THOMAS WATSON AND IBM SET THE STANDARDS

In the early fifties, the concrete jungle of Manhattan as well as the other four boroughs of the Big Apple, were awash with salesmen selling the business equipment of National Cash Register Company (NCR), Remington, Victor and the king of the street, IBM.

This was a tinge before the introduction of computers.  They were hawking the efficiency and time savings of adding machines, bookkeeping machines, and early versions of calculators.

Thomas Watson was not the founder of IBM, but he was the driving force that catapulted the company from a nondescript manufacturer of office equipment to the modern giant that today drives computers worldwide.

He was born in 1874 and educated in a one-room schoolhouse.  As a young man he attended college only briefly, but found it boring.  He worked as an accountant for a small-town grocery store, then performed similar duties at a hardware shop, and later sold sewing machines and stocks.

For several years, he worked as a salesman for NCR, where he had a strong sales record and eventually rose to management.

Leaving NCR, Watson joined the Computing-Tabulating-Recording Company (CTR) as General Manager in 1914, was promoted to president the following year, and added the title of Chief Executive Officer in 1924.  He was known for enforcing a strict office dress code—dark suit, white shirt—and for his rather straightforward motto—“Think”—which he had printed on business cards and wall posters.

CTR was a profitable but not a dominant concern, manufacturing time-clocks and other business and shop furnishings and equipment.  Its best-selling products were punch-cards and punch-card tabulating machines, which allowed the assembly of data and preparation of statistics in the era before computers.  After being promoted to CEO, Watson’s first act was to change the 33-year-old company’s name to International Business Machines (IBM).

He was CEO of IBM for decades, and several decisions marked his long tenure.  First, as the Great Depression struck in 1929, he decided not to lay off large numbers of workers, and instead kept the company’s factories going, stockpiling inventory.  In the first three years of the Depression, as competitors cut back on manufacturing, IBM actually increased its production substantially, based on Watson’s belief that as the economy improved orders would eventually return—and when that happened, IBM would be able to fill orders faster than its competitors, because its machines were already built and ready to ship.  It was a dicey gamble, but Watson was right and it paid off.

A second decision was that all of his outside sales people were directed to adopt his preferred uniform of a white shirt, tie, dark suit and a hat.  The rest of the business equipment sales army pretty much followed suit, except the suit was not always dark and the shirt was sometimes blue.

Another decision set a tone in the business equipment industry that, although successful, was not very popular.  Watson’s philosophy in sales management was to keep increasing a salesman’s expected sales quota each year by 10% to 15% and not waste too much time with a salesman who couldn’t meet the increased quotas.

The other half of his management philosophy was to cut the territory of successful salespeople; and invariably two salespeople, for example, would generate 150% of the sales revenue in a territory that previously only did 100%.  Very unpopular with salespeople, but very successful for management.  Many other business equipment manufacturers tried to follow suit.

Even though they might be calling on the same customer, his salesmen only sold the piece of equipment they specialized in; i.e., adding machines, typewriters, etc.  A customer might therefore see three or four different salesmen from IBM.

Customers couldn’t understand the system, but Watson was convinced it led to greater sales for the company.  In today’s customer-centered environment that may be changing, but the results will probably not benefit the company’s revenue.

Watson handed the company’s leadership to his son, Thomas J. Watson, in 1956, and suffered a fatal heart attack five weeks later.  He was an industry innovator and leader.

By the way, wearing a suit, a tie and a hat in the summer on a N.Y. subway was not a cooling or comfortable experience.

ArtSchwartzSig

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1 Comment

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One response to “THOMAS WATSON AND IBM SET THE STANDARDS

  1. Paul White

    I did a paper on IBM while I was at UCLA. When PCs finally made it, I had one. By today’s standards they were pretty slow. The best thing about them was their keyboard, which are still highly sought-after. I owned several IBM Selectronic typewriters and wish I still had one. None of the current stuff is made anywhere near the old IBM quality. Cheaper, yes, better, no.

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