Chapter 7
The atmosphere in the corporation in the fall of 1923 was one of excitement at the prospect that the industry's first four million car-and-truck year had opened up, and there was a great desire for reconciliation of the organizational issues raised by the copper-cooled engine. The experience with that engine had a profound effect on General Motors. At the same time the power of the great demand for automobiles acted as a disciplinary force. It was clearly time to gather ourselves to meet the challenge of the boom twenties, and to gather meant to co-ordinate.
The problem of co-ordination was one of developing the practical means of relating the various functions of management. We had the principles of organization which were laid down in the "Organization Study" of 1919-20. We needed now concretely to coordinate such very different bodies in the corporation as the general office, the research staff, and the decentralized divisions. The divisions in General Motors are self-contained units combining the functions of engineering, production, and sales—the profit-creating activities, in other words. Corporation staff work in each of these functions cuts across these divisional units. For example, the function of staff engineering is potentially and sometimes immediately related to the engineering activities of any or all of the self-contained operating divisions. The junctures between staff and line are critical, as we had learned the hard way. The experience with the copper-cooled car showed what a paralyzing effect one of these junctures could have if it were turned into a battlefield.
The broad problem of co-ordination and decentralization began at the top of the corporation, and was now my responsibility. What I did about it I had already begun to do in the first period of the new administration. In my notes on the situation in the corporation, which I had written at the end of 1921, I introduced the question of decentralization in relation to the activity of the top executive group. First I set down a declaration of principle, as follows:
...That I approached the matter [of organization] from the standpoint of a thorough belief in a decentralized organization. I still, after a year's experience, [am] just as firmly of the same belief that a decentralized organization is the only one that will develop the talent necessary to meet the Corporation's big problems, but certain things, notwithstanding a decentralized organization, must be recognized and I appreciate these much more than I did before...
The main questions, I said, looking forward to the liquidation of the emergency of 1921, were related to the Executive Committee itself, the highest body in the operating structure. These questions were: the role of the Executive Committee as a policy-making group, the representation from the operating side, and the need for authority in the person of the president. I wrote:
a. That the Executive Committee [should] confine itself more particularly to principles which should be presented to it by the [operating organization], properly developed and thoughtfully carried out rather than to constitute itself as it is now, a group management.
This needs little explanation in view of what I have already related. But let me say that, though I have often been taxed, by people who do not know me, with being a committee man—and in a sense I most certainly am— I have never believed that a group as such could manage anything. A group can make policy, but only individuals can administer policy. At that time, and in particular in relation to the copper-cooled engine, the four of us on the Executive Committee were, in my opinion, trying to manage the divisions.
My next point was not specifically aimed at the lack of automotive experience, but at the need for integration of the top executive committee and the operating organization:
b. The Operating side on the Executive Committee is not strongly enough represented. This should be corrected by the increase of the Executive Committee, and I suggest Messrs. Mott, McLaughlin and Bassett as additional members. The Executive Committee to meet not oftener than every two weeks and perhaps once a month.
I then proposed that the president should assume not less but more authority. This is not as surprising as it may seem at first sight, for it followed the principle that an individual and not a group should administer. In actual fact general operations had devolved on me at the time I was vice president of operations, and we had a situation of confused authority. I wrote as follows:
c. Whoever is in charge of Operations should be designated with real authority to be used in case of an emergency. It will probably be best if the President of the Corporation could absolutely have charge of Operations. If this is not feasible, somebody should be so appointed and whoever has charge should develop a reasonable organization to contact with the Operations side as well as the Executive Committee.
I then gave examples of the distinction between policy and administration. Over-all pricing policy, I said, should be reserved to the Executive Committee. Obviously, since we were working with divisional price classes, we were not likely to want Cadillac to produce a car in the Chevrolet price class.
And on the question of Executive Committee action on the character and quality of product, I wrote as follows:
It would seldom be suitable for the Executive Committee to approve the specifications of contemplated product, or even the principal characteristics unless they be of peculiar significance as involving the entry into new fields, or the possibility of undermining the position of existing profitable lines. The Executive Committee should treat with the question from the standpoint of policy and in the direction of regulating the general quality of product of divisions respectively so as to gain a wholesome distribution of product by class ranges, and the avoidance of undue interference between divisions. A carefully designed policy should be enunciated that will convey to each division a complete understanding of the general quality of product that should be attained or maintained and all major alterations of design should be submitted to the Executive Committee for approval from this standpoint. The Executive Committee should not attempt to pass upon the mechanical features, but must rely upon some competent individual or body in the operating organization.
