TW Jnr and IBM

TW Jnr and IBM

Betting the company on a single product

I have a great deal of time for IBM as a company. They have survived for over 100 years and are still one of the top companies in the world. My first proper computer was an IBM XT, and my first core academic leadership task was to replace our VAX computer with a lab of IBM XT computers. Several academics disagreed with the switch-over, but I could only see the rise of the PC, and the fall of the minicomputer. Since then, PCs have ruled our world, along with DOS, Windows and x86 architectures.

And, so, I’ve just finished reading about the person who really made IBM the company they are now: Tom Watson Jr [here]:

It is a wonderful book, and I enjoyed living the life of Tom’s father and of Tom. There are possibly few people on the planet who lived such an impactful life. Overall, Tom had the difficulty of following in his father’s shadow and was continually accused of being favoured for promotion and in his roles at IBM. But Tom Jr did not want this. He wanted to make his own way in life, but within the company that his father had crafted. Overall, Tom Watson has taken IBM to the point where they dominated in the punch card market and had worldwide sales. This growth happened during wartime, when the company benefited from the data processing requirement of war. Some point to the fact that IBM helped the Nazis, but the book outlines that this was overblown and that it was one of the subsidiary companies that provided the data processing requirement for the Nazis.

And, so, the company grew in the 1950s, and it was time for a change. This happened through the invention of the transistor at Bell Labs. For IBM, their core markets were tabulators and punch cards, and the rise of the transistor challenged their domination. But, as TW Jr took over the CEO role from his father, he immediately put into place a massive scale-up of R&D, and a focus on transistorized computers. It was radical. At the time, the major problem in the industry was compatibility between computers, and where software had to be rewritten for every new computer and where there was no compatibility between systems and in their component parts. This created great expense to IBM — as they were required to maintain all of their previous systems — and where customer service was always a key focus for the company.

And, so, TW Jr bet the company on one thing … the IBM System/360:

In fact, it was the most costly investment in a product ever! It was to be beautifully engineered but built with a compatible architecture and using software compilers. And, too, it would cope with scientific and business processing. For this, IBM pushed their research with the new programming languages of FORTRAN 77 and COBAL and with their data structure work on SQL. The System/360 also brought DOS (Disk Operation System), and which allows disk storage systems to integrate with the operating system.

And, IBM believed in good industry design and that engineering excellence was at their core. This fed making computers that looked amazing, and where some companies would even have a server room in their company’s reception area, and which had glass windows so people could see the magnificence of their IBM computer. This focus on industrial design is apparent from the classic logo:

For the System/360, TW Jr brought together three research labs in a focus in building the state-of-the-art. But, in some places, it did not go well, especially due to delays in electronics manufacturing. In fact, JW Jr ended up moving his brother away from the leadership of manufacturing, and which ended up being one of the great regrets that JW Jr had in his life (as his brother hardly spoke to him after that).

But the gamble worked, and in 1964 it was released, and it changed the computer industry. In fact, the System/360 product range ran for another 14 years (1979), before IBM placed its main competitor (the IBM PC) in its way. In the 1980s, after TW Jr had left his role as CEO, IBM made the mistake of getting a small company named Microsoft to take over DOS (Disk Operating System) and for Intel to take over their architecture.

In the days before Steve Jobs and Apple, it was IBM who was a leader in making beautifully crafted systems and which had a continual focus on the customer. It is strange, then, that Steve’s main target in the rise of Apple was the mighty IBM (and their almost complete dominance of the computer market) — and it was the System/360 which created a virtual monopoly in the market.

Over TW Jr rein, the company made many of their employees rich — as they were one of the first companies to offer share options to their employees. They also looked after their staff and offered salaries to all of their employees (in a time when a salary was an unusual thing for some roles). Also, TW Jr set up IBM plants in areas with high deprivation and offered good jobs in the growing computer industry. Staff, too, had a job of life and some of the best salaries in the industry — along with IBM investing in the education of their staff.

But, it was TW Jr as the person that the book really focuses on, and his continual strive for perfection in his business life. Unfortunately, those around him could be the target of his anger, and it was only later in life that he managed to tame his temper.

With TW Jr as CEO, IBM saw exponential growth as a company for his whole term. And few companies could ever equal their growth in their sales, in their stock, and in the employee count. TW was a person who knew how to manage rapid growth — and his guiding hand touched virtually everything in the company. He broke down barriers in communications — and gave every employee a voice, and allowed staff to speak up against bad managers.

And, for TW Jr, the place to relax and think was on his boat or in the air. His times as a wartime pilot basically changed his world, especially in how business across nations can help reduce the opportunities for war. In fact, TW Jr was a great advocate of thawing US/Russian relationships and was successful in achieving nuclear arms reductions between the two nations.

Over, a worthy life, and a great person and who created a great company. Some of his legacy lives on in IBM, and their continual focus on R&D is still a key factor for the company. But, they did disrupt their own market and have missed many emerging markets, especially with the rise of the Cloud. Their Watson computer, too, did not live up to its AI hype. But nothing can take away the contribution they have made to our world.

We take our modern world for granted. What we see in our iPhones is seven decades of continual innovation — all cramped into a small package. As a society, we have never advanced as fast as we have done in the last few decades — but where will all this advancement take us? Into a scary world of AI or a brave new world?

Please consider reading — most for the humanity of TW Jr, and the way he created a big company that still felt like a small company. People were proud to work for IBM — and where he created a company where every single person in the company mattered — and where the customer was always the key focus for their company.

Sometimes a book or a film changes your viewpoint on life — and this book has changed mines.