicago gangster Al Capone is pictured
Sales were helped by:
- the availability of hire purchase credit and used car trade-ins.
Sloan listened and responded to customers’ comments from car dealer reports and
market research surveys.
He saw the whole world as GM’s market, so it could:
- benefit from economies of scale (to lower costs).
Sloan was committed to the development of new products through
- annual styling changes to cars.
- strong support for research and development.
- constructive and critical discussion of all relevant facts.
So he hated groupthink (i.e. people totally agreeing on a decision without thinking).
When this happened once, he suggested that the decision be postponed
“to give ourselves time to develop disagreement, and perhaps gain some understanding of what the decision is all
Sloan valued creativity more than anything else.
“The greatest real thrill that life offers is to create, to construct, to develop something useful”, he
He also believed that a company’s main responsibility to society was to maximize its
The best way to do this, he said, is “more things for more people in more places”.
4. Tough and determined
He was ruthless in his aim to make GM successful through:
- keeping a tight control over costs.
- firing people, if necessary.
- tough policies (e.g.he bought the trams in many American cities like Chicago,
destroyed them and replaced them with GM’s buses).
- fighting trade unions (using spies but never violence).
But he had to allow unions after a successful sit down strike in 1936-7 at GM’s factory in Flint, Michigan
Sloan believed in:
a) learning from successes, failures and
He thought mistakes are inevitable.
“If you do it 51% of the time you will end up a hero”, he said.
b) management education
He financed a business school (the Sloan Business School ) at the Massachusetts Institute
6. Brilliant organizer
He invented the idea of a divisional structure which gave each of GM’s product divisions
(like cars) the freedom to run themselves within the broad policies and objectives laid down
by Sloan at head office.
He called this “federal decentralization”.
Co-ordination between the divisions was achieved by committees.
7. Change and improvement
He knew that a company has to continuously change and improve, if it is to remain successful and beat its
“There is no resting place for an enterprise in a competitive economy”, he said.
8. Great people
He was good at:
- selecting brilliant managers
- motivating them through delegation (giving them the authority to do their jobs
Key quote on corporate social
The business of business is business.
Key quote on market
A car for every purse and purpose.
Key quote on decision
Bedside manners are no substitute for the right diagnosis.
quote on change
No company ever stops changing. Change will
come for better or worse.
Key quote on
The strategic aim of a
business is to earn a return on capital.
Key quotes on leadership and
I got better results by selling my ideas than by telling people what to
Give a man a clear-cut job and let him do it
Key quote on
The greatest real thrill that life offers is to create, to construct, to develop something useful.