Thomas Watson, Jr.
1914 - 1993

The man who built IBM into a computer giant was racked by angst at the notion of filling his father's shoes. But worry was a relentless motivator
By JOHN GREENWALD for Time Magazine

 

As the eldest son of the president of International Business Machines, Thomas Watson Jr. grew up tortured by self-doubt. He suffered bouts of depression and once burst into tears over the thought that his formidable father wanted him to join IBM and eventually run what was already a significant company. "I can't do it," he wailed to his mother. "I can't go to work for IBM."

Yet 26 years later, Watson not only succeeded his father but also would eventually surpass him. IBM is now synonymous with computers, even though the company did not invent the device that would change our life, nor had it shipped a single computer before Tom Jr. took over.

But he boldly took IBM — and the world — into the computer age, and in the process developed a company whose awesome sales and service savvy and dark-suited culture stood for everything good and bad about corporate America. No wonder the Justice Department sought (unsuccessfully) to break it up.

Under Tom Jr., Big Blue put its logo on 70% of the world's computers and so thoroughly dominated the industry that even rivals like Univac--which built the first large commercial computer — were dismissed as merely part of "the Bunch." And while newcomers such as Compaq and Microsoft brought the company to its knees in the 1980s, the colossus that Watson inherited and reinvented in the 1950s and '60s stands strong again today, the sixth largest U.S. company. Not a bad legacy for someone who spent his youth "convinced that I had something missing" inside. A perpetually failing student, "Terrible Tommy" Watson vented his frustration by pulling pranks and tangling with authority. He needed six years and three schools to get through high school, and managed to graduate from Brown University only through the forbearance of a sympathetic dean. The young playboy rated the pleasures of drinking and dancing far above those of learning.

Watson enrolled in IBM sales school after college and hated that as well. He devoted more time to indulging his passions for flying airplanes by day and partying by night than to calling on clients. Even so, Watson filled his entire sales quota for 1940 on the first day of that year — but only because the company had thrown the boss's son a big account to make him look good.

World War II liberated Tom Watson Jr. from his demons. His success in promoting the use of flight simulators earned him a job as aide and pilot for Major General Follett Bradley, the Army Air Forces' inspector general. Watson flew throughout Asia, Africa and the Pacific, displaying steel nerves and shrewd foresight and planning skills. He was set to fly for United Air Lines after the war when a chance conversation with Bradley changed his course. Informed of Watson's job plans, the general said, "Really? I always thought you'd go back and run the IBM company." A stunned Watson asked Bradley if he really thought his former aide up to the job. The general replied, "Of course."

The IBM that Watson went home to was an American icon. It was the outgrowth of a debt-ridden maker of scales, time clocks and accounting machines that his father took charge of in 1914 — the year Tom Jr. was born. The elder Watson created a fanatically loyal work force at IBM — the company's name since 1924 — hanging think signs everywhere, leading employee sing-alongs (corporate anthem: Hail to IBM) and dictating everything from office attire (white shirt, dark suit) to policies on smoking and drinking (forbidden on the job and strongly discouraged off it). IBM dominated the market for punch-card tabulators — forerunners of computers that performed such tasks as running payrolls and collating census data.

Back from the war, Tom Jr. saw IBM afresh and quickly realized that its future lay in computers, not a 19th century information technology like tabulators. Even the first primitive vacuum-tube machines could calculate 10 times as fast as IBM's tabulators. Many people, however, including Watson's father, couldn't believe the company's core products were headed for extinction. Nonetheless, Tom Jr., who became IBM president in 1952, never retreated. He recruited electronics experts and brought in luminaries like computer pioneer John von Neumann to teach the company's engineers and scientists. By 1963, IBM had grabbed an 8-to-1 lead in revenues over Sperry Rand, the manufacturer of Univac.

