Thomas Watson Jr. Documentary - IBM Success Story

Hi, I'm Evan Carmichael, and welcome to another edition of Modeling the Masters. I believe that the fastest and most effective way to grow your business is to model the strategies of people who've already done what you're trying to do. So today we're going to look at how a boy whose life was consumed with partying and drinking managed to turn his life around take the reins of his father's company and turn it into an international brand. This is a story of former, uh, president and CEO of IBM, Thomas Watson Jr., and the top lessons that you can learn from his success.

Thomas Watson Jr. was the son of IBM founder Thomas Watson Sr. When Thomas Watson Jr. stepped into his father's shoes as president of IBM in 1952, he knew there would be hard ones to fill. Not long before that, Watson Jr.'s life had consisted in large part of drinking and partying. IBM had always been a part of his life, but only in the context of his father's job. Was he ready to take the reins of this multinational company? Could he break out from his father's shadow and create his own legacy? In his teenage years, Watson Jr. began to suffer from depression. As a result, and also partly due to his undiagnosed dyslexia, he struggled to get through school. After being accepted into Brown University only as a favor to his prominent father, Watson received his business degree in 1937. Immediately upon graduating, Watson went to work for his father's growing company, IBM. He had little interest in the job, but was unsure of what to do with his life. It wasn't until World War II that Watson would find his calling. He enlisted in the Air Force and served as a pilot, chauffeuring top military leaders around the USSR. And learning Russian in the meantime. In later years, Watson Jr. would recall how easy piloting came to him and how for the first time ever he had confidence in his abilities. It had been a suggestion of one of the Army generals he had befriended during his service that Watson Jr. try to follow in the steps of his father. So after the war, Watson Jr. did just that and returned to work at IBM. He was promptly promoted to vice president after just 6 months and placed on IBM's board of directors 4 months after that. After 3 years with IBM, Watson Jr. had become the company's executive vice president, a position he would hold for another 3 years until 1952. It was in that year that Watson Sr. decided his eldest son was ready. No amount of additional grooming or training would prepare him for his next challenge. In 1952, Watson Sr. stepped aside and appointed his son as the new president of IBM. Indeed, Watson Jr. would not only create his own unique legacy as a businessman, but would go on to become named as one of Time Magazine's 100 Most Influential People in the 20th Century. Under his leadership, IBM's revenues tripled and the company experienced a rate of growth that few other companies can rival even today.

By finding his self-confidence and by not running away from his past, Thomas Watson Jr. was able to go from that partying, drinking lifestyle transform his life and take his company and build an international brand. To help you transform your business, here are 3 action items that you can learn from Thomas Watson Jr.

