Thomas J. Watson

For his son, see Thomas Watson, Jr.

Thomas John Watson, Sr.
Thomas J. Watson, Sr., circa 1920s
Born	(1874-02-17)February 17, 1874 Campbell, New York, USA
Died	June 19, 1956(1956-06-19) (aged 82) New York City, New York, USA
Occupation	Business
Spouse	Jeanette M. Kittredge (m. April 17, 1913)
Children	Thomas Watson, Jr. Jane Watson Helen Watson Arthur K. Watson
Parent(s)	Thomas Watson and Jane Fulton Whyte or George Marshall Watson and Mary Keller Watson

Thomas John Watson, Sr. (February 17, 1874 – June 19, 1956) was the president of International Business Machines (IBM), who oversaw that company's growth into an international force from 1914 to 1956. Watson developed IBM's renowned management style and corporate culture, and turned the company into one of the most effective selling organizations yet seen, based largely around punched card tabulating machines. A leading self-made industrialist, he was one of the richest men of his time and was called the world's greatest salesman when he died in 1956.

Early life and career

Born on February 17, 1874, he was very much the country boy. His father owned a modest lumber business located in Painted Post, 40 miles southwest of Ithaca in south central New York State. He worked on the family farm in East Campbell, New York and attended the District School Number Five in the late 1870s.

Having given up his first job — teaching — after just one day, he took a year's course in accounting and business at the local Miller School of Commerce; finishing in May 1892. His second job as a US$6 a week bookkeeper was almost as brief as his first, giving way to a career as a peddler. He joined a traveling salesman, George Cornwell, peddling organs and pianos around the farms, for the local hardware store (William Bronsons). When Cornwell left, he continued alone, earning the sum of $10 per week. It was only after two years of this life that he realized he would be earning $70 per week if he were on a commission. The impact of his indignation on making this discovery was such that he upped stakes and moved from his familiar surroundings to the relative metropolis of Buffalo.

Watson then spent a very brief period selling sewing machines for Wheeler and Wilcox. According to Tom Watson Jr., in his autobiography, "One day my dad went into a roadside saloon to celebrate a sale and had too much to drink. When the bar closed, he found that his entire rig — horse, buggy, and samples — had been stolen. Wheeler and Wilcox fired him and dunned him for the lost property. Word got around, of course, and it took Dad more than a year to find another steady job." Watson would later enforce strict rules at IBM against alcohol consumption, even off the job. According to Tom Jr., "This anecdote never made it into IBM lore, which is too bad, because it would have helped explain Father to the tens of thousands of people who had to follow his rules."

In the meantime, Watson once more set out on the road selling. In this case, his partner was C.B. Barron, a showman renowned for his disreputable conduct; which Watson, as a lifelong Methodist, deplored. Jointly they peddled shares of the Buffalo Building and Loan. They were soon very successful, and with his proceeds Watson set up a butchers shop as an investment. Barron absconded with the commission and the loan funds, leaving Watson with no money, no investment (he lost the shop as a result), and no job. Thus for the second, but not the last time, he was fired.

NCR

Watson had a newly-acquired NCR cash register in his butcher shop, for which he had to arrange new repayments. On visiting NCR, he was determined to join the company, and, after a number of abortive attempts, he finally succeeded. Led by John Patterson, NCR was then one of the leading selling organizations, and John J. Range, its Buffalo branch manager, became almost a father figure for Watson and was a model for his sales and management style. Certainly in later years, in a 1952 interview, he claimed he learned more from Range than anyone else. But at first, he was a poor salesman, until Range took him personally in hand. Then he became the most successful salesman in the East, earning 100 US$ per week. In 1899, aged 25, Watson was rewarded with the NCR agency for Rochester, one of NCR's smaller branches. As an agent, he got 35% commission. As a result of these techniques, which largely revolved around knocking the main competitor (Hallwood), in four years Watson made Rochester effectively an NCR monopoly. As a reward he was called to the NCR head office in Dayton, Ohio.

