The following is a guest post by, GM historian William Pelfrey, author of Billy, Alfred, and General Motors.
Slow, bloated, out-of-touch: such words have been used to describe General Motors’ culture for fifty years.
Yet there was a time when GM stood for the opposite.
One little-known example is how GM responded to the near-death of the luxury car market during the Great Depression.
In 1932, Cadillac’s sales were down eighty-five percent from what they were three years earlier and CEO Alfred P. Sloan convened the Executive Committee to vote on killing the brand.
Nicholas Dreystadt, a high former mechanic who rose through the Cadillac service department, showed up at the meeting unannounced to plead his division’s case. Sloan, who was famous for seeking out the viewpoints of customers and lower field management whenever he traveled, gave Dreystadt ten minutes.
I interviewed the late Peter Drucker who spent a year analyzing GM’s organization at Sloan’s request, and recalled that in the meeting Dreystadt explained to Sloan and the Executive Committee that he was always surprised at the number of “coloreds” having their cars serviced in the Cadillac dealership service bays. Reminded that Cadillac dealers did not sell to “coloreds” because it would lower the brand’s prestige, Dreystadt countered that these were not chauffeurs but people with money who paid a white person to buy the car and then sell it to them. Joe Louis, the Pride of Detroit, was one of those people. If Cadillac would openly court well-to-do African-American buyers, it could sustain its market.
After that meeting, African-Americans began buying Cadillacs from the showroom rather than brokers and by 1934, Nick Dreystadt’s Cadillac Motor Division was not only profitable but the only American luxury car brand still in production.
How could a corporate culture evolve from one that took a chance on Nick Dreystadt and his theory (and on a break-through in race relations) to one that became universally chastised for moving slow and not taking risks? It is a case study that leaders in all kinds of businesses might do well to ponder.
William Pelfrey is the author of BILLY, ALFRED, AND GENERAL MOTORS: The Story of Two Unique Men, a Legendary Company, and a Remarkable Time in American History (AMACOM BOOKS). He spent 15 years at General Motors Corporation, most recently as Director of Executive Communications. A veteran U.S. Foreign Service Officer, he is also a former journalist, who reported for The New York Times, Atlantic Monthly, and New Republic from Vietnam, Pakistan, and Appalachia. A Detroit native, he lives in Beverly Hills, Michigan.
BILLY, ALFRED, AND GENERAL MOTORS won the Nicholas-Joseph Cugnot Award in 2006, for the most outstanding writing and original research in automotive history. The Cugnot Award is awarded annually by the Society of Automotive Historians (SAH), an international group of independent historians, university professors, and auto enthusiasts, and is an affiliate of the American Historical Association.