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•Six Greatest Management Thinkers 111

Ask yourself

• How much time are you going to spend today on creating a customer?
• How many of the seven new tasks are you confident about?

Idea 64 – Alfred P. Sloan, author of My Years with
General Motors

It has always been well known to motorists that much of the financial value of a new
car has disappeared as soon as it was driven off the garage forecourt; Sloan’s strat-
egy was that motorists should also realise that their brand new car was also out of
date.

In the 1920s Ford dominated the emerging car market. Sixty per cent of the
cars sold were Model Ts while General Motors could only manage 12. The received
wisdom in this situation was that other manufacturers should concentrate on the
much smaller luxury car market, with much lower volumes but potentially much
higher profit margins. Sloan, on his appointment as chief executive, disagreed and
aimed at the middle market with a range of cars that provided the car buying public
with choice.

His next problem was how to manage a business of GM’s size and historical
organisation. The business had grown through acquisition of smaller businesses and
no-one had managed to develop a corporate culture or strategy. Sloan was to build
that, while at the same time allowing local managers to manage. More than 50 years
ago he invented what have become known as profit centres or business units.

The divisions were made responsible for their market share and profitability,
and given all the necessary functions to make them work more or less autonomously.
There were five car manufacturing units and three divisions building components.