Founding, Growing and Expanding IBM
Father and Son: A Founder and Builder Team |
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Published August 9, 2021
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"With many of us the riddle of life is still to be solved. Those who traveled before us along the same roads have left footprints as they struggled, fell down, hoped, despaired or persevered. This ought to be of value to us as we journey in our confidence of being able to reach the goal we have in view. The biographies, examples and cherished rules that influenced the lives of our fathers are great helps for all of us."
John Wanamaker, "The Business Biography of John Wanamaker"
Watson Sr., the founder, left some big footprints as he struggled, fell down, hoped, and ultimately persevered. This enabled his son, the builder of "The IBM."
Watson Jr. made IBM into the company his father had always envisioned.
Watson Jr. made IBM into the company his father had always envisioned.
Father and Son: A Founder and Builder Team
- Thomas J. Watson Sr. Was the Foundation
- Thomas J. Watson Jr. Grew and Expanded on the Foundation
Thomas J. Watson Sr. Was the Foundation
Thomas J. Watson Sr. dancing with wife and employees
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Watson Sr., the traditional founder of IBM, is well known for his corporation’s century-old, one-word imperative. Desk placards, wall posters and overhead signs instructed employees to THINK. THINK was imprinted on custom leather notepads, notebooks and briefcases. The external corporate magazine that the world associated with IBM for decades carried the brand THINK, and on the cover of its first issue was The Thinker by Rodin.
This one-word message was translated into every language conceivable, and eventually, analysts, customers and cartoonists considered it synonymous with IBM. |
Yet, history has forgotten that Watson Sr. only used THINK to stage an ACT. During the Great Depression he needed to increase the probability that action would follow thought. To encourage such actions he took a unique approach. On February 21, 1930, he told his executive team that “If a man thinks about his work—if he puts real thought into everything he does—he should be and will be forgiven for the mistakes he makes.”
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On October 29, 1930—a year to the day after Black Tuesday crushed the New York Stock Market—he told a room full of new employees to “Think before you act, and then if you make a mistake you will be forgiven.” This was Watson Sr.’s formula for success: THINK and ACT, and don’t make the same mistake twice.
Robert H. Davis, a reporter for the New York Sun, saw this formula for success a few years later hanging overhead as he entered the reception area of IBM’s International Headquarters in New York City. He wrote of his impression standing there looking up.
THINK! Directly opposite was the luminous and inspiring phrase: We Forgive Thoughtful Mistakes! After reading the lines of these two laconic declarations no man of the IBM pay roll can come to any conclusion other than that Tom Watson wishes to instill, namely: Put your mind on the job, express your convictions; make errors occasionally; hit a rock and remember where it was located in your path. And the next trip sail onward to your anchorage. |
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Yes, THINK and ACT! During the Great Depression, Watson Sr. did not have the capital to invest in his culture. Instead, he invested his time; he maintained a constant focus; and he delivered a consistent, memorable and superlative message. But IBM would eventually reach a point beyond which it could not grow with the “old man” at the helm. It was not in this leader’s nature to delegate truly important decisions.
As the traditional founder of IBM, he found it impossible—like so many entrepreneurs—to completely let go. All major decisions of thought and action still flowed through his corner office.
Thomas J. Watson Jr. Grew and Expanded on the Foundation
Watson Jr. talking with employee.
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When Watson Sr. died in 1956, Watson Jr. faced a decision. His father was one of the world’s most recognized corporate, philanthropic and humanitarian figures. His father counseled presidents, walked with kings and queens, and every employee knew what this lone figure had accomplished for their company, their country and their fellow man. The easy route would have been to continue along his father’s well-proven path.
The son, though, was not like his father. Although—like his father—he loved the company, he did not wish to live for it. In 1956, following his father’s death and now IBM’s Chief Executive Officer, he acted. He spurred growth by removing one significant barrier: a corner office that for 42 years needed to be involved—if not in ever decision—in every major decision. He wanted everyone to have the same destination but allow them the freedom, in their unique situations, to determine the best path forward. So he called a meeting in historic Williamsburg, Virginia—because he meant it to carry the aura of a constitutional convention—and he started building his IBM. |
To encourage independent thought, embolden individual action and enable decentralized decisions, he founded a guiding corporate constitution on three words: Respect for the Individual, Service to the Customer, and the Pursuit of Excellence. At the time, analysts, shareholders, employees and customers alike wondered if the son could fill the father’s shoes.
He did. Consider these numbers.
He did. Consider these numbers.
In 1956, Tom Watson Jr. inherited a company that was famous for high pay, generous benefits, and an intense devotion “to Dad.” Internationally, corporate employment stood at 56,000, revenue at $700 million, and net income at $73 million.
Rather than taking another four decades to match those numbers, Watson Jr. added by 1971, on average, an additional 56,000 employees every four years, an additional $700 million in revenue every year and a half, and an additional $73 million in net income almost every year. Revenue per employee grew by 150%, net income per employee by more than 200%, and the number of stockholders by more than 2,000%.
Under Watson Jr.’s watch, IBM became the corporation his father had always envisioned. Watson Jr. didn’t fill his father’s shoes, he manufactured a new pair that was more comfortable. He unleashed a power source that his father only partially tapped: the human potential.
Rather than taking another four decades to match those numbers, Watson Jr. added by 1971, on average, an additional 56,000 employees every four years, an additional $700 million in revenue every year and a half, and an additional $73 million in net income almost every year. Revenue per employee grew by 150%, net income per employee by more than 200%, and the number of stockholders by more than 2,000%.
Under Watson Jr.’s watch, IBM became the corporation his father had always envisioned. Watson Jr. didn’t fill his father’s shoes, he manufactured a new pair that was more comfortable. He unleashed a power source that his father only partially tapped: the human potential.
Encourage people to THINK and ACT. Forgive thoughtful mistakes. Embolden and decentralize action.
Allow others to find their own anchorage.
It means letting go.
- Peter E.
Allow others to find their own anchorage.
It means letting go.
- Peter E.