Tuesday, September 3, 2019

Innovation on Tap # 5: Alfred Sloan: America's Most Successful Entrepreneur?

This is the fifth excerpt from Innovation on Tap: Stories of Entrepreneurship From the Cotton Gin to Broadway's "Hamilton" © Eric B. Schultz, available now for preorder at AmazonBarnes & Noble, and in quantity from Baker & Taylor or Greenleaf Book Group at 800-932-5420.

Excerpt #1, about Buddy Bolden and the birth of jazz, is here.  Excerpt #2, about Jason Jacobs and the growth of Runkeeper, is here.  Excerpt #3, about Jean Brownhill and Sweeten, is here.  Excerpt #4, about Elizabeth Arden and "the right to be beautiful," is here.


Author's note: Dimaggio or Williams, Aaron or Ruth?  Beethoven or Mozart--or Bach? Coke or Pepsi? How 'bout Moxie?!  Who was America's most successful entrepreneur ever?  It's an impossible question, of course, perfect for a barroom argument.  Which is why I took my shot at it in "Innovation on Tap."  My vote goes to Alfred Sloan, who seems (in baseball terms) like Stan Musial--faded more than he should be.  And, for those of you who are introverts--the brilliant "Silent Sloan" once wrote, "Asking favors and pushing myself into places where I am a stranger always did go against my grain."  It's a good reminder that there is no prototypical entrepreneur, only lots of articles on the web saying there is.  Read on: 
Alfred Sloan built the largest, most innovative, and arguably most important company in the world—one that fundamentally transformed the twentieth century. In 1918, he joined a General Motors that was disjointed and nearly bankrupt, with just 12.7 percent market share behind Ford’s 55 percent. He faced America’s greatest industrialist at the top of his game in a fluid and hypercompetitive market.

By 1929, when nearly 4.6 million vehicles were sold, GM’s 32.3 percent share topped Ford’s 31.3 percent. When Sloan retired as chairman in 1956, GM held a 52 percent market share and was one of the world’s most profitable, admired, and best-run companies. Its annual revenues surpassed the GNP of half the world’s countries.

Alfred Sloan (public domain)
Sloan is credited with not just saving General Motors, but with being the father of the modern corporation, a genius of consumer marketing, and the most effective CEO ever. An internal memo he wrote became a sought-after best seller in the 1920s, and his book, My Years with General Motors (1963), was the bible for a generation of managers who aspired to lead like America’s most famous CEO.

Sloan is known for creating effective public relations, implementing long-term forecasting, hiring professional designers to spearhead GM’s parade of annual models, and funding both a series of technological breakthroughs and long-term, visionary research and development. Historian Daniel Boorstin writes that when Sloan asked his staff to look out five years into the future to envision something new and better, he helped invent the modern world.

Sloan is known for other accomplishments as well. He encouraged his best friend, Walter P. Chrysler, to launch his own company when Ford was failing in the 1920s. “GM, in its own interest,” Sloan believed (unlike many of America’s most famous entrepreneurs bent on monopoly), “needed a strong competitor”. . . .

Above all, Alfred Sloan innovated in two essential areas: the effective organization of a complex institution (what he would call “centralized administration with decentralized operations”), and the brilliant segmentation of consumer brands designed to create endless demand. The German philosopher Arthur Schopenhauer (1788–1860) wrote that talent achieves what others cannot achieve, a fitting tribute to the legendary work of Henry Ford. But, Schopenhauer added, genius achieves what others cannot imagine. That was the contribution of Alfred Sloan.

Innovation on Tap: Stories of Entrepreneurship From the Cotton Gin to Broadway’s “Hamilton” is the story of 300 years of innovation in America told through the eyes of 25 entrepreneurs--living and departed--who have gathered to "talk shop" in an imaginary barroom under the watchful eye of economist-turned-bouncer, Joseph Schumpeter. 

From Eli Whitney and his cotton gin to the Broadway smash, Hamilton, their stories capture the essential themes of entrepreneurship, highlight the rules for success, and celebrate the expansive sweep of innovations that have transformed our world.

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