I have undertaken in this book to give an account of the progress of General Motors. There is much to say about the world's largest private industrial enterprise. Its history covers the present century and many parts of the earth, wherever there is a road to travel. It involves a good deal of the modern development of the engineering arts. Tangibly, the corporation is represented in the market by Chevrolet, Pontiac, Oldsmobile, Buick, Cadillac, and GMC Truck & Coach, jointly the producers of about half the passenger cars and trucks manufactured in the United States and Canada today. Our overseas operations—Vauxhall in England, Adam Opel in Germany, General Motors-Holden's in Australia, and our manufacturing plants in Argentina and Brazil—produced in 1962 about one tenth of the passenger cars and trucks made outside the United States and Canada in the free world. The corporation also produces a substantial quantity of the world's locomotives, diesel and gas-turbine engines, and household appliances. Since General Motors is mainly a producer of automotive products—about 90 per cent of current civilian business— I have stayed for the most part in that area. I have, however, given separate chapters to the nonautomotive area and to General Motors' role in war and defense.
My impressions of all this after more than sixty-five years in and around the automobile industry—forty-five of them in General Motors proper—are the basis of this book. However, the long period covered in the story, the scale of the subject itself, and the limitations of human memory led me to base the story on the record as well as on my impressions of the past. I have also turned often to the memories of my associates. To bring all this into focus I have centered my thoughts on certain elements which seem to me to have influenced most importantly the evolution of the enterprise —broadly speaking, the origin and development of General Motors' scheme of decentralized organization, its financial controls, and its concept of the business as expressed in its approach to the intensely competitive automobile market. These three elements, as I see it, form the foundation of General Motors' way of doing business.
As to history, I have sketched the full span of General Motors' life, from its founding by the industrial genius W. C. Durant in 1908—and earlier events—to the present. But I have concerned myself mainly with the period after 1920, or what I have called the modern corporation, and more particularly the period from 1923 to 1946, when, as president and then chairman, I was chief executive officer of the corporation. In this period the corporation developed some of the basic characteristics which it has today. I have described the old, pre-1921 corporation to show what we began with when we set out to build the modern corporation.
As to autobiography, I have sketched my early history in the industry and the way I happened to come into the corporation in 1918. General Motors and the Hyatt Roller Bearing Company, an enterprise of which I was the head and part-owner before it became a part of United Motors Corporation and later of General Motors, have been almost the sole interests of my business life. Since joining the corporation I have been a substantial shareholder in it. For a long time I was one of its largest individual shareholders, with about 1 per cent of the common stock. Almost all of the fortune that this represents has gone and is going into the charitable foundation which bears my name, and from there into education and scientific research in medical and other fields.
Thus the shareholder's point of view is natural to me. I have always taken a strong stand for the shareholder, especially in such matters as representation on the board of directors and its committees, and the payment of dividends. Yet I have also considered myself as one of the breed that we now call the "executive." Management has been my specialization. On many occasions when I was chief executive officer I had individual responsibility for initiating policy. However, it is doctrine in General Motors that, while policy may originate anywhere, it must be appraised and approved by committees before being administered by individuals. In other words, General Motors has been a group management comprised of very competent individuals. And so I shall often say "we" instead of "I," and sometimes when I say "I," I may mean "we."
In accounting for the progress of General Motors a number of diverse elements must be recognized in the background. General Motors could hardly be imagined to exist anywhere but in this country, with its very active and enterprising people; its resources, including its science and technology and its business and industrial know-how; its vast spaces, roads, and rich markets; its characteristics of change, mobility, and mass production; its great industrial expansion in this century, and its system of freedom in general and free competitive enterprise in particular. Adapting to the distinctive character of the American automobile market has been a critical and rather complex element in General Motors' progress. If in turn we have contributed to the style of the United States as expressed in the automobile, this has been by interaction.