Antitrust affair

Watson's role in the scheme of things then was to knock out the competition in the used cash register market. It was made less legal by the chosen means. Using funds allegedly supplied by NCR, he set up what was ostensibly a completely independent organization, Watson's Cash Register and Second Hand Exchange, in Manhattan. Undercutting the competition, for he had no need to make a profit (having effectively limitless funds from NCR), he gradually monopolized the business; until he was able to buy out the competitors, which he promptly did. He then moved to Philadelphia and after that progressed across the country, repeating the operation and covertly establishing another near monopoly for NCR, in the second-hand business, to match that already established in the new machine market. In 1908, when the second-hand business was merged into the regular sales offices, Watson became assistant sales manager; moving up to become sales manager in 1910 with a further role — working along with NCR's engineers — in new product development.

In terms of the questionable second-hand business, Watson later claimed that he didn't appreciate the implications of what he was doing, and indeed it is quite possible that he was so immersed in the work that he failed to understand the full depth of Patterson's machinations. Nevertheless, it was a clear, indeed blatant, breach of the anti‑trust legislation; though until that time such legislation had, in the spirit of the age, been more honored in the breach rather than by adherence. Perhaps he was unlucky, but along with 30 other NCR managers (including Patterson) on February 22, 1912, he was indicted in an anti‑trust suit instigated by managers previously.

In the six months before his trial, he met his wife to be, Jeanette Kittredge. He married her just two weeks after the trial finished on February 13, 1913; he having been found guilty and sentenced to a 5000 US$ fine plus a year in Miami County jail. The jail sentence was unexpected as previously only fines had been imposed, and Watson appealed. In the meantime, charges against Patterson were eventually dismissed because of his philanthropic efforts during the Great Dayton Flood of 1913. Similarly, Watson's appeal was successful, and the verdict was set aside pending a new trial. The government, however, chose not to go through the expense of another trial, and Watson was subsequently cleared of all wrongdoing in the matter.

Head of IBM

Watson joined the Computing Tabulating Recording Corporation (CTR) on May 1, 1914. When Watson took over as general manager, the company produced $9 million in revenue and had more than 1300 employees. In 1924, he renamed the company International Business Machines. Watson built IBM into such a dominant company that the federal government filed a civil antitrust suit against them in 1952. IBM owned and leased more than 90 percent of all tabulating machines in the United States at the time. When Watson died in 1956, IBM's revenues were $897 million, and the company had 72,500 employees.

Throughout his life, Watson maintained a deep interest in international relations, both from a diplomatic and a business perspective. He was known as President Roosevelt's un-official Ambassador in NY and often entertained foreign statesmen. In 1937, he was elected president of the International Chamber of Commerce (ICC) and at that year's biennial congress in Berlin stated the conference keynote to be World Peace Through World Trade. That phrase became the slogan of both the ICC and IBM.

Watson's merger of diplomacy and business was not always lauded. During the 1930s, IBM's German subsidiary was IBM's most profitable foreign operation, and a recent book argues that Watson's pursuit of profit led him to personally approve and spearhead IBM's strategic technological relationship with the Third Reich. In particular, critics point to the coveted Eagle with Star medal that Watson received at the Berlin ICCC meeting in 1937, as evidence that he was being honored for the help that IBM's German subsidiary Dehomag (Deutsche Hollerith-Maschinen Gesellschaft mbH) and its punch card machines provided the Nazi regime, particularly in the tabulation of census data. The most recent study of the matter, however, argues that Watson believed, perhaps naively, that the medal was in recognition of his years of labor on behalf of global commerce and international peace. Watson soon began second-guessing himself for accepting the medal, and eventually returned the medal to the German government in June 1940. German Chancellor Adolf Hitler was furious at the slight, and he declared that Watson would never step on German-controlled soil again. As anticipated, Dehomag went into revolt, its management decrying Watson's stupidity and openly wondering whether or not it would best if the firm separated from its American owner. The debate ended when Germany declared war on the United States in December, 1941, and the German government took custody of the Dehomag operation.

During this same period, IBM became more deeply involved in the war effort for the U.S., focusing on producing large quantities of data processing equipment for the military and experimenting with analog computers. Watson, Sr. also developed the 1% doctrine for war profits which mandated that IBM receive no more than 1% profit from the sales of military equipment to U.S. Government. Watson was one of the few CEOs to develop such a policy.

Watson also had a personal interest in the progress of the war. His eldest son, Thomas J. Watson, Jr., joined the United States Army Air Corps where he became a bomber pilot. But he was soon hand-picked to become the assistant and personal pilot for General Follet Bradley, who was in charge of all Lend-Lease equipment supplied to the Soviet Union from the United States. Watson, Sr.'s youngest son, Arthur K. Watson, also joined the military during the conflict.

