One Turning Point in GM's Recent History

Hi folks -- One area that I am focusing my current studies on closely examines the period between the middle 1960s and the early 1970s. For some time now I have intuitively sensed from my reading that it was then that some major changes took place within the auto industry that sowed seeds for the present-day crisis. And I think a key player in this episode is GM executive Frederic Donner, who began to shift finance experts into the area of operations. In fairness to Donner, however, GM, and the other manufacturers of automobiles during the 1960s, began to experience the instability brought on by inflation, environmental concerns (especially air quality), consumerism, and safety. In response to these pressures, GM's upper level management shifted away from the decentralization derived from Sloanism to what was terms "Coordinated Control." Excerpts from a 1970 article in Business Week describes this new management system:

Donner explained that “Centralization means you are bringing into one level the operating decisions of the company. Coordinated control means that where policies have to be determined…you would have coordination” among operating units.

The most visible and dramatic illustrations of change are an emphasis on using many common parts in all the car lines and the direction financial analysis is evolving. Until the 1960s, finance and operations executives were separated, with little cross-over.

Thomas A. Murphy, who was treasurer when in the spring of 1969 he was placed in charge of the car and truck group. His job was to do a financial analysis of the operating side, and to get maximum commonality of parts among the car divisions.

As Ed Cole stated, a nail’s a nail.”

Under a program initiated in 1964, but given high priority in 1966, each division is given long-range design responsibility for an area of a car. Buick is responsible for brakes, Cadillac for parts that affect the driver’s vision, Pontiac for carburetion, and all suspensions for 1971 in 1971 models will be designed by Chevrolet.

From:

Mighty GM Faces its Critics,” Business Week, July 11, 1970, 72-73.

In sum, the distinction among the GM brands became blurred, and Brand value was ultimately diminished. Alfred P. Sloan's marketing strategy of a"car for every purse and purpose" was modified to meet modern complexities, but in the process its elegant simplicity, and that inherent power, was significantly diminished.