Consider, for example, that survival in the automobile industry in the United States has depended upon winning the favor of buyers of new cars each year. Part and parcel of this is the annual model, the spur to which the organization must respond or die. The urge to satisfy this requirement is the dynamism of General Motors. Many things regarding the progress of the enterprise and the industry fall into place through an understanding of the annual model— its origin and evolution, and the associated concept of upgrading cars, in which General Motors played a prominent role in contrast to the early Ford organization.
I cannot fail to note, too, that the automobile presented one of the greatest industrial opportunities in modern times. General Motors was fortunate to be in on the ground floor. From this thought has come the concept of the first two chapters dealing with the early period of General Motors. Furthermore, the automobile, by giving General Motors an intimate association with the development of the internal-combustion engine, enabled us logically to participate in the application of this type of prime mover to a variety of power needs, notably the airplane and the locomotive. Our growth has been almost exclusively in the mass production of vehicles powered by the internal-combustion engine. It will not come as a surprise to anyone that I am enthusiastic about General Motors and its performance. But I think I am objective in saying that General Motors has capitalized its historic opportunity to the satisfaction of the interests in and around the enterprise, from the shareholder and employees at one end to the consumer at the other.
However, being the largest of private industrial enterprises—with over one million shareholders, some 600,000 employees, $9.2 billion in assets, $14.6 billion in sales, and $1.46 billion in profits in 1962— is a distinction that sometimes makes the corporation a political target. I am glad to meet the issue of size, for to my mind the size of a competitive enterprise is the outcome of its competitive performance; and when it comes to making things like automobiles and locomotives in large numbers for a large home country and the world market, a large size is fitting. It should not be forgotten that the dollar value of these products is relatively high; even a "small" automobile producer may rank among the first hundred largest industrial corporations in the United States.
Growth, or striving for it, is, I believe, essential to the good health of an enterprise. Deliberately to stop growing is to suffocate. We have had examples of that in American industry. In the automobile industry, and in a number of others, the process of growth has given us large-scale enterprise, which is now characteristic of our society. We do things in a big way in the United States. I have always believed in planning big, and I have always discovered after the fact that, if anything, we didn't plan big enough. But I did not foresee the size of General Motors or have size in mind as an objective. I simply took the view that we should go at the job vigorously and without hampering restrictions. I put no ceiling on progress.
Growth and progress are related, for there is no resting place for an enterprise in a competitive economy. Obstacles, conflicts, new problems in various shapes, and new horizons arise to stir the imagination and continue the progress of industry. Success, however, may bring self-satisfaction. In that event, the urge for competitive survival, the strongest of all economic incentives, is dulled. The spirit of venture is lost in the inertia of the mind against change. When such influences develop, growth may be arrested or a decline may set in, caused by the failure to recognize advancing technology or altered consumer needs, or perhaps by competition that is more virile and aggressive. The perpetuation of an unusual success or the maintenance of an unusually high standard of leadership in any industry is sometimes more difficult than the attainment of that success or leadership in the first place. This is the greatest challenge to be met by the leader of an industry. It is a challenge to be met by the General Motors of the future.
It should be clear from this that I do not regard size as a barrier. To me it is only a problem of management. My thoughts on that have always revolved around one concept which contains considerable complexity in theory and in reality—the concept that goes by the oversimplified name of decentralization. The General Motors type of organization—co-ordinated in policy and decentralized in administration—not only has worked well for us, but also has become standard practice in a large part of American industry. Combined with the proper financial incentive, this concept is the cornerstone of General Motors' organizational policy.
An essential aspect of our management philosophy is the factual approach to business judgment. The final act of business judgment is of course intuitive. Perhaps there are formal ways of improving the logic of business strategy, or policy making. But the big work behind business judgment is in finding and acknowledging the facts and circumstances concerning technology, the market, and the like in their continuously changing forms. The rapidity of modern technological change makes the search for facts a permanently necessary feature of the industry. That seems obvious, but some of the biggest changes of position in the industry came about in part because someone got an idea he thought was eternal.
