Thomas J. Watson, Jr

views updated May 29 2018

Thomas J. Watson, Jr.

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 odor 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 traveling 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 behavior 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 Harbor, 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 traveled 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 catalog.

In 1974, IBM's president, Frank Cary, set up a part of IBM called General Systems, to develop minicomputers. He established major research centers in San Jose, California and Boulder, Colorado. The San Jose center 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 Labor-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 Center 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 favorite 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.

Further Reading

Rodgers, William, Think: A Biography of the Watsons and IBM, Stein and Day, 1969.

Sobel, Robert, IBM: Colossus in Transition, Times Books, 1981.

Watson, Thomas J., Jr. and Peter Petre, Father, Son & Co.: My Life at IBM and Beyond, New York, Bantam Books, 1990.

Business Month, August 1990.

Electronic News, January 10, 1994.

Forbes, September 17, 1990. □

Watson, Thomas John, Jr.

views updated May 14 2018

WATSON, Thomas John, Jr.

(b. 8 January 1914 in Dayton, Ohio; d. 31 December 1993 in Greenwich, Connecticut), businessman whose foresight and decisiveness built International Business Machines (IBM) from a prosperous $700-million-per-year general business supplies and keypunch machine company into "Big Blue," a multibillion-dollar-per-year company that dominated the world market for computers.

Watson's father, Thomas John Watson, Sr., was the chief executive who built International Business Machines (IBM) into the dominant manufacturer of keypunch machines; his mother, Jeanette Mary Kittredge, was the daughter of an industrialist. Watson was the eldest of four children. Watson, Sr., always expected his son to follow him as president and chief executive officer (CEO) of IBM. Young Watson felt the pressure when he was very young and was intimidated by the thought of following in the footsteps of the father he revered. Even at age ten, he expressed doubts about his own abilities; he did poorly in school and often managed to get himself into trouble. He would eventually shed his childish irresponsibility to become a dynamic, brilliant leader.

Watson applied to enter Princeton University but was rejected for poor grades. A friend of the family got him admitted to Brown University, from which he graduated with a B.A. degree in 1937, after a college career more notable for parties than for studies. That same year Watson became IBM's sales representative to Wall Street and neighboring parts of Manhattan. In 1940 Watson joined the National Guard and was called up to the U.S. Army Air Corps in September of that year. He trained as a pilot and became a second lieutenant. On 15 December 1941 he married Olive Field Cawley; they had six children. Watson served in several areas of conflict during World War II, earning the United States Air Medal. He was one of the pilots chosen to pioneer the lend-lease ferry air route between Alaska and Russia and was made a lieutenant colonel in 1946.

Watson credited his military service with teaching him self-discipline. Even so, as he returned to IBM in January 1946, he was still very insecure about his ability to measure up to his father. Watson believed that his father never fully trusted him, even when he replaced him as IBM president in January 1952 and immediately began urging that the company enter the then very young electronic machines market.

During the Korean War, IBM developed the 701 Data Processing Machine (also known as the Defense Calculator) for the U.S. military, and in 1954 it offered a business version of the machine, the IBM 702, which pioneered the use of transistors instead of vacuum tubes for calculating. The senior Watson retired in May 1956, and Watson became CEO of IBM. Under his leadership, IBM undertook the SAGE (Semi-Automatic Ground Environment) project for the U.S. Air Force, which involved setting up radar stations across North America and linking them via computers; this was the beginning of real-time data processing. Although SAGE was not especially profitable, IBM was able to apply what it learned to SABRE (Semi-Automatic Business-Related Environment), which went online in 1964, serving airline companies by allowing them to build networks with travel agents that allowed the agents to confirm airline reservations almost instantly.

Watson considered himself a liberal Democrat and took some pleasure in annoying other business leaders by suggesting that corporations had social responsibilities. By 1960 he was concerned about the people his computers were putting out of work, but he thought that retraining laid-off workers was impractical and unrealistic for people in their forties and fifties who had worked at only one kind of job all their lives. This concern may have been one reason why he supported social welfare programs. He especially favored the ideas of John F. Kennedy, with whom he met often, even after Kennedy became president of the United States.

