Watson, Thomas John

views updated May 11 2018

WATSON, THOMAS JOHN

U.S. business executive Thomas J. Watson (1874–1956) assumed management of the International Business Machines Corporation (IBM) in 1924 and built it into one of the world's largest and most respected corporations. As a manufacturer of business machines and computers IBM, under Watson's innovative and inspired supervision, led a revolution in the business world that heralded the information age. By the end of 1955 Watson's last full year as IBM's chief executive officer, he had guided his company from debt to having total assets of $630 million and from fewer than 4,000 employees to 41,000. IBM was poised to dominate the emerging computer market and by the 1960s and 1970s it controlled 80 percent of the U.S. market. Due to Watson's effective leadership, IBM had become a model for corporate planning, research, and customer and employee loyalty.

Thomas John Watson was born February 17, 1874, in Campbell, New York. He was educated in New York at Addison Academy. His father urged him to study law when he graduated and offered to pay his college expenses, but Watson was anxious to pay his own way and to begin his business career. Watson took a year-long course at the Elmira School of Commerce and, at age 17, found a job as a bookkeeper in Clarence Risley's market in Painted Post, New York. Soon bored, he took a job as a peddler selling organs and sewing machines.

From such a modest start Watson would eventually emerge as one of greatest and most influential U.S. business executives. He married Jeanette Mary Kittridge of Dayton, Ohio in 1913, and they had two sons and two daughters. The sons, Thomas J. Watson, Jr. and Arthur K. Watson, followed their father to work for IBM.

In 1895 Watson joined the fast-growing National Cash Register (NCR) Company as a salesman. At first the company manager was uninterested in hiring him but Watson persisted, making numerous trips to the company's Buffalo office. After several months he was finally offered a position. The United States was in the midst of a depression and Watson sometimes went many weeks without a single sale. He sustained himself by quoting the tried-and-true slogans and homilies that he later would use at IBM. Despite his early lack of success he received encouragement from his superiors, and within two years Watson had become the top salesman in the Buffalo office. He moved steadily up the corporate ladder to become general sales manager and was given a position in NCR's Dayton home office in 1903. This period was marked by Watson's aggressive assault on NCR's competition, namely the creation of a company to undercut competitor's prices on second-hand cash registers, which proved to be illegal; however, it is unclear whether Watson was aware of this. Watson, along with NCR's president and 28 others, was indicted and convicted for the scheme. An appeals court later ordered a new trial but it was never held. In 1913, in a dispute over an anti-trust legal issue, Watson was fired from NCR though he was presented with a $50,000 parting gift.

Watson was selected to head the Computing-Tabulating-Recording Company of Elmira, New York, a small holding company that controlled four small firms that produced punch-card tabulators, time clocks, and other business machines. As company president, Watson acted to secure loans to finance expansion. The move helped the company's gross sales increase from $2 million in 1914 to more than $33 million by 1949. Personnel increased from 235 to 12,000 during the same period. Watson was committed to research and development and much of the borrowed funds went into engineering laboratories that produced new machines such as the keypunch, card sorters, tabulators, and eventually the computer. In 1924 the firm merged with International Business Machines Corporation taking its name. By then the business he had taken over had more than doubled in terms of plant size, number of employees, and volumes of sales. As the head of IBM, Watson helped those figures double yet again about every five years during his reign.

In the 1930s a new engineering laboratory was built in Endicott, New York, and IBM entered the electrical typewriter business with the purchase of Electromatic Typewriters, Inc. of Rochester, New York. As the holder of more than 1,400 patents as of 1941, IBM held a virtual monopoly in the field of business machines. IBM would maintain its dominance through Watson's inspired leadership. Having been a salesman Watson devoted considerable effort in training his sales force, insisting that IBM salesmen should know how to install, operate, and repair all the equipment they sold. Working out the three basic steps in the selling technique, the approach, the demonstration, and the closing, Watson insisted that his salesmen stress that IBM sold not machines but service.

Watson's personality and manner defined the IBM corporate identity that extended to its severely conservative dress code and the ever-present stimulating signs that graced IBM offices such as "Aim High and Think in Big Figures," "Serve and Sell," and IBM's trademark, a Watson creation: "Think." Dignified and conservative in his dress and manner, Watson neither smoked nor drank, nor did he take vacations. He worked 16-hour days and spent most of his evenings at the functions of his many employees' clubs. Watson was extremely concerned about IBM's corporate image, and was rigid in his hiring and personnel practices. Before World War II (1939–1945), employees at IBM were exclusively male and white Anglo-Saxon Protestants. Jews, Catholics, blacks, and women were unacceptable to him.

