Frank Donaldson Brown

Frank Donaldson Brown (1885-1965) was born in Baltimore on February 1, 1885, the son of J. Willcox Brown and Ellen Turner Macfarland. Brown entered Virginia Polytechnic Institute (VPI) in 1898 at the age of 13, graduating four years later with a degree in electrical engineering.  Today, the student union at VPI is named for him. 

He became the chief financial officer at DuPont Corporation in 1912 and later General Motors Corporation (GM) in 1921. At both companies, Donaldson Brown developed accounting innovations that led to the success of both organizations. These innovations included the DuPont Return-on-Investment (ROI) formula in 1914. However, ROI was not Brown’s only contribution to financial management.  His dealer ten-day reporting system at GM was widely and rapidly adopted throughout the auto industry. His ideas to support a variety of forecasting and planning techniques supported decentralized corporate management, and his pricing processes were cutting-edge developments that others emulated. Flexible budgeting at General Motors also was implemented during his administration in the early 1920s.

Brown began his career in 1903 with the Baltimore & Ohio Railroad, but soon moved to the Sprague Electric Company, a subsidiary of General Electric. He stayed with that company until 1907 when he went into business for himself in a coal-moving company and then went to work in 1909 as a salesman of explosives for the DuPont Company. In 1912, DuPont general manager, Hamilton Barksdale, a first cousin who was married to a duPont*, recognized Brown's abilities and asked him to join the staff. In June 1916, Brown married Barksdale's daughter, Greta duPont Barksdale, which gave him a kinship that some considered necessary for advancement at DuPont.  He was elected to the DuPont board of directors in 1918 and remained thereon until his death 47 years later. He served on the DuPont board’s Finance Committee for 45 years.  He died on October 2, 1965, at the age of 80.

ROI was Brown's most prominent contribution and the technique achieved status as a dominant approach to financial management by the 1950s.  As a national standard-of-performance measure, it was supported by varying sources including the American Management Association as well as in the teaching materials of academics, especially Robert N. Anthony of the Harvard Business School. The impact of these forms of dissemination led to ROI being adopted eventually at the Ford Motor Company when its previously autocratic centralized style of Ford family management was replaced by a team known as the Whiz Kids, led by Harvard Business School alumnus Robert McNamara and a former GM vice president, Ernest R. Breech. This is indicative that the innovations developed by Brown are among the most important of those initiated in 20th century corporate America, and thus among the most important in the development of 20th-century accounting and financial management thought. 

Although it was at DuPont that Brown developed many of his concepts, it was at GM where he was able to put them to work.  Brown’s title was officially that of chief financial officer, but he was also essentially what is known today as the chief information officer at both companies—a role that effectively supported GM’s decentralization. The practices initiated by Donaldson Brown enabled DuPont and General Motors to cope with the challenges of large companies seeking to balance centralized vs. decentralized decision-making. Brown’s ideas were made known through his writings, publications, and speeches, and ultimately by incorporation in textbooks, classrooms, and academic literature. Trade organizations and financial publications, for decades up to the present, have disseminated ROI materials. Furthermore, his disciples helped in spreading his influence far beyond GM and DuPont. 

* Note that the name of the DuPont company is capitalized, but the surnames of the founding family members do not have an initial capitalization.

Frank Donaldson Brown (1885-1965) is the One Hundredth and Eleventh member of The Accounting Hall of Fame.