By 1961 there were slightly more than 6,000 computers in the United States; more than 4,000 of them were manufactured by IBM. Up until that time, computer manufacturers had built specific computer systems for specific clients. One of IBM's big selling points was the service that it provided for its machines and the software programs that were unique to its various clients. Watson thought there should be a better way to meet clients' needs; his company was beginning to be overwhelmed by the demands of meeting the differing requirements of various systems scattered across the country as well as the world. He settled on the idea behind System/360, the most revolutionary change in the designing and marketing of computers before the development of the Apple personal computer. The System/ 360 was to be standardized; it would come in the form of five sizes (eventually clients' needs increased the number to seven), would use hard disks for storing information, and would be internally compatible—Watson's key innovation. All peripherals, all data-storage units, all programs designed for one computer would work on all the other computers. This innovation spawned a vast industry of independent companies making peripherals and writing software that would be compatible with IBM computers.

The System/360 faced significant obstacles. One was that it took years to develop. The initial cost in development, job training, and factory building was more than $5 billion before any of the computers began bringing in money. Another obstacle was Watson's own deep depression after his friend John F. Kennedy was assassinated. He announced the development of the System/360 on 7 April 1964, before it was ready to go to market. That year he was suggested as a candidate for the vice presidential nomination on President Lyndon B. Johnson's Democratic ticket, but he declined. In 1965 IBM was one of the top ten manufacturing companies in the United States, but despite the company's success, Watson felt that his life was out of control. His effort to get System/360 into production was eating him up.

In 1967 Watson declared his support for Senator Robert Kennedy's potential bid to become president, expecting that that opportunity would come in 1972, after Johnson had served another term. When Kennedy announced that he was running for president in 1968, Watson was invited to run for his senatorial seat in New York, but by then he had lost whatever interest he had had in becoming a politician. When Kennedy, like his brother, was assassinated, Watson lost another good friend. He was asked by the Kennedy family to take Kennedy's place in the presidential race, but he declined.

During the 1960s IBM's revenues had risen by 30 percent per year, an achievement probably unequaled in U.S. business. In December 1968, Control Data, then developing what would be known as the Cray ultrafast computers, sued IBM for trust violations, contending that IBM was using its vast size to discourage companies from buying Crays from Control Data, a small company. At the time, companies were constantly suing IBM, and since Watson had decided that superfast computers like the Crays did not fit into IBM's view of building broadly compatible machines, the suit seemed just another nuisance.

Creating software for the System/360 had cost $500 million by 1966, making it more expensive than any other aspect of developing the system. By 1968, smaller companies with much smaller development teams were producing cheaper computer programs faster than IBM. IBM always had sold what Watson called "bundled" services: hardware, peripherals, software (or keypunch cards), and support services, such as repair services. With the System/360, computers were bundled with software as well as with all the services that IBM traditionally provided those who bought or leased its equipment. By 1969 IBM computers accounted for about 70 percent of all computers sold. On "Black Friday at IBM," the United States Justice Department, using Control Data's lawyers and research, filed an antitrust lawsuit against IBM, demanding that the $7.5 billion giant be broken up into seven different companies. In June 1969 IBM unbundled its products, selling each aspect of its computer products separately and allowing small specialty companies to compete.

IBM was being pressed hard by the Japanese manufacturers Fujitsu and NEC, and Watson feared that the ability of its individual divisions to compete against these giants would be lost if IBM was broken up. In any case, he foresaw IBM's market share shrinking as the market expanded. In this expectation Watson seems to have been correct; by 1980 IBM had vigorous competition from numerous U.S. companies. In 1972 IBM settled with Control Data out of court by giving Control Data IBM's computer services division. The Justice Department case lingered on until 1981, when it was abandoned.

Watson was inducted into the National Business Hall of Fame in 1976. He served as ambassador to the Soviet Union from 1979 to 1981. In its 31 August 1987 issue, Fortune magazine said, "If creating wealth for shareholders is the best measure of a businessman's success, Thomas J. Watson Jr. is the greatest capitalist who ever lived." He died of a stroke, and is buried at Sleepy Hollow Cemetery, in Sleepy Hollow, Westchester County, New York.

Watson's autobiography, Father, Son & Co.: My Life at IBM and Beyond (1990), is an outstanding account of his relationship with his father and how he and many others built the modern manufacturing giant IBM. Watson's A Business and Its Beliefs (1963) offers insight into his thinking when IBM was growing by as much as 30 percent in wealth per year. Robert Sobel, IBM: Colossus in Tradition (1980), discusses the changes in IBM made by Watson. Emerson W. Pugh, Memories That Shaped an Industry: Decisions Leading to IBM System/360 (1984), tells of the project initiated by Watson that reshaped the computer industry and laid the foundation for IBM PC compatibles. Obituaries are in the Los Angeles Times, New York Times, and Washington Post (all 1 Jan. 1994); the Chicago Tribune (2 Jan. 1994); and the (London) Times (3 Jan. 1994).

Kirk H. Beetz

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