All employees were expected to have a copy of Men, Minutes and Money, a collection of Watson's speeches and essays and to be freshly shaved. They were also to wear daily shined shoes, and to follow their chairman's dress style—dark suits, quiet ties, and white shirts—whether in the main New York office or in the Endicott factory. The IBM image virtually defined the corporate concept of the "organization man." Yet the benefits of conforming to IBM's image were many. Forbes magazine declared in a 1948 article that Watson had created "the nearest to ideal working conditions." Watson paid higher wages than did his competition. There were few firings and benefits included health and life insurance, a rarity at the time. IBM workers were made to feel that they were members of a special group who were encouraged for their innovations and originality and they were expected to carry a THINK notebook to record their inspirations.

By 1955, Watson's last full year as IBM's chief executive, the company's total assets were $630 million, with a domestic work force of 41,000 employed in branch offices in 189 cities and plants in six cities. The IBM World Trade Corporation had 19,000 employees, 11 plants, and 208 branch offices in 82 countries. Watson had seen his struggling company grow into a world giant that would continue, under the direction of his son, Thomas, Jr., to dominate the business machine market and the rapidly developing computer industry.

Watson's principal interest outside of business was as a patron of the arts. He began acquiring paintings when he was only 24, and he was an outspoken advocate of the mutual benefit in joining the world of art with business. At the 1939 New York World's Fair he exhibited paintings by artists from 75 countries and a collection by U.S. artists that IBM had acquired. For many years he served as a trustee at Columbia University and as the president of the International Chamber of Commerce. An adviser to several U.S. presidents, Watson, who never graduated from college, was the recipient of 32 honorary degrees. For offering IBM's considerable research and production capacity to the war effort during World War II (1939–1945), Watson was given the U.S. Medal of Merit. He also received numerous decorations from several foreign countries including the Merit Cross of the German Eagle, which Watson returned to German leader Adolph Hitler (1889–1945) in 1940, stating that the policies of the Nazis were contrary to the causes for which he worked.

Thomas Watson died in 1956, one year after his retirement from IBM. During his tenure as head of IBM, Watson created one of the world's largest and most influential corporations. Dominating its markets IBM supplied the business machines upon which U.S. business depended by creating new products to meet customers' needs. Through the development of data processing equipment and a successful computer line IBM changed the very nature of modern business itself. Watson also forged the dominating principles of the corporate culture with its emphasis on company loyalty and team spirit, accomplishing the difficult task of simultaneously encouraging employee uniformity and innovation and individuality.

See also: Computer Industry, International Business Machines

Watson, Thomas J., Sr

views updated Jun 08 2018

Watson, Thomas J., Sr.

American Business Executive
1874–1956

Thomas John Watson, born on February 17, 1874, was neither an inventor nor a technician, but his contributions to computer science were substantial nonetheless. During Watson's forty-two years of leadership at IBM Corporation, his marketing and management skills and his emphasis on research and development helped create the Computer Age. He died on June 19, 1956.

The fifth child of an immigrant Scots-Irishman, Watson was born in a four-room cabin in Painted Post, New York. He showed no affinity for the family farm and lumber business and chose to study business and accounting instead. After a year at the Miller School of Commerce in Elmira, New York, he accepted a bookkeeping job at the then relatively high salary of $6 a week. He was seventeen years old.

The job was shortlived, however, as Watson succumbed to the lure of the open road and the life of a traveling salesman, peddling pianos, organs, and sewing machines off the back of a wagon. He soon joined forces with a more established salesman named C. B. Barron, this time selling stock in the Northern New York State Building and Loan Association.

During this period, Watson began honing the selling skills that would someday earn him the nickname of the world's greatest salesman. But first there were a few bumps on the road: Barron absconded with the money they had earned, and Watson was fired. However, fortune smiled on Watson in October 1895, when he took a sales job with the National Cash Register Company (NCR) and was soon outperforming everyone in NCR's Buffalo, New York, office.

By 1912, after a series of rapid promotions, Watson had risen to second-in-command at NCR's corporate headquarters in Dayton, Ohio. At the age of thirty-eight, this tall, strikingly handsome man was one of the town's most eligible bachelors—but not for long. He met Jeannett Kittredge, daughter of a prominent businessman, at a country club dinner, and a year later they were married. The couple eventually had four children: Thomas, Jr.; Jane; Helen; and Arthur.

During the NCR years, to raise the morale of a dispirited sales force, Watson adopted his famous motto "THINK" and placed framed placards with that single word throughout the company's offices. Years later, he would use that same slogan at IBM, a company he was soon to join.

Watson's departure from NCR was preceded by two serious impediments to his career path. The first of these was an accusation by the company's main competitor, American Cash Register Company, that Watson and twenty-nine other executives had violated the Sherman Antitrust Act ﾀ by engaging in unfair business practices, some designed to eliminate the second-hand trade in business machines. Although Watson was sentenced to one year in jail and a $5,000 fine, the verdict was quickly appealed and eventually set aside. Nonetheless, the widely publicized trial did little for his standing at NCR. In addition, there was a public disagreement with NCR President John H. Patterson, and shortly thereafter Watson was dismissed.