Watson, who shared his father's volcanic temper, was just warming up. Fearful of falling behind in the fast-changing industry, Watson promoted "scratchy, harsh" individuals and pressured them to think ahead. (When IBM engineers complained that transistors were unreliable, Watson handed out transistor radios and challenged the critics to wear them out.) He never backed away from conflict, not even what he called "savage, primal and unstoppable" fights with his father over issues like finance. He installed a "contention" system that encouraged IBM managers to challenge one another. Watson was paternal with rank-and-file employees, but he was murder on his lieutenants, in accordance with his dictum that "the higher the monkey climbs, the more he shows his ass."

With IBM clearly on top in the early '60s, Watson took one of the biggest gambles in corporate history. He proposed spending more than $5 billion--about three times IBM's revenues at the time — to develop a new line of computers that would make the company's existing machines obsolete. The goal was to replace specialized units with a family of compatible computers that could fill every data-processing need. Customers could start with small computers and move up as their demands increased, taking their old software along with them. This flexibility inspired the name System/360, after the 360 degrees in a circle.

The strategy nearly failed when software problems created delivery delays. Panic raced through IBM's top echelons as rivals closed in. A desperate Watson ousted his younger brother Dick as head of engineering and manufacturing for the System/360 project, derailing the younger man's career and filling Watson with shame.

Ultimately, System/360, which revolutionized the industry, proved to be wildly successful as well. IBM's base of installed computers jumped from 11,000 in early 1964 to 35,000 in 1970, and its revenues more than doubled, to $7.5 billion. At the same time, IBM's market value soared from about $14 billion to more than $36 billion.

A heart attack forced Watson to retire at age 57 in 1971, leaving him plenty of time for such adventures as retracing a flight across Siberia that he had made during the war. A lifelong Democrat (his father had been a Franklin Roosevelt confidant), Watson served for two years as Jimmy Carter's ambassador to Moscow.

But perhaps his proudest achievement was to emerge from the shadow of a legendary, relentlessly demanding father. In his first five years as chairman, the younger Watson observed the anniversary of his father's death in 1956 with a ritual. He quietly took stock of what IBM had accomplished since his father died, and then said to his wife, "That's another year I've made it in his absence."
 

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Thomas J. Watson, Jr. (1914-1993) assumed control of International Business Machines (IBM) from his father in 1956. Under his leadership, IBM entered the computer market, focusing on sales, service, and adaptation. He also changed IBM's management style and invested in new plants and laboratories. Toward the end of his life, Watson became involved in arms control and Soviet-U.S. relations, serving as the ambassador to the Soviet Union in 1979.

Thomas J. Watson, Jr. was born on January 14, 1914 to Thomas J. Watson, Sr. and Jeannette Watson, in Short Hills, New Jersey. The Watsons later had two daughters, Jane and Helen, and another son, Arthur. Thomas Watson, Sr. began managing the Computin g-Tabulating-Recording Company (CTR) in 1914. In the 1920s, Thomas Watson, Sr. became chief executive officer and renamed the company IBM.


Trouble at School

Thomas Watson, Jr. was a poor student and often in trouble. He embarrassed his father, a member of the school board, by putting skunk odour in the school's ventilating system, forcing the school to close for the day. Watson had trouble reading and had little self-confidence. The greatest moment of his childhood was when he flew in an airplane for the first time, at age ten, and saw his first film with sound, both on the same day. Although his father always told him he was free to choose any career, Thomas Watson, Sr. groomed his son from an early age to take over IBM, taking him to sales conventions, factories, and meetings.

Because his grades were poor, Watson needed his father's help getting into college. He attended Brown University, where he also received poor grades, but managed to graduate. In September of his freshman year, Watson learned to fly, gaining a great deal of self-confidence. Besides flying, Watson spent his time at college drinking and socializing. In his senior year, Watson decided that he wanted to work for IBM. He began as a sales trainee that fall, after spending the summer of 1937 travelling to Asia, Germany, and Russia.