Action item number 1: Make the workplace great. Your company's growth will always be limited by the size of your team. If you're a solo entrepreneur, you'll only be able to do so much on your own. If you want to continue mo— your momentum, you'll have to bring people on And if you want great people to join you, you have to make your workplace great for them. Have a vision that gets people inspired. Push people to improve their skills and become better people. Do work that helps others. And surround yourself with people who all share the same values. If you bring the right people on board and set them up for success, your growth potential is limitless. Like father, like son, both Watson Sr. and his son made it their number one priority to ensure that IBM was a company that people wanted to work for. From generous employee benefit packages to encouraging an open line of communication between staff and managers, Watson Jr. continued his father's tradition of placing supreme importance on worker satisfaction. Under Watson Jr., the company initiated a rigorous hiring process—a series of interviews followed by an aptitude test—but once hired, an IBM employee could be guaranteed a workplace environment where his or her opinions could be freely voiced and where they would be listened to by management. From maintaining an open and unimpaired two-way communication system within the company, to encouraging the contribution of workers at every level of the company, to overall progress in implementing methods of appreciation and recognition, Watson Jr. made sure that his company was one of the best you could work at. According to Watson Jr., "One of the proudest claims is the fact that people say IBM is a good place to work. I like to think that as we continue to grow, We're not only going to live up to that claim, but make IBM an even better place to work. There are many things I would like IBM to be known for, but no matter how big we could become, I want this company to be known as the company which has the greatest respect for the individual. This is a company of human beings, not machines, personalities, not products, people, not real estate. We have always believed in IBM that our most important asset is our people. So we followed a basic principle of trying to hire, train, and keep the best possible people. This principle, along with the recognition of the dignity of every individual, is the backbone of IBM employee relations. Action Item #2: Satisfy your customers. Business success comes from satisfying your customers. If you're solving a problem for them, they're going to pay you for it and make your company successful. The bigger the problem is and the more you can help them, The more money you're gonna make. Always listen to your customers. Aside from IBM employees, no one was more important to Watson Jr. than the company's customers, and nothing was more important than pleasing them, whatever it took. He understood that customer satisfaction lied at the center of his business success. In the budding new computer industry, marketing would make the difference in attracting new customers, but it was only the satisfied customer who would return to the company time after time. Watson Jr. boiled down his operations to a simple formula: Make your customers happy and you'll be around to work another day. To this end, Watson Jr. knew it wouldn't take much to create the loyal customer base he wanted. All he had to do was ensure that IBM demonstrated a sincere desire to meet their wants and help them with anything they needed. Machines were bound to fail, Watson Jr. knew that all too well, but he also knew that customers are willing to tolerate mechanical problems —so long as they had someone, a real person, to care when something went wrong. And it was here where IBM was able to excel. According to Watson Jr., "Service has always been the hallmark of our company, and looking at the years ahead, I think that the margin between our success and failure will be measured more and more in terms of the service we provide. I'm speaking not only of the service we agree to provide by contract, but also that of quality of urgency expressed by by people who desire to do a little more than is expected. To respond cheerfully and willingly to the needs of customers, fellow employees, and everyone we meet. Nothing can bring disaster more rapidly to a business and to its people than a breakdown in communications and understanding. I think my most important job in IBM is working with anybody who has a problem. Action Item #3: Integrate Integrity into Your Business. People are attracted to people with integrity. Acting with integrity doesn't always yield the best short-term results, but always makes for long-term success. If integrity is one of your core values, you'll attract customers, employees, partners, and investors who trust you to do the right thing and will stick by your side. On both the personal and professional levels, Watson Jr. was committed to maintaining and acting with integrity. He set a new standard for the time when it came to businessmen and their involvement in, and advocacy on, social issues. In addition to eliminating the hourly wage and introducing tuition loans within his own company, Watson Jr. also pioneered the idea of matching grants for charities. As an aide for many successive American presidents, Watson Jr. also advocated for increased federal aid for the poor, nuclear disarmament, and the provision of better national healthcare. Watson Jr.'s integrity extended not only to his beliefs in the social and humanitarian responsibility of businesses, but also to the very way in which his company operated. Watson Jr. might have worked with machines, but he never allowed his company to be run by anything other than rational and compassionate minds. Operating with integrity was not just a way for Watson Jr. to be able to sleep well at night. He knew that to do so also simply made good business sense. According to Watson Jr., it's easy to be big in big things, in big moments, when everyone is watching. Real character emerges in the way we meet our routine, everyday obligations. Really big people are, above everything, courteous, considerate, and generous. Not just to some people in some circumstances, but to everyone all the time. One of the reasons we are known as a great company is that we're known as a company made up of people like that. We accept the responsibilities as a corporate citizen in the community. National, and world affairs. We serve our interests best when we serve the public interest. In a business that moves as fast as ours, that is as complex as ours, that has as many people as ours, there will always be the requirement for many meetings, presentations, and appointments. But I think we can make calendar integrity a way of doing business and benefit from its discipline.

So remember, make the workplace great, satisfy your customers, and integrate integrity into your business. To finish up this video, I wanted to share one of my favorite true stories about Thomas Watson Jr. and some of his best quotes.

Thomas Watson Sr. believed in staying with what you know, but Watson Jr. knew that this kind of thinking would not sustain a company forever. After taking over as president, Watson Jr. took the biggest risk he'd ever taken by investing all of IBM's finances into researching and developing a new product line. That amounted to $5 billion of the company's money. This risk would not only bankrupt the company if it didn't work, but make all the products IBM was currently making obsolete. Watson Jr. was sure that developing a computer that everyone could use was the wave of the future, and after several delays, as well as near bankruptcy, IBM launched the System/360 in 1966. Instantly the new computer was selling to everyone that could afford it. Between 1966 and 1970, IBM was selling more than 35,000 computers a year, when before it was selling only around 11,000. IBM's revenues surpassed $7.5 billion for the first time in company history during this time. The gamble paid off.

Thank you for joining me for another edition of Molly and the Masters. If you like the video and you want to see more, please give it a thumbs up below. I'd also love to hear what you have to think if you want to leave a comment under the video. I always read those and appreciate seeing them when they come in. So thank you, and we'll see you on the next episode.