In general, the activity of the Executive Committee should be guided along the lines of establishing policies and laying the same down in such clear cut and comprehensive terms as to supply the basis of authorized executive action...
I cannot recall how Mr. du Pont expressed himself on these proposals. I think he must have agreed, for he co-operated in bringing them into effect. In 1922 he caused to be elected to the Executive Committee Mr. Mott and Fred J. Fisher, both experienced in operations. And later, in 1924, when I was its chairman, he concurred in adding Mr. Bassett, Mr. Brown, Mr. Pratt, Charles T. Fisher, and Lawrence P. Fisher, making ten in all, seven experienced in operations, two in finance, and Mr. du Pont himself. The Executive Committee thus achieved an identity with the operating organization, which, under one title or another, it has maintained ever since. Eventually the Executive Committee limited itself to policy matters, and left administration to the president.
Now the question of the relation of the staff, line, and general officers. I shall describe here the steps which, when completed, put form into the organization.
Two early steps, one in the area of purchasing, the other in advertising, assisted in pointing the way to a practical form of organization. The setting up of the General Purchasing Committee was a task I undertook in 1922. There are two things about this committee which it is important to consider. One was its value or lack of it in its own right; the other was its incidental value as a lesson in coordination, which is more germane to the story here.
Centralized purchasing was not an original idea with us. In those days it was considered to be an important industrial economy, and in some circumstances I believe it was. I had experience with volume economies at Hyatt as a supplier to Ford. But centralized purchasing, in which a single purchasing office executes contracts involving more than one division of an enterprise, was an oversimplified notion, as we discovered. The problem for General Motors, as I saw it in 1922, was to get the advantages of volume by buying on general contracts such items as tires, steel, stationery, rags, batteries, blocks, acetylene, abrasives, and the like, and at the same time to permit the divisions to have control over their own affairs. In a preliminary memorandum I argued that co-ordination of purchasing would save the corporation an estimated five to ten million dollars a year; that it would make it easier to control—especially to reduce—inventory; that in an emergency one division could obtain materials from another, and that the corporation's purchasing specialist could take advantage of price fluctuations. I conceded, however, the peculiar difficulties that arise "when one considers the extremely technical character of practically all the Corporation's product and recognizes that we are dealing with many personalities and viewpoints developed through years of contact with certain products as compared with others." In other words, it was a question of acknowledging the natural constraints of decentralization that were built into both the technology of the product and the minds of the managers. The latter were not long in making precisely this point when I first proposed to have a purchasing staff do the co-ordinating. They gave as argument their long experience, the variety of their requirements, and the loss of divisional responsibility in an area which could affect their ability to carry out their car programs.
To meet these objections I proposed the General Purchasing Committee, with a membership drawn mostly from the divisions. The divisions supported the proposition when they learned that they would be represented and would participate in deciding on policy and procedures for purchasing, determine specifications, and draw up contracts, and that their decisions in the committee would be final. Thus it was arranged that in the committee the representatives of the divisions had the opportunity to draw the balance between their special needs and the general interest. A corporation purchasing staff was to administer, but not dictate, the committee's decisions; that is, the relation of committee to staff was to be that of "principal and agent." The Purchasing Committee lasted about ten years and worked reasonably well during that time. But a number of limitations on its value arose:
The first was that quantities of any particular product needed for one division were generally large enough to justify the supplier giving the lowest possible price to that division.
The second was the question of administration. For instance, if the corporation made a contract available to all divisions it sometimes happened that a supplier who did not get the contract would go to one of the divisions and make a lower price, even though he had participated in the original offering. That would cause confusion and unhappiness.
Third, a large number of parts and supplies to be purchased had no common denominator. They were special items applicable to a particular engineering concept.
Therefore, I think the General Purchasing Committee itself cannot be cited as an unqualified success. It caused us, however, to make a strong effort to standardize articles where possible. This and the description of standardized production were very important matters. The General Purchasing Committee's real and lasting success was in the area of standardization of materials.
Also, this committee provided our first lesson in co-ordination. It was our first experience of inter-divisional activity, combining line (at the level of a divisional function), staff (a general purchasing section), and general officers (I was the first chairman of the committee). Two years later, reviewing its work, I wrote:
...The General Purchasing Committee has, I believe, shown the way and has demonstrated that those responsible for each functional activity can work together to their own profit and to the profit of the stockholders at the same time and such a plan of co-ordination is far better from every standpoint than trying to inject it into the operations from some central activity.