Trained at IBM School

Watson began his sales training at IBM's school in Endicott, New York. The IBM school strove to inspire enthusiasm, loyalty, and high ideals in its trainees. Over the front door the motto "THINK" was written. Students and teachers alike wore the company "uniform," dark business suits with white shirts. When Watson went to a bar for a drink after school, the bartender asked "Doesn't your father have a big policy about liquor?" Watson recalled in his autobiography, Father, Son & Co. The policy applied to drinking on the job or on IBM property, but Watson felt Endicott was a rather unpleasant place, where he was singled out as the boss' son.

Watson spent most of his training time learning about IBM's punch card system, an automated accounting system. Although he did poorly in school, he graduated and was given a prime sales territory, the western half of Manhattan's financial district. He did very well, but felt it was because of who he was, not what he did. His three years in sales were full of self doubt. By 1940, Watson made some sales calls in the morning and spent the rest of the day flying airplanes. His evenings were spent drinking and dancing in nightclubs. His behaviour caused a stir at IBM, but his father did not say much as Watson managed to stay out of the gossip columns.


Flew for His Country

In early 1940, war seemed inevitable. Watson knew he wanted to fly planes for his country, but wanted to avoid flight school and military discipline. He joined the National Guard and during the week "marked time" at IBM. On weekends he practiced flying with his squadron. In September 1940, the National Guard was mobilized, and Watson became a military pilot at Fort McClellan in Alabama.

After the bombing of Pearl Harbour, Watson married Olive Cawley, a model he had met in 1939. He was transferred to California, where his squadron flew along the coast, looking for Japanese submarines. He disliked his commander, and asked his father to help him. A week later Watson was transferred to the Command and General Staff School at Fort Leavenworth, Kansas. Watson became the aide-de-camp of Major General Follett Bradley. Together they travelled to Moscow where they set up the Alaska-Siberia ferry route to bring planes to the Soviets. Watson held other positions during the war, flying about 2,500 hours in five years.

In 1942, Olive gave birth to a baby boy, who died at the age of two months. In 1944, their son Tom was born. The couple also had five daughters.


Headed IBM

After the war, Watson returned to IBM to work as the assistant to Charles Kirk, IBM's executive vice president. Watson became a vice president, one of only five, in 1946.By 1950, Watson and Al Williams were running the company, with Thomas Watson, Sr. occasionally making a major decision. In 1952, Watson became president; his father was chairman of the board. Four year later, he became the official head of IBM. One month later, his father died.

Watson's management style differed from his father's. Watson wanted managers to use their imaginations and to make decisions without always checking in with him. Although Watson could be harsh, he tried to loosen things up at IBM. Soft collars on shirts, rather than hard ones, were now allowed. IBM employees could have an occasional drink. Watson also decentralized the company's administration, encouraged more research and development, and increased the company's debt.

Watson saw that IBM's punch cards would need to be replaced by computers. The success of IBM's 604 Electronic Calculator convinced Watson that the field of electronics would be expanding rapidly, so he enlarged the company's research department. In six years, the company increased the number of engineers and technicians from 500 to over 4,000. In the early 1950s, Watson worried about the UNIVAC computer, produced by Remington Rand. He wanted to create a computer to compete with it. In 1953, IBM unveiled the 701, a computer for scientific use. The IBM 702, an accounting computer, was up and running by 1956. In 1954, the company started delivering a small business computer, the 650, which could perform complex accounting operations.

In the early 1960s, IBM began developing a new computer, the System/360. Development took longer and cost more than expected, with hundreds of computer programmers having to write millions of lines of code. The development of this software alone cost half a billion dollars. The new computers used integrated circuits, an innovation at the time. In 1964, Watson announced the System/360, even though it was not fully developed. By 1966, the System/360 was running with the long awaited software. System/360, a compatible multiple model system, was revolutionary. The feature of compatibility did not yet exist in computers. System/360 would allow any of the computers in this "family" to use the same software, disk drivers, and printers as any other computer in the family. A business could start with a small, inexpensive model and move up to bigger, more powerful ones by mixing and matching components from IBM's catalogue.

