In 1922, General Motors chief Alfred Sloan contemplated centralizing authority at the automaker by removing the autonomy of his division heads. He ultimately decided against it.
Sloan knew he needed “strength and responsibility in the chief operating positions,” Peter Drucker recalled. “This was needed as much as control at the center and unity.”
We thought about Sloan’s decision, which served GM very well for many decades, after reading this week’s Wall Street Journal report about Chrysler Group CEO Sergio Marchionne, who seems bent on concentrating authority at one single spot in the corporation: his own desk.
[EXPAND More]The biggest way this manifests itself, according to the newspaper, is in Marchionne’s attention to detail. The Journal article opens, for example, with a scene in which the CEO is personally driving a team of engineers to fix a faulty door handle on the Dodge Charger. “If you really want to run the business, you need to get involved in this level,” he said. The Journal noted that by involving himself in the nitty-gritty this way, Marchionne was able to “save Fiat SpA from the brink of collapse a few years ago.”
But there is clearly a downside, as well, to this kind of micromanagement. “One executive says that some managers who report to Mr. Marchionne know they have the power to make decisions but ‘they also are worried’ in case the boss doesn’t agree,” the Journal reported.
Drucker would not have been surprised. “Any enterprise that attempted to centralize responsibility and decision-making at the top . . . would go under as did the great reptiles of the Saurian age who attempted to control a huge body by a small, centralized nervous system that could not adapt to rapid change,” he wrote in his 1954 book The Practice of Management.
What do you think? Is it better for a CEO to let go of the details, or to keep a tight grip on them?[/EXPAND]