The next significant step toward co-ordination was in the area of advertising. I had had some consumer studies made in 1922, and we found that people throughout the United States, except at the corner of Wall and Broad streets, didn't know anything about General Motors. So I thought we should publicize the parent company. A plan submitted to me by Barton, Durstine, and Osborn, now BBDO, was approved by the Finance Committee and by our top executives. But since divisional matters would come into the picture, I asked both divisional personnel and other executives in Detroit for their viewpoints on the propriety of such a program. It was agreed that the plan was worthwhile, and Bruce Barton was given full responsibility for conducting the campaign. We then formed the Institutional Advertising Committee, consisting of car division managers and staff men, to assist Mr. Barton and "to effect the necessary co-ordination with other phases of the Corporation's publicity." I made a rule that if any advertising theme dealt with a particular division, it must have the approval of that division. It was another little lesson in divisional relationships.
The really big step forward in co-ordination, however, followed from the copper-cooled-engine experience. When that issue was concluded with the parties to it divided against one another—particularly the research engineers on the one hand and the divisional engineers on the other—something had to be done to heal the wounds, and to resolve this fundamental conflict between those seeking new concepts and those with the responsibility for producing automobiles. First of all, what was needed was a place to bring these men together under amicable circumstances for the exchange of information and the ironing out of differences. It seemed to me preferable that such a meeting of minds should take place in the presence of the general executives, who would in the end have to make or approve the big decisions on forward programs.
Rather than try to give the picture wholly through recollection, in which it might well be supposed that I would share in the human failing of making it seem more logical than it was, I shall quote here at length a proposal—the key statement, I believe, in the whole affair—which I wrote and circulated to a number of executives of the corporation and obtained approval of during September 1923:
I have felt for a long time past that if a proper plan could be developed that would have the support of all those interested that a great deal could be gained for the Corporation by co-operation of an engineering nature between our various Operations, particularly our Car Divisions, dealing as they do in so many problems having the same general characteristics. Activities of this type have already been started in the way of purchasing and have been very helpful and I am confident that as time goes on will be justified in a great many different ways beside [s] resulting in very material profit to the Corporation. The activities of our Institutional Advertising Committee have been constructive and Mr. du Pont remarked to me the other day after one of those meetings that even if it was assumed that the value of the advertising was negligible the other benefits accruing to the Corporation by the development of a General Motors atmosphere and the working together spirit of all members of the Committee representing the various phases of the Corporation's activities . . . the cost was well justified. I am quite confident that we all agree as to these principles and assuming that is the case and there is no reason why the same principle does not apply to engineering, it appears to me to be well worth a serious attempt to put the principle into practical operation. I am thoroughly convinced that it can be made a wonderful success. I believe, therefore, that we should at this time establish what might be termed a General Technical Committee which Committee would have certain powers and functions which should be broadly defined at the start and amplified in various ways as the progress of the work seems to justify.
Before attempting to outline even the general principles upon which I believe a start could be made, I think it should be very clearly set forth and distinctly understood by all that the functions of this Committee would not in any event be to deal with the specific engineering activities of any particular Operation. According to General Motors plan of organization, to which I believe we all heartily subscribe, the activities of any specific Operation are under the absolute control of the General Manager of that Division, subject only to very broad contact with the general officers of the Corporation. I certainly do not want to suggest a departure even to the slightest degree from what I believe to be so thoroughly sound a type of organization. On the contrary I do believe and have believed for a long time that one of the great problems that faces the General Motors Corporation was to add to its present plan of organization some method by which the advantages of the Corporation as a whole could be capitalized to the further benefit of the stockholders. I feel that a proper balance can and must necessarily be established in the course of time between the activities of any particular Operation and that of all our Operations together and as I see the picture at the moment no better way or even as good a way has yet been advanced as to ask those members of each organization who have the same functional relationship to get together and decide for themselves what should be done where coordination is necessary, giving such a group the power to deal with the problem where it is felt that the power can be constructively applied. I believe that such a plan properly developed gives the necessary balance between each Operation and the Corporation itself and will result in all the advantages of co-ordinated action where such action is of benefit in a broader way without in any sense limiting the initiative of independence of action of any component part of the group.
Assuming that this is correct in principle, I might set forth specifically what the functions in the case of the General Technical Committee would be, although this discussion would, I think, apply equally well to other Committees dealing with all functions common to all manufacturing enterprises.
1. The Committee would deal in problems which would be of interest to all Divisions and would in dealing with such matters largely formulate the general engineering policies of the Corporation.
