Reviewed by
Daniel A. Wren
University of Oklahoma
The title would suggest that we will find some managerial inno vations by General Motors—yet the editor leaves it to the reader to determine what these might be. The editor offers no explanation of why these eight items (six reprinted articles and two reprinted speeches from the period 1923-1927) were selected, how they might fit a theme, or just what the “innovation” might have been. For those who are familiar with Professor Chandler’s writings, the ra tionale can be found fairly readily—but if Chandler has not been on your reading list, do not start with this collection. Chandler’s work has emphasized the growth of enterprise and how managerial responses are made to this growth. In this collection, his selection is the writings of top G.M. executives (all Vice-presidents with two exceptions) to show how this enterprise responded to growth.
Under William C. Durant, General Motors had been an unwieldly union of motor car and parts producers. As G.M. faced bankruptcy, it was Du Pont money and Pierre S. du Pont as Chief Executive who saved the Durant creation in 1920. The Du Pont Company, under Pierre S. du Pont, had already pioneered some of the organizational and managerial techniques which would be used at G.M. Du Pont’s Treasurer, Donaldson Brown (who contributed four of the eight arti cles in this book) came to G.M., and together with Alfred P. Sloan, Jr., helped create the G.M. organization with centralized policy and control and decentralized administration and operations.
The managerial innovations at G.M. were those steps taken to bring a rational system of policies, plans, structure, and controls to the organization, something it lacked under previous management.
For example, G.M.’s “Consolidated Cash” policy and procedure was instituted to reduce idle working capital (previously held in various division offices throughout the country) by receiving and distributing all funds centrally through the Corporate Treasurer. Forecasts of activities were translated into budgets for both planning and con trolling uses. G.M.’s Comptroller was given a major role in analyz ing past trends, studying present conditions, and making the fore cast as “a combination of business prophet and historian.” Other selections on pricing policy, inventory control, and budgets are of fered to show the G.M. administrative mechanisms for achieving centralized control. Of particular interest is Albert Bradley’s (Brown’s Assistant) discussion of how G.M. balanced production, inventory, and sales through a dealer reporting system. Readers who are familiar with Durant’s failings will recall that he had trouble balancing production levels and dealers’ sales. Under new manage ment, G.M. developed a dealer’s report, submitted every ten days, of sales, orders, and inventory on hand; this was compared to the original sales forecast, and production adjustments were made as necessary.
Chandler’s theme develops as that of how G.M.’s top manage ment rationalized its organization and management to capitalize on what Billy Durant had built but could not manage. If G.M. had not developed the ideas and techniques we see in these readings, it is highly likely that the outcome of the automobile industry would have been quite different. General Motors did not achieve its successes until after these “managerial innovations” were made.
