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Summary of Alfred P. Sloan’s “The Most Important Thing I Ever Learned About Management”

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When a deaf, aging Alfred Sloan was asked: “what is the U.S. stock with the most promising growth prospect?” He promptly wrote, “General Motors.” Sloan built the foundation of the modern corporation through the pioneering automobile company. Today Sloan’s path-breaking blueprint is the holy grail of organizational management.

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Sloan was the first celebrity CEO. He made GM into an icon of productivity, market domination, and stable profitability. Through marketplace performance and a relentless public campaign, he convinced Americans that the business corporation was the beating heart of the nation's political, cultural, and economic life and that men like him were indispensable to the nation's security and prosperity. Sloan's tenure at GM provides a useful reminder that great corporate leadership is mainly honest and usually brilliant. It is, also, almost always fiercely self-interested. The best corporate leaders, Sloan's life reveals, often care very little about the nation's common good. Sloan's story helps to explain both the strengths of our corporate-based economy and the weaknesses of our corporate-influenced polity.My Years is also noteworthy for what it leaves out. Sloan tells readers next to nothing about his personal life

And quite purposefully he says nothing at all about his institutional and personal campaigns to affect public policy (often effective), to defeat Franklin Roosevelt and to limit New Deal restraints on corporate power (less successful), and to create and fund a web of organizations that sold the general public, politicians, and government bureaucrats on the centrality of rationally managed business corporations—and GM in particular—to the American way of life (moderately successful). Sloan Rules does not gloss over those efforts.

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So with GM reaching new profit peaks and with the chief architect of its achievements adding additional and authoritative detail to the GM success story, it is no surprise that the Sloan book has sold so well. Consequently, there is a real danger that the success of this book may presage a new round of wholesale imitation of General Motors. It is easy to envisage a new crop of eager executives bounding into the boardroom, proclaiming: “What’s good enough for General Motors is certainly good enough for World-Wide Widgets, Unlimited.” And because this is a personal memoir, and a fascinating one at that, it is certainly not going to be read like another How To Succeed in Business Without Even Trying. When that opus attained popularity, first as a book and then as a musical comedy, one could be reasonably certain that it would be taken as caricature and not as chapter and verse, as a “how to” exercise in executive self-development

My Years With General Motors touches on much more complex matters, and what it has to say is supported by the enormous personal prestige of Sloan (HBR , 1960). It is quite probable, therefore, that this book is being read by many as bible and blueprint, rather than as biography. If so, this could undo much of the contribution that the recent painstaking studies of management have made toward qualifying the simpler version of the GM story (“Mirage of Profit Decentralization,” 1962).

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In the end, efficiency accounts of the firm arghe that the multidivisional governance structure (M-form) arose and succeeded because it reduced costs by creating a clear distinction between strategic and tactical planning. Examining new evidence in the paradigmatic case of General Motors (GM), this article shows that such approaches are poorly equipped to explain changes in the M-form. For most of its history, GM intentionally violated the axioms of efficient organization to create managerial consent. The GM case suggests that the textbook M-form may actually undermine order within the firm, thus leading to organizational decline.

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“Mirage of Profit Decentralization,” HBR November–December 1962, p. 154.

“Pricing Policy in Relation to Financial Control,” from Some Reminiscences of an Industrialist, Port Deposit, Md., 1957, p. 130.

“The Silent Language in Overseas Business,” HBR May–June 1960, p. 87.

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