2. The Committee would assume the functions of the already constituted Patent Committee which would be discontinued and in assuming these functions would have the authority to deal with patent matters, already vested in the Patent Committee.
3. The Committee would not, as to principle, deal with the specific problems of any individual Operation. Each function of that Operation would be under the absolute control of the General Manager of that Division.
It is to be noted that the functioning of the Patent Section, Advisory Staff, differs materially from that of any other staff activity and is in a sense an exception to General Motors plan of organization in the fact that all patent problems come directly under the control of the Director of the Patent Section. In other words, all patent work is centralized. The Patent Procedure provides, however, for an Inventions Committee and for co-operation with the Director of the Patent Section and the dividing under certain conditions of responsibility in patent matters. In view of the fact that the personnel of the Inventions Committee must necessarily largely parallel that of the General Technical Committee it is thought advisable to consolidate the two for the sake of simplification.
There is also to be considered the functions of the General Motors Research Corporation at Dayton. I feel that up to the present time the [General Motors] Corporation has failed to capitalize what might be capitalized with a proper system of administration, the advantages that should flow from an organization such as we have at Dayton. In making this statement I feel that there are a number of contributing causes, the most important being a lack of proper administrative policy or, I might say, a lack of getting together which it is hoped that this program will provide not only, as just stated, for better co-ordination with the Research Corporation but better co-ordination also among the Operating Divisions themselves. I believe that we would all agree that many of our research and engineering problems in Dayton can only be capitalized through the acceptance and commercializing of same by the Operating Divisions. I fully believe that a more intimate contact with what the Research Corporation is trying to do will be all that is necessary to effect the desired result and strengthen the whole engineering side of the entire [General Motors] Corporation.
It is my idea that the General Technical Committee should be independent in character and in addition to developing through its Secretary, as hereafter described, a program for its meetings, which it is believed would be helpful and beneficial to all the members of the Committee, would conduct studies and investigations of such a character and scope as its judgment would dictate as desirable and for that purpose would use the facilities of the Research Corporation or of any Operating Division or of any outside source that in its judgment would lead to the most beneficial result. Projects of this character would be presented to the Committee by any member of the Committee itself, by the Research Corporation or by any member of the General Motors Corporation through the Committee's Secretary. Beginning January 1, 1924 the cost of operating the General Motors Corporation will be under the control of a budget system and funds will be provided in that budget to cover this purpose.
I have presented the above ideas at an Operations Committee meeting of which all the General Managers of the Car Divisions primarily interested in this matter and the Group Vice Presidents are members and they all seemed to think that the step was a constructive one and would have the support of all.
In order, therefore, that all the above may be crystallized in a few principal points which will be sufficient to form a starting point, I propose the following:—
1. That co-operation shall be established between the Car Divisions and the Engineering Departments within the Corporation, including the engineering and research activities of the General Motors Research Corporation and that co-operation shall take the form of a Committee to be established to be termed the General Technical Committee.
2. The Committee will consist as to principle, of the Chief Engineers of each Car Division and certain additional members . . .
Thus formed, the General Technical Committee became the highest advisory body on engineering in the corporation. It brought together the very persons who had parted over the copper-cooled engine: the divisional chief engineers, including, notably, Mr. Hunt; staff engineers, including, notably, Mr. Kettering; and a number of the general officers of the corporation, including myself as the committee's chairman. It was, as my proposal stated, an independent staff organization with its own secretary and budget. It held its first meeting on September 14, 1923. I was pleased to sit among those fine men—Mr. Kettering, who had the research responsibility; Mr. Hunt, who had a production-engineering responsibility at Chevrolet; Henry Crane, who was my assistant on engineering matters; and the others— all of whom met in a friendly atmosphere and entered afresh into the future development of the automobile.
The General Technical Committee raised the prestige of the engineering group in the corporation and supported its efforts to acquire more adequate facilities and personnel. Its activities emphasized the importance of product integrity as the basic requirement for the future success of the business. It had a remarkable effect in stimulating interest and action everywhere in the corporation in matters of product appeal and product improvement, and produced a free exchange of new and progressive ideas and experience among division engineers. In short, it co-ordinated information.