Watson was recruited by Charles R. Flint, the founder of what was to become IBM, and on May 1, 1914, he became general manager of the Computing-Tabulating-Recording Company (CTR), a small conglomerate in need of a major turnaround. Watson was intrigued by the product line, particularly the tabulating machine invented by Herman Hollerith (1860–1929) to help tally census results. Believing that automated accounting and record keeping had great commercial potential, Watson focused on the tabulating-machine division. Later that year, as CTR president, he borrowed the funding for research and development and began a transformation of the company. In 1924, at the age of fifty, he became chief executive officer and changed CTR's name to International Business Machines Corporation (IBM), reflecting his vision of the future.

To realize that vision, Watson motivated his employees through slogans and songs, a company newspaper and school, a country club that any employee could join for a dollar a year, and the promise of lifetime employment. One of his slogans was "World peace through world trade." A master of sales promotion, he understood the needs of the customer and met those needs through continuous funding of engineering and research. It was primarily Watson's support that ensured the development of Howard Aiken's Mark I calculator—the first digital computer made in the United States and IBM's first step into the Computer Age. Advancements continued and in 1952 IBM introduced its first production computer, the 701, and the company was firmly established in the computer business.

Watson retired as president of the firm in 1949 to become chairman of the board, and on May 8, 1956, he passed on executive power to his eldest son, Thomas Watson Jr. Six weeks later, he died of a heart attack at the age of eighty-two.

see also Herman Hollerith; IBM Corporation; Mainframes.

Karen E. Esch

Bibliography

Belden, Thomas, and Marva Belden. The Lengthening Shadow: The Life of Thomas J. Watson. Boston: Little, Brown, 1962.

Fishman, Katharine Davis. The Computer Establishment. New York: Harper and Row, 1981.

Levinson, Harry, and Stuart Rosenthal. CEO: Corporate Leadership in Action. New York: Basic Books, 1984.

Rodgers, William. THINK: A Biography of the Watsons and IBM. New York: Stein and Day, 1969.

Slater, Robert. "Thomas J. Watson, Sr.: Founder of IBM." In Portraits in Silicon. Cambridge, MA: MIT Press, 1987.

Watson, Thomas J., Jr., and Peter Petre. Father, Son and Co. New York: Bantam Books, 1990.

ﾀ Named after American Senator John Sherman, the Sherman Antitrust Act (1890) was intended to reduce business practices that limited economic competition.

Computer Sciences Esch, Karen E.

Thomas J. Watson

views updated May 18 2018

Thomas J. Watson

Thomas J. Watson (1874-1956), American business executive, assumed the management of International Business Machines in 1914 and built it into one of the world's largest corporations.

Thomas J. Watson was born Feb. 17, 1874, in Campbell, N. Y. He attended the Adison Academy but turned down his father's offer to pay his college expenses. Instead, he took a short course in the Elmira School of Commerce and became a salesman in Painted Post, N.Y.

In 1898 Watson joined the fast-growing National Cash Register Company as salesman. His first efforts were less than spectacular, but he received encouragement from his superiors, who realized the difficulty of the product market. During the next 15 years he moved steadily up the ladder, eventually becoming general sales manager. While working on advertising material, Watson produced a sign which read "THINK." This attracted John Patterson, the company's founder, who ordered copies for all offices.

Watson left National Cash Register in 1913 after a dispute over an antitrust legal issue and became president of Computing-Tabulating-Recording Company. The firm was a small holding company which controlled four other small firms that produced a punch-card tabulator, time clocks, and other machines. About this time Watson married Jeannette M. Kittredge, who bore him four children.

One of Watson's first tasks with his new firm involved the negotiation of a loan for expansion. Watson, like many other businessmen of his era, embraced the concept of research and development, and much of the borrowed funds went into an engineering laboratory. From this and other laboratories came new machines such as the key punch, card sorters, tabulators, and eventually the computer. In 1924 the firm merged with International Business Machines Corporation (IBM) and took its name. The success of Watson's leadership is dramatically revealed by investment data. One hundred shares, which would have cost $2, 750 in 1914, by 1956 were equivalent to 3, 990 shares valued at $2, 164, 000. By 1941 IBM held nearly 1, 400 patents on various types of business machines.

Having been a salesman, Watson placed great emphasis on that area of company activity. He insisted that IBM salesmen know how to install and service products as well as sell them. Labor conditions and benefits were always regarded as excellent.

IBM became a virtual monopoly, largely because of its patents and because the firm chose to rent its equipment rather than sell it. In 1952 the Federal government instigated an antitrust suit against IBM, charging that the firm controlled over 90 percent of all the tabulating machines in the country. The company agreed to a consent decree in 1956, by which competition was ensured.

Watson had many other interests outside the business world. For many years he served as a trustee for Columbia University. He participated in many ways to encourage and support the fine arts and gave financial assistance to all religious groups. He served as president of the International Chamber of Commerce. Watson acted as an adviser to several U.S. presidents. He died on July 19, 1956, in New York City.