Thomas J. Watson Jr.
He modernized a bastion of the global information industry to prepare it for even greater success in the computer age
Profile studio portrait of Thomas J. Watson Jr., circa 1954

He placed an “all-in” bet on a first-of-its-kind computer and reaped for IBM the fortunes of a new technological age. On the way, Thomas J. Watson Jr. created a marvel of corporate management, nurturing a people-centric culture and expanding progressive social and work policies while piloting the company through a phase of complex and disruptive business modernization to global business dominance.

During his time at the helm, revenue at IBM grew nearly tenfold to USD 8 billion, and employee count more than tripled to 270,000. He built the world’s premier corporate research program and established a leading industrial design practice while positioning IBM for another decades-long run atop its markets. As a corporate citizen, Watson used the IBM pulpit to champion workforce inclusion, forging a lasting legacy of investment and activism in public and in-house diversity programs.

IBM during Thomas J. Watson Jr.’s leadership 270,000 Employees, a >3x increase USD 8B In revenue, almost 10x increase
From IBM to war and back

Watson joined his father’s company as a salesman in October 1937, following an unremarkable undergraduate education at Brown University. Like all IBM salespeople, he started in the company’s sales school, learning about punched card machinery. When he finished, he was placed in the western half of Manhattan’s financial district, a prime sales territory.

He was determined to avoid special treatment as the progeny of the CEO. An April 1939 wire from his father made it clear that, at least from the elder Watson’s perspective, he was earning his own way in the company. Thomas Watson Sr. sent a memo to his son to herald the achievement of surpassing the annual sales quota by 69%, calling him “a qualified IBM man not by birth or heritage but by your personal ability and knowledge of the business.”

Still, the passion for flying that Watson Jr. had developed in his college years led him to join the National Guard in 1940. When the Guard mobilized for World War II later that year, he became a military pilot, initially running reconnaissance flights and later shuttling high-level officers around combat arenas and along supply lines. During this period, Watson met Eliot Noyes, a glider pilot who would become the guiding force of IBM’s transformational design program.

An on-ramp to computing
His ascent to CEO

When the war ended, Watson Jr. considered turning his love of flying into a career in the US Air Force or as a commercial airline pilot. He shared the idea with Major General Follett Bradley, for whom he had served as an aide. “I thought you’d go back and run IBM,” Follett told him. In truth, Watson Jr. had come back from his military service with the notion of one day running the company. Buoyed by Follett’s affirmation, he opted to return to IBM.

Within a year, in 1945, Watson Jr. was named vice president and appointed to the IBM board of directors. Groomed for future leadership, he worked as assistant to Charles Kirk, whom Watson Sr. had tapped as his apparent successor. When Kirk died unexpectedly in 1947, the elder Watson accelerated his son’s advancement and named him president of IBM in 1952.

Now in position to more heavily influence the company, Watson Jr. went to work. In 1953, he penned “Policy letter #4” to formalize IBM’s commitment to equal opportunity, which had been set in motion years prior. He declared it “the policy of this organization to hire people who have the personality, talent and background necessary to fill a given job, regardless of race, color or creed.”

He also would end ongoing litigation with the US Department of Justice, which filed suit claiming the company held a monopoly in the tabulator market. IBM owned roughly 90% of the industry under a model in which it exclusively leased machines. Among other demands, the DOJ wanted IBM to also sell its machines.

In 1956 the company, at Watson Jr.’s behest, conceded to a number of DOJ provisions, including to sell its machines, though the agreement hardly affected IBM’s growth plans. Demand for tabulating machines had been slowing, and IBM had tacitly considered making the shift to computers — despite skepticism from Watson Sr., whose sales team led him to believe the computer lacked commercial appeal.

Nevertheless, the company waded into the burgeoning market with its Selective Sequence Electronic Calculator (SSEC) in 1948, and the IBM 701, also known as the Defense Calculator, which was designed to support the Korean War effort and later adapted for commercial sales, in 1952. Watson Jr. was a booster of both projects.