A number of specific functions were given to the General Technical Committee. For a while it dealt with patent matters, but these were soon turned over to a special New Devices Committee. More important was the committee's role as a kind of board of directors of the great new Proving Ground that we built at Milford, Michigan. Testing had clearly become a crucial question for the future of our products. The Proving Ground, with its controlled conditions, was the logical step away from testing on public roads, which the industry up to that time had practiced. The committee saw to it that the Proving Ground developed standardized test procedures and measuring equipment, and that it became the corporation's center for making independent comparisons of division products and the products of competition. Although engine testing was not assigned to the Proving Ground, the committee was charged with developing an engine test code that would produce uniformity in the engine testing practices of the various divisions.
And yet the General Technical Committee was the mildest kind of organization. Its most important role was that of a study group. It got to be known as a seminar. Its meetings usually were opened with the reading of one or two papers on a specific engineering problem or device, and these would then be the center of a general discussion. Sometimes the committee's discussion would conclude with the approval of a new device or method, or a recommendation on engineering policy and procedure, but more often the results were simply that information was transmitted from one to all. The members returned to their divisions with a broader understanding of new developments and current problems of automotive engineering and with knowledge of what their associates in other areas of the corporation were doing.
In its reports, papers, and discussions the General Technical Committee studied such short-range engineering problems as those concerning brakes, fuel consumption, lubrication, changes required in the steering mechanism as a result of the development of four wheel brakes and "balloon" tires (this led to a subcommittee conferring with the rubber companies) , and the condensation of products of combustion that resulted in internal rust and oil sludge (which was finally eliminated by proper crankcase ventilation) . In 1924 and 1925 the committee gave attention to the education of the dealers and sales departments on the advertising and sales value of current engineering developments. I asked the committee to develop a series of criteria by which "car value" of the different makes and models might be objectively determined. In 1924, too, I gave the committee the task of setting up the broad specifications of the different cars to assist in our efforts to keep the several General Motors' cars distinct and separate products and in a proper price and cost relationship to one another.
Mr. Kettering's staff made most of the long-range investigations and submitted most of the reports during the early years of the committee. They discussed such matters as control of cylinder-wall temperature, cylinder heads, sleeve-valve engines, intake manifolds, tetraethyl lead for gasoline, and transmissions. Fundamentally the subject matters were fuels and metallurgy, the two areas which have furnished the most important improvements in the performance of the automobile since that time.
A meeting on September 17, 1924, in which the subject of transmissions was considered, is a good example of the committee at work. I rely on the minutes for this description. Mr. Kettering began by describing the relative merits and demerits of various types of transmissions. This was followed by a long discussion on the practicality of the inertia-type transmission from an engineering standpoint. Mr. Hunt discussed the different types from the "commercial angle." The growing traffic problem, he said, was calling for a car which "has real acceleration, and in addition it has to have real brakes." After some give and take around the table, I closed this part of the meeting by saying: "I take it that the sentiment of the Committee is something like this: First, that we should look to the ultimate, which is directly a Research problem, and that the inertia type [transmission] is the one which offers the greatest possibilities. (Note 7-1.) This being strictly a Research problem, should not the Committee charge Mr. Kettering with doing everything possible toward its development? . . . Second, for the present we must have minimum inertia and minimum friction in our clutch and transmission elements at our various divisions, and this problem is their own."
In such manner we separated the function of the Research Corporation from that of the divisions. The divisions in those days, however, also had long-term projects; Chevrolet, for example, developed a six-cylinder low-priced car.
That summer I wrote Mr. Kettering about a session of the Technical Committee in Oshawa, Canada. This passage gives the general idea:
. . . We had a splendid meeting not only so far as the meeting itself went but the boys stayed over Saturday and some of them Sunday and some went fishing and others played golf and that helps a lot in bringing men who are thinking in the same direction, more closely together. I can't help but feel, considering the magnitude of our picture and all that sort of thing, that this co-operation in engineering is working out just splendidly. We must be patient, but I am sure that as time goes on we are going to be fully repaid for the way we have handled it as compared with a more military style which I do not think would have ever put us anywhere.
The inter-divisional committee, tried in a rudimentary way in purchasing and advertising, and applied more intensively in the General Technical Committee, was the first big idea for co-ordination in the corporation. We went on from the General Technical Committee to apply the concept to most of the principal functional activities of the divisions. The next inter-divisional committee to be formed was in sales. The sales area was relatively unexplored, for the industry in the mid-twenties for the first time had entered its commercial phase. I therefore arranged to set up the General Sales Committee, made up of the sales managers of the car and truck divisions, sales-staff members, and general officers of the corporation. As its chairman, I opened its first meeting on March 6, 1924, with the following remarks:
While General Motors is definitely committed to a decentralized plan of operation, it is nevertheless obvious that from time to time general plans and policies beneficial to the Corporation and its stockholders, as well as to the individual divisions, can best be accomplished through concerted effort.
