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 / Fourth Quarter 2001 / Issue 25(originally published by Booz & Company)


Best Business Books: CEO Memoirs

The Packard paradox has been endemic to executive memoirs, starting with the first example of the genre, A New View of Society, written in 1813 by a visionary textile entrepreneur, Robert Owen. In an era when “dark, satanic mills” were the norm, Owen took young children out of his Scottish factory and put them in a school he funded. He invented day care, unemployment insurance, contributory sickness and retirement plans, and a credit union. He reduced his employees’ workdays from 13 to 10 hours, gave them job security during recessions, and established their right to appeal supervisors’ ratings of their performance. Most radical of all, he provided a clean, safe working environment. As a result, Owen became fabulously rich — and he shared the wealth with his employees.

Had Owen also been able to explain effectively the rationale behind his practices to his fellow leaders of the Industrial Revolution, the world might have been spared the trauma of Marxism. But, alas, Owen was no storyteller. Not only was his prose style overblown and his presentation of subject matter quirky, he was incapable of putting forth a rational argument that other businessmen found convincing.

Sloan’s Value System
It turns out that writing is a core incompetence of many a great executive. A century after Owen’s death, GM’s fabled CEO, Alfred P. Sloan, Jr., addressed that all-too-common shortcoming with a generic solution: the ghostwriter. Sloan’s “as told to” 1963 opus, My Years with General Motors, stands today as the clearest expression of the managerial philosophy that dominated American corporations for most of the 20th century. Sloan (and his ghostwriter) got it right: Sloan documents in insightful, authoritative, and useful detail how, under his leadership, General Motors grew from a nearly bankrupt enterprise in the early part of the century to the world’s greatest industrial corporation when he retired in 1956.

To the contemporary reader, what is particularly striking about Sloan’s book is its unintentional expression of a value system. Only in the writings of F.W. Taylor is there such a relentless commitment to the engineering world view. Profit and growth are stars in his firmament of values, but efficiency is his Polaris. Sloan’s language is that of the calculating engineer working with calipers and a slide rule, his words as cold as the steel he bends to form cars: “economizing,” “utility,” “facts,” “objectivity,” “rationality,” and “maximizing” constitute his working vocabulary. He writes:

And since, therefore, no one knew, or could prove, where the efficiencies and inefficiencies lay, there was no objective basis for the allocation of new investment.… [So we developed] statistics correctly reflecting the relation between the net return and the invested capital of each operating division — the true measure of efficiency.

Sloan’s bugbear is the human element that threatens to gum up the efficient operation of his intricately organized and smoothly functioning corporate machine. In the book’s one acknowledgment of his family life, Sloan makes a passing reference to his wife (he abandons her on the first day of a European vacation in order to return to business in Detroit). And only two individuals at GM are portrayed in human terms. The first is Billy Durant, the entrepreneur who masterminded the creation of the company, who is dismissed by Sloan as a relic of outmoded thinking: “Mr. Durant was a great man with a great weakness — he could create but not administer.”

The second is the researcher Charles F. Kettering, who is treated with gentle disdain for his failed attempts to develop an air-cooled engine. Sloan details at painful length how Kettering’s attempt at creativity was simply bad business, concluding that “it was not necessary to lead in design or run the risks of untried experiment.” And true to his word, GM was never again a technological leader. Instead, it became the domain of the engineer and not the creative scientist, the arena of the marketer and financier and not the innovator, and, especially, the world of the administrator and not the entrepreneur.

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