|Thomas J Watson Sr, Father of IBM|
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For a generation of computer users, the IBM PC was computing - anything else was a pale imitation at a lower price. On the other hand, many people think of IBM as a huge monolith of a company that has always been there, probably never deserved to be there and is certainly no good thing. The same sort of attitude extends to its founder - Thomas J Watson. He is often stereotyped as the super salesman, interested in nothing but sales and totally uninterested in products. If you follow this view you can be led to believe that IBM was drawn into computing by accident, that Watson even resisted the move, and only made a success of it all by being good at selling. In this picture IBM might as well as have been a frozen food company as a designer and seller of computers. This isn't so...
Thomas J Watson Sr (1874-1956)
Thomas Watson was born on February 17, 1874 into a family of Scottish decent who had emigrated from Ireland to avoid the potato famine. They were involved in the lumber business and the young Watson must have been influenced by the idea of commerce from an early age. When he finished school his father had ambitions of him becoming a lawyer but he had other ideas - he would be a teacher. A single day of teaching cured him of this plan!
So the next idea was to go into business. His father agreed as long as he went to business school. He completed the courses in accounting and business and immediately landed himself a job at $6 a week keeping the books of a butchers shop. But he didn't see sitting on a high stool with a pen keeping books as his lifetime's career. His next move was the one that probably set the course of the rest of his life. He went on the road selling sewing machines and pianos with a travelling salesman.
He studied the sales techniques but he was not good at selling. He watched the more experience salesmen's techniques while holding the horses and learned. Eventually he got so good at it that when he quit the boss offered to sell him the business.
Learning to sell - the NCR experience
After a few faltering attempts to get a good job he eventually ended up with the National Cash Register company - NCR - or "the cash" as it was locally known. Watson fell under the spell of a talkative Irish salesman-cum-manager called John Range. This was where Watson really learned the skills he would need in the coming years. Not just the salesman's technique but the role of father-figure and boss of countless other salesmen. In this instance he was on the receiving end but soon he would practice the role himself.
When Watson failed to sell any cash registers, Range set about telling him that excuses weren't good enough. A demoralizing tongue-lashing that ended in an uplifting and sympathetic examination of what the difficulties in selling were. They went out on the road together and Watson was amazed. Each time Range was involved in the selling, they sold a machine. Eventually Watson, at 25 years old, was the top salesman in the area.
His next move was to be manager of his own branch - Rochester. Near the bottom of the NCR sales league when Watson took it over, within a few months it was sixth from the top. Then the sales fell off, partly due to market saturation but also due to competition in the area. Watson, like all NCR men, knew how to deal with competition - make their machines malfunction. The dirty side of the business made Watson feel ashamed but he indulged nevertheless.
His first big managerial job was to set up a spoiling operation against the second-hand trade in cash registers that had started up. He set up a shop next door to any second-hand shop and sold machines at cut down prices. With a million NCR dollars to use he drove the opposition out of the market. This work was probably illegal but Watson, ever loyal to "the cash", got on with the job and did it well.
Eventually Watson was summoned to head office to meet the boss. John Henry Patterson was the real super salesman behind NCR. He had taken it from nothing by improving the design of the machines and by writing a manual for salesmen. His ideas on how a corporation should be run were revolutionary. He built a factory of glass with trees and greenery - a paternalistic idyll. But unlike the true industrial philanthropists Patterson was only interesting in increasing the efficiency of his work force by improving its well being. "It pays", said Patterson. "Hungry people, people with bad diets or in poor health, are not good producers."
Watson's position within NCR grew more and more important until he reached the top executive level. Patterson was so pleased with Watson that he bought his prize employee a house and a car. Then it all went sour. Watson and 38 other NCR executives were accused of unfair business practices and the subsequent trial received much publicity.
He was engaged to Jeanette Kittredge at the time and offered to end their engagement because of the embarrassment - but they were married in 1913 two weeks after the trial at which he received a one-year jail sentence and a $5,000 fine. He appealed and the case remained pending for several months - casting a long shadow over his future.
Just short of his 40th birthday he argued with Patterson and was instantly fired. Although he was offered many rewarding jobs he was badly hurt and confused by Patterson's attitude. To go from top man to being sacked in so short a time would have been a sobering experience for any man.
From CTR to IBM
He next took up the challenge, in 1914, of managing the Computing-Tabulating-Recording company (CTR). It was a challenge because it was deep in debt and close to going out of business. CTR had been formed out of Herman Hollerith's Tabulating Machine company. It produced the punch card sorting and tabulating machines that were used in the 1890 census. It also produced a wide range of time clocks, scales and simple accounting machines.
One of Watson's first moves was to improve the tabulating machine that Hollerith had invented. He did this by making use of his experience of cash register mechanisms gained at the NCR knockout department which built machines to look like the opposition's models but with design flaws included on purpose so that they failed and gave the real thing a bad reputation. In this case the method was used to improve the CTR machine by examining the rival machine from Powers. Hollerith was not impressed by this early example of reverse engineering!
When in 1915 the court of appeal quashed the verdict and removed the threat of a jail sentence, Watson was promoted to become president of CTR. The company's sales of tabulating machine had grown from $4 million in 1914 to $8 million in 1917. In 1919 his engineers had produced the ultimate tabulating machine - electrically operated it fed the cards automatically and had a built in printer. By 1920 CTR's gross income was $14 million. In 1924, when Watson was 50 he became chief executive officer and changed the name of CTR to International Business Machines - IBM.
|Last Updated ( Saturday, 17 April 2021 )|