In 1974, IBM's president, Frank Cary, set up a part of IBM called General Systems, to develop minicomputers. He established major research centres in San Jose, California and Boulder, Colorado. The San Jose centre became known for its informality and unusual methods of problem solving. Watson approved of the innovations because he felt IBM needed change.


Chose Health over IBM

In 1952, the Antitrust Division of the Justice Department brought a restraint of trade case against IBM. Watson went over his father's head, allowing IBM's lawyers to settle the case by signing a consent decree in January 1956. In 1969, the Justice Department filed an antitrust complaint accusing IBM of monopolizing the computer industry. The government wanted IBM broken up. This was one of the biggest antitrust cases ever. The government felt that IBM's marketing tools were used to destroy their competition. Six months after the suit was filed, IBM gave up the marketing practice of bundling-selling everything a computer customer would need for one price. Instead, each component was sold separately. The government's case dragged on until 1981, when the Reagan administration finally dropped it.

Although Watson intended to retire from IBM in 1974, he had a heart attack in late 1970 that caused him to reconsider the decision. After he recovered, he decided that he wanted to live more than he wanted to run IBM. Thomas Learson assumed the chairmanship and Frank Cary took over as president and CEO. Watson remained as the head of the board's executive committee, where he could retain some control. During his time at IBM, Watson oversaw the remarkable growth of the company. In 1957, the company hit $1 billion in sales. When he resigned in 1971, the company had sales of $7.5 billion a year.


An Active Retirement

While still in the hospital, Watson began making plans for a new sailboat. When he recovered, Watson and his crew sailed around Newfoundland. In 1974, he made a major voyage off the coast of Greenland, over 500 miles above the Arctic Circle.

Because he was one of the few liberal businessmen of the times, Watson became involved with government during the Kennedy years. He served on several committees and commissions, including the Advisory Committee on Labour-Management Policy, which dealt with unemployment, and the Peace Corps steering committee. Watson and his wife attended many social events at the White House. President Johnson asked Watson to be his secretary of commerce, but Watson turned him down. In 1977, President Jimmy Carter asked Watson to chair the General Advisory Committee on Arms Control and Disarmament (GAC). This commission advised the president on nuclear strategy. In 1978, GAC reported to Carter that the MX missile should not be developed because it was impractical.

In 1979, Watson became the U.S. ambassador to Moscow. He felt like a pawn in U.S.-Soviet relations, which at that time were quite bad. The Soviet Union had invaded Afghanistan. In response, the U.S. ended grain sales and boycotted the Moscow Olympics. When Carter lost the election to Ronald Reagan, Watson's stint in diplomacy ended. He then founded the Centre for Foreign Policy Development at Brown University.

On his return from his ambassadorship, Watson began speaking and writing about arms control. In 1987, he flew across the Soviet Union, retracing the route he took during WW II, when he helped set up the Alaska-Siberia ferry route to bring planes to the Soviets. In 1990, he published his autobiography.

For over three decades, Watson amassed one of the best scrimshaw collections in the country, including 200 intricately carved pieces, all made of whalebone by American whalers. The collection was kept in his home in Greenwich, Connecticut, and at his summer home on North Haven Island, Maine. Watson sailed and flew planes, helicopters, and stunt planes. He had a personal fleet that included a Lear jet, a Breezy, a Twin King Air, a Taylor Cub, and a Bell jet 206 helicopter. His favourite was his stunt plane, a high-tech model, weighing only 850 pounds. Watson perfected a stunt show featuring inward loops and upside down flying. He rode a motorcycle around the island, dodging mouflon sheep. He also tinkered with antique cars, and had four Ford Model T automobiles. He kept them on the island to teach his grandchildren how to drive. Watson died of complications following a stroke on December 31, 1993 in Greenwich, Connecticut.

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