The necessity for concerted action on the broader phases of our activities is emphasized by the likelihood of some of our competitors merging their interests—perhaps in the near future. This, as you know, is the trend of the industry. Narrowing profits will add impetus to such a tendency and under the highly competitive conditions of the near future we may expect a decidedly different situation in the field.
General Motors, as you know, has made quite a lot of progress in lining up its products into different price groups, which, relatively speaking, are non-competitive. From the standpoint of design and manufacture we have, through the cooperation of our Division Managers and Engineers, made wonderful progress in the direction of coordination.
Much is to be gained through a similar coordination of sales activities. I think that we, in General Motors, have all got to recognize that the "neck of the bottle" is going to be the sales end. This is perfectly natural in any industry; it eventually gets down to the sales end, and certainly the automotive industry is beginning to reach that period— if it has not already arrived.
It is our idea that this Committee will take in hand all those major sales problems which [a] fleet the Corporation as a whole. It is your Committee. You can feel perfectly free to bring up any sales problems that seem to require general discussion and concerted effort. Whatever general policies or actions you may decide upon will be fully supported by the parent Corporation.
We should, I believe, confine our discussions in these meetings to problems of common interest [a] fleeting all divisions. Realizing that all of you men are extremely busy we will try to keep away from details — dealing only with the basic problems. We will do everything in our power to make the sessions business-like and to the point. No time will be taken to prepare papers, etc. unless in some instances you may wish it that way. Mr. [B. G.] Koether [director, Sales Section] will serve as Secretary of the Committee. He has a Staff which can be expanded if necessary, and whose services are entirely at your command.
We have not developed any definite programs for these meetings because we want to leave such matters to you, realizing that you are in a better position to know just what problems require the most urgent attention and while we may suggest a number of things from time to time it is entirely up to you to act upon such suggestions as you may see fit . . .
The chairmanship of the General Sales Committee was later given to Donaldson Brown, vice president of finance, because of the bearing of statistical and financial controls on production and sales problems. Co-ordination in sales thus extended to the Financial Staff.
After a study of the inter-divisional type of committee by Mr. Pratt in late 1924 confirmed in the minds of everyone that this was the best form of co-ordination we had found up to that time, it was made more or less official and was extended to works managers and the power and maintenance staff. Something of the same sort of co-ordination was extended to the very top level of management —but with a difference.
The reader will recall that under Mr. Durant the Executive Committee was composed largely of division managers who campaigned there for the interests of their respective divisions. When we formed the new temporary Executive Committee of four, we placed the former members, mainly the division managers, in an advisory operations committee. For some time, while the emergency was being liquidated, this advisory committee was not regularly active. After I became president and the Executive Committee was enlarged again, it included at different times one or two division managers, depending on circumstance, or motivated by the thought that the largest car division should have representation there. But these were exceptions, not the rule, for I believed in principle that the top operating committee should be a policy group detached from the interests of specific divisions. In other words, it should contain only general executives. Holding this view, after I became president I felt that something should be done to bring the general managers into contact in a regular way with the members of the top operating policy group. I therefore reactivated the Operations Committee and had placed on it all the general operating officers on the Executive Committee and the general managers of the principal divisions, thus making it the major point of regular contact between the two types of executives. The Operations Committee was not a policy-making body but a forum for the discussion of policy or of need for policy. The Operations Committee would receive a full set of data on the performance of the corporation and would review that performance. The word "forum" may suggest something idle, but I assure you that in this case it does not mean that. In a large enterprise some means is necessary to bring about a common understanding. It is perhaps sufficient to note that, with all of the members of the top operating policy group present, an agreement on a policy, suggested say by a division manager, would be tantamount to acceptance on the operating side of the corporation.
In sum then, the whole picture of co-ordination in 1925 and for a number of years thereafter was as follows: The inter-divisional relations committees gave a measure of co-ordination to the functions of purchasing, engineering, sales, and the like. The Operations Committee, including the general managers, appraised the performance of the divisions. The Executive Committee, with contacts in all directions, made policy. It sat at the head of operations, responsible to the board of directors—indeed it was a committee of the board—but beholden to the Finance Committee for its larger appropriations. On the operating side the Executive Committee was supreme. Its chairman was the president and chief executive officer of the corporation; and he had all the authority he needed to carry out established policy. This was the new General Motors scheme of management from which developments down to this day, through much evolution, have been derived.