Post-Election: Historical lessons for American Executives

 With political power shifting after the mid-term elections, history offers a valuable lens for business leaders. In our book, Detroit vs. Seattle, we explore a similar economic and political transition during the Great Depression and the strategic lessons business executives can apply today. A century ago, the world's largest industry was automotive, and its most successful and influential leaders came from this industry. President Hoover nominated several automotive executives to his administration, while Henry Ford was considered the greatest entrepreneur and Alfred Sloan of GM the most outstanding executive. When the Great Depression started, Hoover invited Ford, Sloan, and other executives to the White House to tell the American people the economy was strong. In fact, Ford lied and said he was hiring new workers when he was firing them (more on that in the book). Both Ford and Sloan believed successful businesses would always grow, create jobs, and provide workers with the means to support their families; this aligned perfectly with  Hoover's pro-business economic policies.

Alfred Sloan: Winning the Market, Losing the Workers

Alfred Sloan was a brilliant executive; he developed GM's decentralized management system, which helped create America's biggest company. His management techniques would become a model for business schools and executives for generations. Sloan understood the opportunities the Great Depression presented. With unemployment widespread, GM could increase production without fear of employee turnover. His management style ensured GM remained one of the only companies profitable throughout the Great Depression.

Because of high production quotas, line workers' morale was low; workers were exhausted, but what could they do?  A young United Auto Workers (UAW) tried to get GM to recognize it as the representative of line workers so it could negotiate for better conditions. The UAW initially joined the larger American Federation of Labor (AFL). The AFL was known for using peaceful means to negotiate with business. The UAW tried to take advantage of the situation when FDR and Democrats were elected and passed several pieces of legislation giving workers the right to organize. The UAW wuld try to use these regulations to gain labor representation. GM believed business was stronger than government and would not comply with union regulations (none of the automotive companies would), and it could challenge the law in court for years. Sloan would not take the UAW seriously and continued with high productivity requirements. 

GM felt it was safe from the union.  Even when French auto executives told GM how workers took control of their plants with a sit-down strike.  GM felt safe that this would not happen to them; most of their production was in Flint, Michigan, and GM had financial arrangements with the Mayor and Police Chief of Flint, Michigan.

The Balance of Power Shifts

The UAW was frustrated that its peaceful approach to negotiating with GM was not working. So it left the AFL and joined the more aggressive, sometimes violent, Congress of Industrial Organization (CIO). The CIO was formed as a union for miners and used violent strikes to gain recognition in the steel industry. The UAW, backed by the CIO, looked for a chance to use more aggressive techniques to organize GM.

Frank Murphy was elected Michigan Governor in 1936 and gave the UAW the opening it needed. On January 11, 1937, GM workers took control of a GM plant in Flint in a sit-down strike. Police and company security forces confronted strikers; the workers began throwing bolts back at the police and security forces. 14 strikers were wounded during the violence. The new Michigan governor was forced to send in the National Guard to keep the peace. Governor Murphy refused to use more violence to kick out the workers, forcing GM to negotiate with the union.   

From Walter P. Reuther Library, Archives of Labor & Urban Affairs

GM's power began to work against it: a judge ruled that the striking workers had to leave, but he had to withdraw from the case after it was shown he held a large share of GM stock. The UAW used public opinion of the richest company in the world beating workers to their advantage. The strike cost GM money because it stopped almost all production. Governor Murphy facilitated a deal between the UAW and GM. Murphy's intervention helped change the relationship between management and labor in America. Workers showed that corporate power had limits, especially when public opinion and government authority didn't align with its strategy.

Sloan was blinded by power and cost GM Millions.

The 1937 sit-down strike is considered a turning point for union rights. But in reality, it was a failure of the economic system, driven by Sloan's arrogance of power. The lack of trust between automotive companies and workers would continue. With no trust, there was hate, and the violent struggle between automotive companies and the UAW would continue for decades, costing the auto industry production days and costing workers pay. 

What makes our upcoming book, Detroit Vs. Seattle, compelling is how we contrast different cities and industries to show different outcomes. In contrast to GM, Boeing accepted the political shifts and negotiated peacefully with the IAM 751 union, preserving decades without strikes and avoiding lost production.

What Today's Business Leaders Should Learn

The parallels to today are striking. Technology companies and financial institutions have enormous resources and influence in Washington. Yet many Americans remain frustrated by economic insecurity, rising costs, and the perception that powerful corporations receive favorable treatment while ordinary families struggle to get ahead.

The lesson from Sloan is not that successful businesses are the problem. When businesses use their resources to build closer relationships with political leadership instead of aligning with society, they risk losing touch with the people they serve. Citizens will fight power with their own power, changing election landscapes overnight and fighting for their rights. 

Today's business leaders would be wise not to fight every regulation or societal demand in the new political landscape. Executives should focus on delivering value to markets by empowering their workers and aligning with communities. A more balanced approach will build goodwill and societal capital, supporting future success with lower risk.    

The Great Depression forced America to reconsider the business relationship with its citizens. It did not destroy capitalism; it changed the rules under which capitalism operated.

Sloan's greatest mistake was failing to adapt to political and societal change because of his past success. 

Interested in the history of Detroit, Seattle, and the business and political leaders who shaped America's cities? Follow the development of our book project, Detroit vs. Seattle.