(Readers: Please note the blog about the 5th revolution in the US is constructed as a story. While not all chapters are linked, the story might be more meaningful by starting at the beginning.)

(Want a PDF version for Entries #1-10, #11-20, #21-30 formatted for tablets and e-books?  Entries #31-40 available soon.  Click links for download.  America’s 5th Revolution Volume I (Entries 1-10)America’s 5th Revolution Volume II (Entries 11-20)America’s 5th Revolution Volume III (Entries 21-30)

Scene: Jordan’s office with Matt, reporter for major publication.  Matt has been asked by POTUS’ office to help write the story of GM.  POTUS wants to use the information as part of a plan to help rebuild US manufacturing.

reporter on typewriter clipartMatt:  “I’m still dumbfounded over the last session.  But we have one more segment to go on Sloan – organizational structure.  Why was it so important?”

Jordan:  “Couple of reasons.  Maybe the most important  is Sloan understood people like to identify with an organization or with a brand.  Ask some people who they work for.”

Matt:  “You mean like Apple, or Honda or Starbucks?”

Jordan:  “Right.  Do you ever hear anyone say, ‘Gee I work for this acronym of a holding company.”

Matt:  “No, other than a few Wall Street types.”

Jordan:  “When GM was at its best, the divisions – Cadillac, Buick, etc – were effectively ?????????????????????????????????????????????????????????????????independent companies.  The employees – hourly and salary – the dealers, even some of the suppliers would say ‘I work at Buick.’  And notice I used the word ‘at’ and not ‘for.  Because the employees felt part of the team.”

Matt:  “Did anyone ever say I work at General Motors?”

Jordan:  “Rarely, if ever.  Even when I worked on the corporate staff in New York, we used to identify ourselves as the Treasurer’s Office, New York, aka TONY.”

Matt:  “All these divisions sound great but wasn’t it inefficient to allow so much autonomy?  There must have been a lot of overlap and extra cost.”

Jordan:  “You sure you aren’t a bean counter?”

BeanCounterMatt:  “Jordan, you know I’m not.  But still, seems like a lot of unnecessary overhead.”

Jordan:  “Matt, take a deep breath and listen.  Keep in mind how large the divisions were.  For example, Buick Division was larger than say all of Goodyear Tire and Rubber Company.   That’s Goodyear worldwide.  And Buick was not especially large in GM.”

Matt:  “I had no idea each division was that large a business.”

Jordan:  “Well, now you know what an economic engine GM was.  Sloan understood the economic engine was fueled by sales.  And he understood that clear brand identity was critical for sales.”

Matt:  “Is identity with the brand the foundation for creating an emotional bond?”

Jordan:  “For a reporter, you’re not bad marketer.  Absolutely.  Establishing an emotional bond is important for all types of products.”

Matt:  “You have some examples?”

Jordan:  “Jump from brands of cars to brands of electronics.  In a somewhat cynical way, you can think of most computers, phones and other electronic equipment as just pushing around electrons.”

Matt:  “I suppose not much different than looking at a car as mere transportation.”

Jordan:  “And for some buyers that’s true.  But many, many buyers develop an emotional bond with their product.  When thinking about buying electronic equipment some people are die-hard Apple fans; others are in love with Google.  And still others are die-hard Microsoft fans.  And the same applies to cars and trucks.”

BuickMatt:  “Now that you mention it, my grandfather used to refer to himself as a proud ‘Buick’ man.”

Jordan:  “Mine did as well.  That’s why I was so happy to be assigned to Buick after the Sloan program.”

Matt:  “Was your grandfather alive then?”

Jordan:  “No.  But many times when talking about Buick product or dealers I would think of him…and one product in particular.  While I was at Buick we introduced…really re-introduced… a large rear-wheel drive sedan.  And guess what we called it?”

Matt:  “Roadmaster?”

Jordan:  “You got it.  The name Roadmaster fit perfectly.  My grandfather loved his Roadmasters.  But the funny part of the naming story happened during some consumer research of the car.”

Matt:  “What do you mean?”

Jordan:  “We had a fiberglass model of the car in a research clinic but no badge identification.”

Matt:  “You mean like no Ford oval or Chevrolet bowtie?”

Jordan:  “No markings at all.  Anyway, this young lady gets a first look at the car and says without any prompting, ‘That looks like a master of the road.  A road master.”

Matt:  “So that cemented any doubts about the name.”

Jordan:  “I could not have scripted it better.”

APSMatt:  “OK, so Sloan allows the divisions to operate fairly autonomously.  You also mentioned the New York office.  What was the name again, TONY?

Jordan:  “The Treasurer’s Office, New York operated as a consulting group.  TONY was to be a voice away from the day-to-day activities at Detroit HQ and the ‘hype’ at the car divisions.”

Matt:  “’Hype’ seems a bit pejorative.  I mean the car divisions weren’t all used-car sales people.”

Jordan:  “Actually only dealers sell used cars but I know what you mean.  The divisions were vertically integrated and included engineering and manufacturing staffs.  But like organizations with a product, the goal for the divisions was to sell more products.”

Matt:  “I still think ‘hype’ is a bit too much.  Still too much like used-car sales people.”

Jordan:  “OK.  How ‘bout ‘enthusiastic’?”

Matt:  “That works.  Back to the New York office.”

Jordan:  “Recall that GM’s bankruptcies in 1909 and 1919…we need to confirm those dates… were not caused by lack of demand but by running out of cash.”

Matt:  “Did Sloan set up some type of system to manage cash?”

Jordan:  “I don’t know all the background but any expenditure beyond a certain dollar amount had to be reviewed and approved by corporate staff…or even the Board.”

Matt:  “And that was TONY’s role?”

Jordan:  “Yes.  We worked directly with the chairman, coordinating the meetings, providing the analysis and making recommendations.  Plus the group developed forecasts of demand.  TONY even had an Economist’s Staff.”

Matt:  “You mean with real PhD economists?”

Jordan:  “Yes, I worked on that staff for a while.  And no I am not a PhD economist.  But I am a decent model builder and forecaster.  At least I was.”

Matt:  “The NY office really does sound like a consulting group.  What about the Treasury function?”

Jordan:  “When the office was established, being close to Wall Street had advantages.  Far less so today.”

Matt:  “What I’ve heard so far is GM was at its best when the divisions operated fairly independently and with their own engineering and manufacturing staffs.  Doing so created…or at least helped create…strong brand identity, which helped build an emotional bond with customers and with employees.”

Jordan:  “Good summary so far.”

Matt:  “In addition, GM had a separate office in NY to oversee use of capital, both internally and as a treasury function.”

Jordan:  “Let’s take a break.  Next session we’ll talk about how some organizational changes in the 1980’s began to destroy Sloan’s formula for the economic engine.”

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