Watson worked with local leaders to create a college in the Binghamton area, where IBM was founded and had major plants. In 1946, IBM provided land and funding for Triple Cities College, an extension of Syracuse University. Later it became known as Harpur College, and eventually evolved into Binghamton University. Its School of Engineering and Applied Sciences is named the Thomas J. Watson School of Engineering and Applied Sciences, although the IBM plant in the neighboring city of Endicott has since downsized drastically.

After World War II, Watson began work to further the extent of IBM's influence abroad and in 1949, the year he stepped down, created the IBM World Trade Corporation in order to control IBM's foreign business.

Watson was named chairman emeritus of IBM in 1956. A month before his death, Watson handed over the reins of the company to his oldest son, Thomas J. Watson, Jr. Thomas Watson Sr. was interred in Sleepy Hollow Cemetery in Sleepy Hollow, New York.

Personal

Watson married Jeanette Kittredge, from a prominent Dayton, Ohio railroad family, on April 17, 1913. They had two sons and two daughters.

1. Thomas Watson, Jr., succeeded his father as IBM chairman and later served as Ambassador to the Soviet Union under Jimmy Carter.
2. Jeanette Watson Irwin married businessman John N. Irwin II, later Ambassador to France
3. Helen Watson Buckner became an important philanthropist in New York City.
4. Arthur K. Watson served as president of IBM World Trade Corporation and later as Ambassador to France.

As a Democrat (after his criminal indictment by the Taft Administration) Watson was an ardent supporter of Roosevelt. He was one of the most prominent businessmen in the Democratic Party. He was considered Roosevelt's strongest supporter in the business community.

The US Supreme Court, in 1936, upheld the lower court decision that IBM, together with Remington, should cease its practice of requiring its customers to buy their cards from it alone. In the event it made little difference because IBM was the only effective supplier to the market; and profits continued undiminished.

Watson served as a powerful trustee of Columbia University from June 6, 1933 until his death. He engineered the selection of Dwight D. Eisenhower as president and played the central role in convincing Dwight D. Eisenhower to become president of the school.

In the 1940s, Watson was on the national executive board of the Boy Scouts of America and served for a time as International Scout Commissioner. E. Urner Goodman recounts that the elderly Watson attended an International Scout Commissioners' meeting in Switzerland, where the IBM founder asked not to be put on a pedestal. Before the conference was over, Goodman relates, Watson "… sat by that campfire, in Scout uniform, 'chewing the fat' like the rest of the boys". He received the Silver Buffalo Award in 1944. Thomas Watson Jr. later served as National president of the Boy Scouts of America from 1964–1968.

Thomas Watson Sr. was chairman of the Elmira College Centennial Committee in 1955 and gave Watson Hall, primarily a music and mathematics academic building.

Mr. Watson was inducted into the Junior Achievement U.S. Business Hall of Fame in 1990.

Famous misquote

Although Watson is well known for his alleged 1943 statement: "I think there is a world market for maybe five computers," there is scant evidence he made it. Author Kevin Maney tried to find the origin of the quote, but has been unable to locate any speeches or documents of Watson's that contain this, nor are the words present in any contemporary articles about IBM. The earliest known citation on the Internet is from 1986 on Usenet in the signature of a poster from Convex Computer Corporation as "I think there is a world market for about five computers" — Remark attributed to Thomas J. Watson (Chairman of the Board of International Business Machines), 1943. Another early article source (May 15, 1985) is a column by Neil Morgan, a San Diego Evening Tribune writer who wrote: Forrest Shumway, chairman of The Signal Cos., doesn't make predictions. His role model is Tom Watson, then IBM chairman, who said in 1958: "I think there is a world market for about five computers." One of the very first quotes can be found in a book "The Experts Speak" written by Christopher Cerf and Victor S. Navasky in 1984. However Cerf and Navasky just quote from a book written by Morgan and Langford, "Facts and Fallacies". All these early quotes are questioned by Eric Weiss, an Editor of the Annals of the History of Computing in ACS letters in 1985.

