In The Maverick and His Machine, veteran technology columnist Kevin Maney credits Watson with three lasting contributions: “He turned information into an industry,” he “discovered the power of corporate culture,” and he “was the first celebrity CEO.” How Watson started out as a boy on a modest upstate New York family farm and eventually became the highest paid man in the United States is in many ways a classic rags-to-riches tale, complete with a plucky and industrious hero, youthful indiscretion and a fall that leads to new resolve, and a tremendous risk that pays off because of the hero’s intelligence, unwavering confidence, and luck.
It was the National Cash Register Company (NCR) that gave Watson his first real success. He had made his mark as a salesman and then as a branch manager for NCR, but he felt he was destined for greater things. At the age of twenty-nine he was given his chance: He was summoned to NCR headquarters in Dayton, Ohio, and asked to head up a secret used-cash-register business. For years, Watson traveled from town to town, setting up small stores from which he bought and sold used NCR machines. With no need to make a profit, he was able to buy higher and sell lower than his competition, effectively driving the other stores out of business. It was a clever strategy for NCR, which managed to control the new and used markets for this new and increasingly popular product, and a good career move for Watson, who became a star at NCR.
Somehow, neither Watson nor his employers saw that what they were doing was illegal. After a three-month trial, the courts found Watson and his employers guilty of restraint of trade and creating a monopoly. While he maintained his innocence until his death, Watson spent the rest of his life demonstrating that he was not a criminal. Of the moment the jury declared him guilty, Maney writes, “If there was a single moment when Tom Watson changed—when he decided that a squeaky-clean image and reputation were paramount in business and life—this was that moment.” Watson soon left NCR, but for most of his career he modeled his management style on that of the company’s forceful and much-feared president, John H. Patterson.
In 1914 Watson joined the Computing-Tabulating-Recording Company (C-T-R), run by its founder, Charles Ranlett Flint. C-T-R was a loosely organized conglomerate which built time clocks, computing scales, and Herman Hollerith’s tabulating machine that could count and sort information by means of holes punched in rectangular cards. Flint brought Watson aboard to help him sort out his various products and their markets, to make the company more productive and efficient. Watson trimmed and reorganized, eliminating the computing scales division (the “computing” in Computing-Tabulating-Recording) and the time recording products. To reflect the company’s new focus and to leave room for expansion, he created a new name, International Business Machines (IBM).
Although he had his detractors from the first day, Watson quickly took control of the company, making his mark by admitting early on that he did not know much about tabulating machines and would rely on information and suggestions from his employers to ensure the company’s success. He encouraged divisions to share information and managers to listen to what the salespeople and the customers had to say. If they all worked together, he believed, they could all become rich.
This was the beginning of Watson’s corporate culture, which fostered strong loyalty to himself and to the company. With this loyalty and this team spirit, Watson was able to be both a dictator and a kindly father; he made rules and enforced them, but his employees were eager to follow his lead. He also imposed (by example) a sober, nonflashy corporate uniform, created new forms of pay incentives for the sales force, and organized rallies, complete with company sing-alongs, to build team spirit and cooperation. He allowed women to train for executive positions and paid them at the same rate as the men. Under his leadership, the company grew into a multinational giant.
Watson was surprisingly superstitious about personal matters, and this carried over into his business decisions. In the 1890’s, when he was selling sewing machines from a horse-drawn cart in upstate New York, he once parked his cart outside a...
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