General Motors Corp. (GM) may soon be history. The rest of the business world owes a lot to the company that taught it how to run a modern corporation.
The legendary Alfred Sloan, who ran the firm for nearly three decades after 1923, made GM the colossus it eventually became.
Sloan ensured a new model was launched every year, with planned obsolescence. He segmented the market: selling cars at different price points for consumers with different levels of income. This also meant that consumers kept buying GM cars as they climbed the ladder of success. Sloan also created the modern multi-division firm, which Peter Drucker wrote about in Concept Of The Corporation, the first tome on modern management.
But GM was eventually challenged by nimbler rivals, who embraced its best practices and avoided many of its worst mistakes. That is how capitalism renews itself.
“The business of business is business,” Sloan once said. And now that GM has weak business, it may soon be going out of business. RIP.