Thomas J. Watson Sr.

Thomas J. Watson Sr. created a model corporation for the 20th century. Guided by a set of human-centric principles, he redefined culture and management for generations of CEOs and reframed industry’s role as an indispensable partner in meeting society’s challenges. IBM came to rule the information technology market under Watson’s paternalistic leadership.

Watson turned the Computing-Tabulating-Recording Company, three loosely connected businesses that made electric punched-card machines, scales and time clocks, into the global leader in machines that tabulated and calculated everything from livestock to lunar orbits. He embraced automation, mechanization and data-recording trends emerging at the turn of the century to meet the growing need across society for better ways to collect and manage information.

“The world’s greatest salesman,” as the media would come to call him, taught a new generation of young professionals how to sell, a skill that would elevate the man himself from modest beginnings on a farm in Steuben County, New York, to the pinnacle of influence and prestige on the world stage. “Nothing came easy,” Watson would say of his early years, emphasizing how initiative and hard work pulled him out of early business setbacks and financial disadvantage. He never attended university, deciding instead to begin a hardscrabble rural sales career, where he developed an appreciation for the challenges and abilities of everyday people.

These “bootstrap” beginnings built his faith in human agency, a guiding principle of the company. He encoded this belief in a simple set of values that, along with service to the customer and excellence in work, would form the bedrock of its culture. Within a year of his arrival at C-T-R, in a 1915 talk with staff, he established the company’s first priority: the respect and nurturing of employees.

This ethos, centered on people rather than products, persists at IBM to this day. 

Watson viewed sales acumen as critical to building competitive advantage and success in the marketplace. In the 1920s, he set up a six-week intensive training program that all new recruits had to complete before seeing customers. He stressed the need for professionalism with managers and insisted on high ethical standards. He required that they become experts in IBM’s products and services and in the value those offerings would provide to various customers.

In this way he molded a potent salesforce that delivered the company a dominant share of the glotal tabulating machines market. In 1924, the company was renamed International Business Machines to reflect its global ambitions. Thanks in part to its highly trained salesforce and global march, IBM was one of the few corporate success stories of the Great Depression era. “Salesmanship is probably the most important factor in the life of a nation, of a business, and of an individual,” he said.

Watson also paid his employees well and offered a progressive slate of benefits. In 1934, the company moved all of its manufacturing employees from “piecework” pay to hourly wages. His “cradle-to-grave” culture fostered deep loyalty among staff.

Watson aggressively pursued international trade in the 1930s and 1940s, extending the company’s hold over the global business machines industry. He employed locals as managers, set lofty goals, and helped countries build their economies while imparting the same standards and values he’d instilled in the US. In 1949, he formed the World Trade Corporation to focus the company’s international expansion efforts. In 1975, foreign sales overtook US revenues.

For Watson, international commerce served his broader goal of promoting world peace. “We have organizations in 79 countries, practically all the countries of the world, and when we are able to maintain peace and cooperation among our people, it seems to me that the same could be accomplished among nations,” he said in 1939.

He also was deeply concerned by inequality in society. “It is our obligation to make this country of ours a better place to live in for the great mass of people,” he said.  

Watson was an ardent supporter of the arts and academia, convinced of industry’s collaborative role in society’s progress. He took a particular interest in scientific research, pairing the company’s computing resources with the world’s leading minds in the physical sciences to support new discoveries as well as to open new markets.

From the company’s early days, Watson was committed to R&D. In 1945, he funded a new computer center, the Watson Scientific Computing Laboratory, on the campus of Columbia University, to act as a crucible of sorts for the company to apply computational expertise alongside scientists with the goal of solving complex problems. From the cooperative venture arose IBM Research, the world’s top corporate research laboratory.

“We are going to do research work, but are we just going to search for something?” Watson asked his managers at the onset of the Great Depression. “No, we are going to find something.”

Eventually, Watson Sr. would steer the company toward developing machines that were precursors to modern computers. He entered IBM into a contract to build the Harvard Mark I calculator. Later, Watson Lab director Wallace Eckert and his staff would build the Selective Sequence Electronic Calculator (SSEC), the first machine to combine electronic computation with a stored program.

“This machine will assist the scientist in institutions of learning, in government and in industry to explore the consequences of man’s thought to the outermost reaches of time, space and physical conditions,” said Watson’s signed plaque at the machine’s first installation at the company’s Madison Avenue offices. The SSEC would perform the calculations that 20 years later would help land humans on the moon.

IBM built the 701, also known as the Defense Calculator, to support the Korean War effort, and it would become the company’s first production business computer and the precursor to its commercial success in mainframes.

In 1952, at the of age 78, Watson Sr. appointed his eldest son, Thomas Watson Jr., president of the company. As the younger Watson’s influence grew, he began to map out cultural and strategic changes that would prepare IBM for its shift to computers and its next phase of outsized growth. In 1956, Watson Sr. handed full leadership of the company to his son — and died of a heart attack a month later at the age of 82.

When Watson died, he left behind his widow, Jeanette; another son, Arthur K. Watson, who at the time was president of IBM’s foreign subsidiary; two daughters; and 15 grandchildren. Of course, his loss was felt by many more. The company he joined in 1914 had 235 employees. Just over four decades later, it counted 60,000.

IBM’s revenue had increased a hundredfold to USD 900 million under Watson’s watch. More importantly, he created a founding set of principles that would form the basis for a powerful culture and decades of industrial leadership. Watson’s sales acumen vaulted him to the executive ranks. His vision, ideas and resolve inspired and shaped global industry in the 20th century.