The Power of Information--

Sloan joined General Motors in 1923. On his arrival, he found the company a maze of complexities that he dedicated himself to unravelling to make it a successful organisation.

Sloan was clear that to build a sound strategy and undertake the right venture, he would need facts and insight from the people in the organisation. He knew that without making his understanding of the business from close personal collaborations with his technical and business staff and regular private visits to the company’s technical facilities, he might not understand the issues hindering the organisation’s performance. His most significant impact on the organisation came from how he created working relationships with GM dealers nationwide. He constantly gathered information from GM’s dealers and cultivated close, productive relationships with them. He made his office in a railroad car and travelled across the length and breadth of the country to visit dealers. He often saw between five and ten dealers a day. He did not want to know what GM was selling to the dealers but what was selling off the dealers’ lot.

These visits resulted in Sloan’s realisation that the car business was changing. Used cars would provide basic transportation. Middle-income buyers, with the assistance of instalments and trade-ins, would buy upscale new cars.

The change demanded a renewed relationship with the dealers—a relationship based on partnership. Sloan created a dealer council to meet regularly with GM’s senior executives at corporate headquarters and a dealer relations board to handle dealer complaints and did economic studies to determine the best locations for the new dealership.

Sloan knew that without accurate information, sales would remain inconsistent. For the dealer, it was pertinent to know why his sales were dropping. Whether it was due to a used car problem, a parts problem, a service problem or some other problem, to address these needs, Sloan set a standardised accounting system across the GM organisation and all dealerships.

It was yet to be digital, but it was an extremely valuable step to centralise the information base for timely decision-making. With this information, GM managed its inventory better than anyone else and gained a huge competitive advantage from capitalising on this information. Expectedly, the investment and faith in the new system brought about high sales, more revenues, and a satisfied workforce and dealerships.

Back then, with communication and information technology still in its infancy, much work in the accounting system was done manually and involved thousands of phone calls. Today, however, as GM did later, it transcended to PC technology and internet standards to communicate with its dealers and customers.

If information management and organisational responsiveness can make a fundamental difference in a traditional smokestack industry ninety years ago, how much difference will they make propelled by technology?

It is about data procurement, management, and distribution to the right people at the right time.

Source: Business @ The Speed of Thought--Succedding in the Digital Econonmy by Bill Gates.