It takes more than the structural design of an organization, however, to ensure sound management. No organization is sounder than the men who run it and delegate others to run it. They are in a position to tip the balance in a decentralized organization toward centralization and even one-man rule. General Motors' long-term survival depends upon its being operated in both the spirit and the substance of decentralization.
It seems appropriate in this connection to speak of General Motors as an institution. In the corporation there is an atmosphere of objectivity and enjoyment of the enterprise. One of the corporation's great strengths is that it was designed to be an objective organization, as distinguished from the type that gets lost in the subjectivity of personalities.
Let me say, however, that my experience tells me that there is no simple formula in this matter of organization. The role of personality can be so important that sometimes it is necessary to build an organization, or rather perhaps a section of it, around one or more individuals rather than to fit individuals into the organization. This will be seen in rather dramatic form in my account of the development of our early engineering staff work. Great constraint, however, is required when any part of a corporation has to be adapted to an individual, because there are limits to this process as well as to the other. And as I have said above, it is imperative for the health of the organization that it always tends to rise above subjectivity.
If I have expressed or implied in this book a so-called ideology, it is, I suppose, that I believe in competition as an article of faith, a means of progress, and a way of life. It should be recognized that competition takes various forms: General Motors, for example, has competed with other enterprises as a type of organization (decentralized) and in its long-range way of doing business (upgrading the product), as well as in the usual day-to-day business activities. The elder Henry Ford, on the other hand, believed more in centralized organization and in a static car model. Such competition in basic policy has at times been decisive. We proceeded, too, with a belief in progress, which is evident in our forward investment planning. We set out to produce not for the chosen few but for the whole consumer public on the assumption of a continuously rising standard of living. Our interpretations of the significance of the rising standard of living marked an important difference between us and others in the formative years of the modern market.
The area in General Motors that I have staked out for this book is one that is not usually visible. It extends from the board of directors to the producing divisions, and consists of the general administration, the executive officers, the policy committees, the line and staff organization, and the interactions between the producing divisions; in other words, the area in which the part contributes to the whole and the whole to the part. Not the interior of the producing divisions, therefore, but the interior of the constellation we call General Motors is my subject.
The book is divided into two parts. Part One is an integrated, continuous story of the main lines of General Motors' progress, involving the origin and development of the corporation's basic management concepts in the areas of organization, finance, and product. Part Two consists of individually distinct sections dealing in some detail with engineering, distribution, overseas operations, war and defense products, incentive compensation, and other aspects and branches of the enterprise. I have not, however, attempted to be comprehensive. It would have been an impossible undertaking for me to try to tell the whole story of General Motors, covering more than a half century. I have selected—as all authors must—largely from my own experience, and I am prepared to be judged accordingly.
The approach of this book is to deal with business from the logical point of view, and to combine ideas and history. The structure of the book, particularly the sequence of chapters in Part One, resulted from a consideration of the logic of management in relation to the events of the automotive industry. There were, of course, other possible approaches, psychological, sociological, subjective, and so forth. The logical approach was chosen because it made possible the presentation of a large amount of complex material in a limited space. It also made it possible to give a clear view of the business as a business. Such an approach was appropriate to the subject of General Motors, since one aspect of the corporation's business strategy has been a conscious effort to be objective in the pursuit of business aims.
Necessarily, I have emphasized work done in times past, when many long-term, basic policies were first laid down. I recognize, however, that in the operation of the corporation year in and year out, new creative efforts have to be continuously made which result in refining and modifying the early policies. Furthermore, new policies have to be formulated to meet new conditions. Change, as I have often said, means challenge, and the ability to meet challenge is the sign of good management. Far-reaching changes in product, demand, and outside pressures have had to be met to maintain General Motors' growth and prosperity. Indeed, the present management of General Motors is meeting and taking care of entirely new problems unique in its generation.