Alcoholics Anonymous, 1937–1957:
A Management Case in Disguise
[AI Chat GPT 5.2]
In this earliest phase, AA was highly dependent on charismatic founders, a classic feature of fragile young enterprises. Bill Wilson provided vision, language, and the ability to communicate a system; Dr. Bob provided steadiness, local credibility, and medical respectability. The “product” was not yet clearly defined. What existed was a shared discovery: sobriety seemed to be maintained through mutual aid, spiritual reorientation, and service to others, rather than through medical treatment or institutional control. At this stage, AA could easily have disappeared, as many early members relapsed or died. There was nothing inevitable about its survival.
The first great act of scaling came with the publication of the book Alcoholics Anonymous in 1939. From an organizational perspective, this was transformative. The book — later known simply as “the Big Book” — turned a loosely shared experience into a portable, codified method. The Twelve Steps were laid out in a consistent form, personal stories illustrated the approach, and the model could now travel without the founders being present. AA shifted from a founder-dependent craft model to a replicable system. This is the moment AA began to behave less like a small circle and more like a scalable platform.
During the 1940s, growth accelerated in a way that is unusual even by modern standards. AA spread through word of mouth, personal contacts, and favorable media attention — especially a widely read 1941 Saturday Evening Post article. New groups formed across the United States and then abroad, often started by a single sober member moving to a new town. Importantly, this expansion occurred with almost no central control. AA was not franchising, licensing, or directing new groups in a managerial sense. Instead, the method and culture diffused socially.
Success, however, introduced existential dangers. As AA grew, it faced the kinds of risks that destroy many movements:
| Emerging Risk | Why It Threatened AA’s Survival |
|---|---|
| Personality-driven leadership | Groups could become dependent on strong local figures rather than principles |
| Financial opportunity | Pressure to charge fees, sell cures, or commercialize sobriety |
| Religious capture | Risk of becoming a sect or arm of a church |
| Medical control | Risk of being absorbed into hospital or psychiatric systems |
| Public scandal | Misconduct by members could damage credibility |
By the late 1940s, AA confronted a fundamental question: how could it grow without being captured by money, authority, or ideology? The answer was one of the most significant governance innovations in the history of voluntary organizations — the Twelve Traditions, formally adopted in 1950. These Traditions functioned as a kind of organizational constitution. They emphasized group autonomy, self-support, nonprofessionalism, avoidance of outside endorsements, and personal anonymity in public life. In effect, AA deliberately designed itself to resist the normal consolidating forces of power and hierarchy.
By 1957, AA had evolved into a mature national organization with thousands of groups, a General Service structure, a headquarters in New York, and a widely shared culture and history. Yet it remained strikingly non-bureaucratic. It had achieved what many institutions fail to do: it moved from a charismatic movement to a stable system without building a conventional command hierarchy.
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Switching to our MBA hats, we now assess AA's history via the MBA method known as "Porter's Five Sources." Porter was a Harvard MBA professor, and the Five Forces were meant to be a universal framework, applicable to Ford Motors, Apple, or a dry cleaners.
The five are (1) New Entrants, (2) Supplier Power, (3) Customer Power, (4) Substitutes, and (5) Direct Competitors (Rivalry). For example, for a bakery, new bakeries (Entrants) can open fairly easily. Suppliers of flour and sugar may raise prices. Customers can easily shift to a new cafe. Substitutes might be IHOP, grocery store packaged baked goods, or baking at home. Rivalry between nearby bakeries could be intense.
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AA Through the Lens of the Five Forces
In the “industry” of alcohol recovery, the threat of new entrants has always been high. Anyone can start a support group, a treatment model, or a recovery philosophy. Over time, alternatives have included therapeutic communities, religious programs, professional counseling, medication-based treatments, and secular peer groups. AA’s survival despite this open field rests less on barriers to entry and more on brand identity, a clearly defined method, and a vast network of local meetings that make participation easy.
The power of suppliers in AA’s case is unusually low. The “inputs” AA depends on — members’ time, meeting spaces, and literature — are largely provided internally or donated. Members are both the beneficiaries and the labor force. Because AA does not rely on salaried professionals or major external funding, no single supplier group can exert strong leverage over the organization.
The power of “buyers,” or members, is high in theory because participation is entirely voluntary. Anyone can leave at any time. Yet in practice this power is moderated by two factors: the severity of addiction limits alternatives, and the structure of AA encourages members to become helpers, not just recipients. People stay not because they are bound by contract, but because they are woven into a network where their presence matters.
The threat of substitutes is also high. People can pursue recovery through medical treatment, therapy, religion, self-help literature, or attempts at self-control. AA’s distinctive position lies in offering a free, continuous, identity-based community that does not end when a program or insurance coverage does. It is not just an intervention; it is an ongoing social world.
Finally, rivalry among competitors is remarkably low — largely because AA refuses to compete in the usual sense. The Traditions discourage endorsement, criticism, and public comparison with other approaches. AA does not try to defeat alternatives; it coexists with them. This reduces direct rivalry and allows AA to occupy a stable niche.
Strategic Strengths and Structural Liabilities
AA’s long-term strength rests on several structural features: an extremely low cost structure, powerful network effects as more meetings make access easier, a deep shared culture and narrative, and governance rules that prevent concentration of power. These create resilience without formal control.
At the same time, these same features create limitations. AA’s reliance on volunteers means uneven quality of guidance. Its resistance to professionalization can slow adaptation to scientific developments. Its spiritual language is not accessible to everyone. And its decentralized nature makes systematic outcome tracking difficult. AA chose moral and cultural legitimacy over managerial precision.
Conclusion
Between 1937 and 1957, Alcoholics Anonymous accomplished something rare in organizational history. It scaled nationally while deliberately limiting its own ability to accumulate money, authority, and centralized power. Through the Big Book and the Traditions, it created a portable method and a constitutional culture. From a strategic perspective, AA resembles an open-source social system with a powerful brand and decentralized governance. That combination explains how a movement that began in two living rooms became, within twenty years, a durable national institution.
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Prompt. Take the role of a top notch business school professor. Discuss the history of the first 20 years of the organization Alcoholics Anonymous from about 1937 to 1957. In 1937, there were just a couple dozen members in New York City, centered around Bill Wilson’s house, and a few dozen members in Akron, Ohio, send it around Dr. Bob’s house and a church nearby. In 1957. It was a well established national organization with a well developed culture in history and active growth statistics. After discussing some of the key features and challenges of the first 20 years, assess the liability and success of Alcoholics Anonymous from the perspective of Michael Porter five forces, as taught at Harvard business school in case studies.
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