Monday, January 7, 2013

In Praise of the Introverted Entrepreneur

Arguably the single most successful entrepreneur of the twentieth century was Alfred Pritchard Sloan (1875-1966). In 1920 he joined an unwieldy and nearly bankrupt collection of business entities called General Motors, scratching out just 12 percent market share against the 55 percent of Henry Ford’s indomitable Model T. 

In 1956 when Sloan retired as chairman of GM, the company boasted a 52 percent market share, a matchless reputation for innovation, quality and reliability, and some of the strongest consumer brands in the world.  Over a 36-year career, Alfred Sloan orchestrated the creation of the largest, best run, and most valuable company on the planet. 

Those readers who know the American auto industry only through the lens of poor quality, hidebound management, bankruptcies and bailouts might be interested to learn that it began as one of the most fluid and hypercompetitive markets in history.  In 1903 alone, 57 automobile companies were founded in the United States (and another 27 went bankrupt). Consumers could choose from 1,500 distinct models produced by seemingly as many companies.  Sloan described Detroit’s entrepreneurial community like we might today’s Silicon Valley: “The field was open to all; technical knowledge flows from a common storehouse of scientific progress. . .The market is world-wide, and there are no favorites except those chosen by the customers.”  And, not unlike today’s smartphone, Sloan wrote of the automobile, “Humanity never had wanted any machine as much as it desired this one.”

Alfred Sloan was blessed with extraordinary focus, great energy, an ability to attract and foster amazing talent, and an intellect that grasped modern consumerism better than most anyone in the world.  His innovations ranged from four-wheel brakes and ethyl gasoline to safety glass and the concept of “annual models.” He has been hailed as the father of the modern corporation, a master of consumer mass marketing, and the most effective CEO ever.

He was also an introvert--a flat-out, socially uncomfortable, avoid-the-party, go-home-to-his-wife-at-night introvert.

Sloan remembered the discomfit with which he approached his first job in 1895. “I was young and unimpressive.  I felt my mere presence was effrontery," he wrote.  “And I was shy by nature.  Asking favors and pushing myself into places where I am a stranger always did go against my grain.”

As CEO of GM, Sloan was described by associates as a “functional, frill-less man.”  He did not smoke, rarely drank or read for pleasure, and did not golf or engage in any sports--which he considered a waste of time.  Relaxation for Alfred Sloan might be an occasional evening of watching television with his wife.  In the 1930s Sloan’s friends encouraged him to purchase a yacht which he assented to by laying out $1 million for the RenĂ©, a 236-footer with a crew of 43.  Before long Sloan grew bored, mothballed the yacht, and sold it for $175K in 1941—one of the few losses he ever took on any venture.

Alfred Sloan relied heavily upon the talents of those around him.  His nickname in the industry was “Silent Sloan.” “I never give orders,” he said.  “I sell my ideas to my associates if I can, I accept their judgment if they convince me, as they frequently do, that I am wrong.  I prefer to appeal to the intelligence of a man rather than attempt to exercise authority over him.” One associate referred to Sloan by his first turnaround, a company making roller bearings: “Self-lubricating, smooth, eliminates friction and carries the load.”  The New York Times called him simply a quiet, selfless executive.

I must see an article a month roll across my browser asking if introverts can ever become good entrepreneurs.  It seems a silly question, easily answered by observation and history, and a potentially damaging to many fledgling entrepreneurs.

Alfred Sloan’s Adventures of a White-Collar Man is an entertaining look at the early automobile industry.  It's also a wonderful reminder that quiet, thoughtful, selfless leadership is capable of building the world's most valuable company.