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Thomas Watson Jr. Mainframe Mogul

Thomas Watson Jr.
Chairman of IBM Corp.
Founded: 1924

"Fear of failure was the most powerful force in my life."-Thomas Watson Jr.

When Thomas Watson Jr. assumed control of IBM from his father, he had some pretty big shoes to fill. After all, the senior Watson had built IBM from an obscure time-clock maker and punch-card tabulator company into a corporate titan. Dogged by self-doubt, the would-be successor to the IBM throne once wailed to his mother, "I can't do it. I can't go to work for IBM." Yet Watson not only succeeded his father, but he eventually surpassed him. He boldly carried IBM-and the world-into the computer age, and in the process, created a company whose awesome sales and service savvy and dark-suit culture stood for everything good.and bad.about corporate America.

Thomas Watson Jr. was born in 1914, the same year his father was appointed manager of Computing-Tabulating-Recording Co. (CTR). In 1924, Watson Sr. became CEO and renamed the company International Business Machines (IBM). Because of his father's position, Thomas Jr. had a very privileged upbringing, attending private schools, traveling the world and enjoying the benefits of considerable wealth. But this would prove to be more of a handicap than an advantage for the troubled young man.

Watson Sr. was curt and unforgiving, and had unreasonably high expectations for his son-expectations Watson Jr. often felt he could never live up to. Indeed, early on it seemed clear that he might not be the equal of his father, nor a competent successor. A perpetually failing student, "Terrible Tom," as his classmates and instructors called him, vented his frustration by pulling pranks and tangling with authority. It took him six years and three schools to get through high school, and college wasn't much better. At Brown University, he spent most of his time fooling around, and only graduated through the intervention of a sympathetic dean.

After college, Watson enrolled in IBM sales school, but didn't fair much better. "My three years as a salesman were a time of sickening self-doubt," he writes in his autobiography, Father, Son & Co.: My Life at IBM and Beyond. And Watson had good reason to feel that way. He could never be sure what he'd accomplished on his own and what had been arranged to curry favor with his father, as when the head of his sales-training class fixed it so he'd be elected its president. "Unfortunately for me," Watson recalls, "I lacked the force of character to say 'I won't have this.' "

But World War II would change that. As aide and pilot for Major General Follett Bradley, the Army Air Forces' inspector general, Watson flew throughout Asia, Africa and the Pacific, displaying raw nerve, visionary foresight and shrewd planning skills. As a result of his experiences, he returned from the war confident and thinking for the first time that he might be capable of running IBM.

His father, however, was not as confident. Watson Jr. had been so unimpressive before the war that it was hard for the senior Watson to accept that he had changed. Yet not only had he changed, but he had also returned to IBM with a new perspective. He quickly realized that IBM's future lay in computers, not in outdated technology like tabulators, which were the company's stock and trade. Many people, his father included, refused to believe that the company's core products would soon become obsolete.

Nevertheless, when Watson became president of IBM in 1952, he followed his vision, recruiting electronics experts and luminaries, such as computer pioneer John von Neumann, who were responsible for creating IBM's first successful computers, the 700 series and the 650 series. By 1963, IBM had grabbed an 8-to-1 lead in revenue over Sperry Rand, its closest competitor and maker of Univac-the first large commercial computer.

With IBM clearly on top, Watson took the biggest gamble of his career. He proposed spending more than $5 billion to develop a new line of computers that would make the company's existing machines obsolete. His vision was to replace specialized units with a family of compatible computers named System/360 that could fill every data-processing need and would allow customers to start with small computers and move up as their needs increased, without having to discard their existing software.

It was a bold strategy that nearly failed when software problems created delivery delays. In a "hail mary" play, Watson assigned 2,000 engineers to work on solving the software problems. Although the first machines were slow, they became better as more were built. By 1966, the long-delayed software programs were delivered, and System/360, which would ultimately revolutionize the computer industry, proved to be a phenomenal success. IBM's installed base of computers skyrocketed from 11,000 in 1964 to 35,000 in 1970, and its revenues more than doubled to $7.5 billion.

In 1971, years of overexertion and stress caught up with Watson, and he suffered a near-fatal heart attack. While recuperating, he decided to retire. "I wanted to live more than I wanted to run IBM," he explains in Father, Son & Company. "It was a choice my father never would have made, but I think he would have respected it." After his retirement, Watson pursued his interests in sailing and flying, and even served as ambassador to the USSR under President Jimmy Carter. In December 1993, the man Fortune magazine praised as "the greatest capitalist who ever lived," died of complications following a stroke.

Under Thomas Watson Jr., IBM so thoroughly dominated the computer industry that it left even powerful competitors such as Sperry Rand flailing in its wake. And although newcomers like Compaq and Microsoft nearly brought the company to its knees in the 1980s, as the new millennium approaches, the colossus that Watson inherited and reinvigorated in the 1950s and 1960s stands strong as the sixth-largest company in the United States.

Aviation Pioneer?
Not only did Thomas Watson Jr. spark a computer revolution, but he also broke new ground in aviation. While serving in the Army Air Forces during World War II, Watson trailblazed the Alaska-Siberia ferry route, which the United States used to ship planes to the Soviet Union.

A Kinder, Gentler Big Blue
One of the keys to Thomas Watson Jr.'s success at IBM was the management style he adopted when he became company president. Under his father, IBM was a corporate dictatorship with an autocratic management strategy that discouraged individualism and independent thinking. All decisions had to be run past Watson Sr. Watson Jr., however, realized that in the rapidly evolving technology industry, the management strategy that had served his father so well could actually become an impediment. So he encouraged IBM managers to use their imaginations and make decisions independent from the home office. As a result, IBM became a top innovator in the computer field.

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