In 1985 the story was discussed on Usenet (in net.misc), without Watson's name being attached. The original discussion has not survived, but an explanation has; it attributes a very similar quote to the Cambridge mathematician Professor Douglas Hartree, around 1951:

I went to see Professor Douglas Hartree, who had built the first differential analyzers in England and had more experience in using these very specialized computers than anyone else. He told me that, in his opinion, all the calculations that would ever be needed in this country could be done on the three digital computers which were then being built — one in Cambridge, one in Teddington, and one in Manchester. No one else, he said, would ever need machines of their own, or would be able to afford to buy them.

(quotation from an article by Lord Bowden; American Scientist vol 58 (1970) pp 43–53); cited on Usenet. The misquote is itself often misquoted, with fifty computers instead of five.

The story had already been described as a myth in 1973; the Economist quoted a Mr Maney as "revealing that Watson never made his oft-quoted prediction that there was 'a world market for maybe five computers'".

Interestingly, since the quote is typically used to demonstrate the fallacy of predictions, if Watson did make such a prediction in 1943, then, as Gordon Bell pointed out in his ACM 50 years celebration keynote, it would have held true for some ten years.

The IBM Archives Frequently Asked Questions asks if he said in the 1950s that he foresaw a market potential for only five electronic computers. The document says no, but quotes his son and then IBM President Thomas J. Watson, Jr., at the annual IBM stockholders meeting, April 28, 1953, as speaking about the IBM 701 Electronic Data Processing Machine, which it identifies as "the company's first production computer designed for scientific calculations". He said that "IBM had developed a paper plan for such a machine and took this paper plan across the country to some 20 concerns that we thought could use such a machine. I would like to tell you that the machine rents for between $12,000 and $18,000 a month, so it was not the type of thing that could be sold from place to place. But, as a result of our trip, on which we expected to get orders for five machines, we came home with orders for 18." Watson, Jr., later gave a slightly different version of the story in his autobiography, where he said the initial market sampling indicated 11 firm takers and 10 more prospective orders.

Famous quote

"THINK". Watson summarized the IBM philosophy with a motto consisting of one word. IBM's first U.S. trademark was for the name "THINK" filed as a U.S. trademark on June 6, 1935 with the description "periodical publications". This trademark was filed fourteen years before the company filed for a U.S. trademark on the name IBM A biographical article in 1940 noted that "This word is on the most conspicuous wall of every room in every IBM building. Each employee carries a THINK notebook in which to record inspirations. The company stationery, matches, scratch pads all bear the inscription, THINK. A monthly magazine called 'Think' is distributed to the employees." THINK remains a part of IBM's corporate culture to this day; it was the inspiration behind naming IBM's very successful line of notebook computers, IBM Thinkpad. In 2008, IBM Mid America Employees Federal Credit Union changed its name to Think Mutual Bank[1]. The now commercial bank has several branches, mostly in the Rochester, Minnesota area where IBM Rochester has a strong presence.

See also

• Jeannette K. Watson Fellowship
• Thomas J. Watson Fellowship
• Thomas J. Watson Research Center
• Thomas J. Watson School of Engineering and Applied Science

Sources

• Watson, Thomas J. (1934). Men-Minutes-Money A collection of excerpts from talks and messages delivered and written at various times. International Business Machines.
• Watson, Thomas J. (1954). As a Man Thinks …: the Man and His Philosophy of Life as Expressed in His Editorials. International Business Machines.
• Maney, Kevin (2003). The Maverick and His Machine: Thomas Watson, Sr. and the Making of IBM. John Wiley & Sons. ISBN 0-471-41463-8 .
• William H. Rodgers. Think; A Biography of the Watsons and IBM (1969).
• Robert Sobel Thomas Watson, Sr.: IBM and the Computer Revolution (1981).
• Richard S. Tedlow. The Watson Dynasty: The Fiery Reign and Troubled Legacy of IBM's Founding Father and Son. (2003)
• Thomas J. Watson. Father, Son & Co.: My Life at IBM and Beyond. (1990)
• Scouting Round the World, John S. Wilson, first edition, Blandford Press 1959 p. 186 272

External links

• Oral history interview with Thomas J. Watson, Jr., 25 April 1985, Armonk, New York, Charles Babbage Institute, University of Minnesota.
• Obituary, NY Times, June 20, 1956 Thomas J. Watson Sr. Is Dead; I.B.M. Board Chairman Was 82
• Thomas J. Watson at Find a Grave
• The IBM Songbook
• First Usenet Posting of the misquote
• IBM biography of Watson
• IBM Argentine
• Ancestry.com site