My Years With General Motors

Our management policy, as the 1942 annual report formally stated it, “has evolved from the belief that the most effective results and the maximum progress and stability of the business are achieved by placing its executives in the same relative position, so far as possible, that they would occupy if they were conducting a business on their own acco

The air-cooled engine offered an attractive prospect. It would get rid of the cumbersome radiator and plumbing system of the water-cooled engine and promised to reduce the number of parts in the engine, its weight, and its cost, and at the same time to improve engine performance. If it fulfilled all these promises it would indeed revolutionize the

Decentralization or not, an industrial corporation is not the mildest form of organization in society. I never minimized the administrative power of the chief executive officer in principle when I occupied that position. I simply exercised that power with discretion; I got better results by selling my ideas than by telling people what to do. Yet th

There are only two that I know of: either manufacturer-owned, manager-operated dealerships, or the selling of cars by anyone and everyone, as cigarettes are sold — with the manufacturer maintaining a system of service agencies. I look askance at either of these changes. I believe that the franchise system, which has long prevailed in the automobile

Having thus separated out a set of related price classes, we set forth an intricate strategy which can be summarized as follows: We proposed in general that General Motors should place its cars at the top of each price range and make them of such a quality that they would attract sales from below that price, selling to those customers who might be

This proposal to maintain diversity in cars and separate divisional selling efforts in a crowded price class required new forms of coordination. And the more you coordinate, the more questions you draw up into the policy area, and therefore the finer must be the distinctions between policy and administration.

But in the face of such urgent demand, the inevitable result was that a second or “gray” market came into existence. It frequently happened that, when a customer drove out of a dealer’s place of business with a new car, he would not get beyond the first stop light before somebody, perhaps a used-car dealer, would drive up and offer to take the car

Experience has convinced me, however, that for those who are responsible for a business, two important factors are motivation and opportunity. The former is supplied in good part by incentive compensation, the latter by decentralization.

The 1923 study failed to gauge accurately the future growth of the market largely because it underestimated the effect of two important factors on new car sales. One of these was the process of continuous product improvement which stimulated consumer demand by providing increasing values for the customer’s dollar. The other was the continued growth