In 1956 he succeeded his father, by then 82 years old, as the company’s second CEO. The elder Watson died only several weeks later, on June 19, 1956.

It is the policy of this organization to hire people who have the personality, talent and background necessary to fill a given job, regardless of race, color or creed Thomas J. Watson Jr. IBM’s second CEO
 
Internal evolution toward an industry revolution

As IBM’s new leader, Watson Jr. forcefully committed the company’s future to computers, establishing it as a pioneer in an industry that it would come to lead for decades.

Making the shift to computers required a complex internal overhaul. The company was hiring new workers at a rapid rate, as many as 25,000 a year in the US alone. They needed training in highly specialized skills, many of which the company was defining on the fly, to address the company’s fast-evolving research and product needs in the computing field. In Watson Jr.’s first six years, IBM increased its base of engineers from 500 to 4,000.

Like his father, Watson Jr. believed IBM should be a good place to work. While driving its rapid expansion and conversion to a computer age, he fought hard to preserve the fundamental respect for people that had been at the core of IBM’s belief system. He was equally committed to his father’s principle about lifetime employment, which meant IBMers were in a near-constant state of retraining and shuffling. “If an organization is to meet the challenges of a changing world, it must be prepared to change everything about itself, except those beliefs, as it moves through corporate life,” he said.

Watson Jr. also recognized that the company under his charge could no longer rely on a top-heavy management structure, where all major decisions were funneled up to the chief executive. His father’s paternalistic, almost authoritarian, style may have been appropriate for the IBM of his time, but it wouldn’t work for a global powerhouse. In late 1956, Watson Jr. gathered the top 100 or so executives for a three-day meeting in Williamsburg, Virginia, and told them to figure it out. “We went into that meeting a top-heavy, monolithic company and came out of it decentralized,” Watson said.

 

If an organization is to meet the challenges of a changing world, it must be prepared to change everything about itself, except [its] beliefs Thomas J. Watson Jr. IBM’s second CEO
Legacies
IBM research, IBM design, System/360

Also in 1956, Watson Jr. established an independent research division, reporting to top management, by uniting the administration of the Watson Lab at Columbia University with research labs at other IBM locations. Its chief aim was to “study, in a fundamental manner, physical phenomena in fields which are of primary importance to IBM.” Over time, IBM Research would grow into one of the largest industrial research organizations in the world.

Watson Jr. also formed the first IBM Design program, hiring architect and former military acquaintance Eliot Noyes to create a visually enticing aesthetic that would reflect the modern, progressive direction IBM was taking. He collaborated with leading architects and designers to reimagine the form of everything, from the company’s logo to its marketing to new buildings.

The company’s big breakthrough in the computing world came in the early 1960s, with the introduction of System/360. This new line marked a turning point in modern computing. For the first time, machines would work compatibly using a common architecture. Customers could buy a small system and scale up into larger components as their needs grew.

Watson Jr. was the driving executive force behind its creation. He channeled USD 5 billion into the project — a “bet the company” investment — to bring the S/360 to market while cannibalizing the company’s other commercial computing products. Orders rapidly exceeded forecasts, and soon other companies were building peripherals designed to plug into the S/360 ecosystem. For the next 20 years the S/360 family of machines and its successors would dominate the world of corporate computing.

Watson Jr. retired as CEO in June 1971 after suffering a mild heart attack at the age of 57, earlier than the mandated 60 for company executives. In retirement, he advocated for nuclear arms reduction, especially during the Carter administration as US ambassador to the Soviet Union. He died from complications of a stroke on December 31, 1993, survived by Olive, his wife of 52 years, as well as six children and 15 grandchildren. “Tom Watson was one of the great business leaders of our time, a splendid ambassador to the Soviet Union during a very difficult period, and a marvelous man,” said Cyrus R. Vance, the secretary of state during the Carter administration and a former IBM board member, in a New York Times obituary.

Called the “most successful capitalist that ever lived” by Fortune magazine, Watson Jr. left an indelible impression on industry as a titan of business and a lasting legacy for future generations as a champion of equal opportunity and a model of fair and principled leadership.

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