Authors: James Essinger
Hollerith might have remained with the company as a figure-head and board member for the rest of his life had he not come up against a formidable colleague at C-T-R. The man was Thomas John Watson, a human whirlwind who, while not in any sense a technological pioneer himself, had the vision and commercial acumen to see that it should be possible to transform Hollerith’s machines into immensely powerful tools that would revolutionize how the world handled information.
Thomas Watson was born in
1874
in a small village, East Campbell, in upstate New York. His father was a lumber dealer. Watson began his career studying business at a local school of commerce before starting to work as a salesman in a retail store. From this 183
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he graduated to employment as a commercial traveller selling pianos and organs.
Later in life, Watson looked back at his time as a commercial traveller as one of his most important formative periods. He said it taught him some lessons he never forgot. He learnt that the role of the salesman is an honourable
profession
and that successful salesmen need to dress the part and behave like professionals.
Another important lesson Watson said he had absorbed from his time on the road was that commercial salesmen were too prone to seeking solace in drink as a way of dealing with the loneliness and rootlessness of their jobs.
These guiding principles remained with Watson all his life.
They explain his rigid insistence on dress code and his zero toler-ance of drinking during working hours. Above all, Watson’s early experience of working life convinced him that no commercial or industrial organization had any chance of lasting success unless it managed to recruit and hold on to energetic, focused, and highly motivated salesmen who were totally devoted to their customers.
In
1898
Watson joined the sales staff of the National Cash Register Company in Dayton, Ohio. A born salesman, Watson shot up through the corporate hierarchy. Within ten years he rose to the post of general sales manager of the company under the tutelage of its canny, ultra-competitive president, John H.
Patterson.
Patterson played a vital role in defining the direction American business was to take throughout the twentieth century.
Watson regarded Patterson as his mentor. In his own subsequent career he borrowed and built on many of the techniques Patterson had taught him.
In those days before mass-market advertising became a widespread feature of the business world, corporations were greatly dependent on their sales staff to drive home to the customer the reasons for buying a particular product or service. The trouble was, the very salesmen on whom a company’s fortunes relied were frequently the least professional part of the corporate 184
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team, partly because of the rigours of the salesman lifestyle.
There was not yet an infrastructure of comfortable, value-for-money business hotels where travelling salesmen could stay at the end of a long, hard day. Salesmen also usually felt neglected and even ignored by their employers. Small wonder that many became lonely and demoralized, paid too little attention to their customers, and spent what commission they managed to earn on drink.
Patterson’s goal, which Watson subsequently eagerly adopted himself, was to head a revolution in how an organization saw its salesmen. Patterson believed that if he could achieve this within National Cash Registers, he could achieve a similarly revolutionary success in business. He set his company on a mission to, as he put it, ‘exalt the salesman’ and ‘make a businessman out of him’.
Patterson led his revolution by introducing ideas that are nowadays taken for granted in business around the world but at the time were still new. Firstly, he took every step to motivate his sales force financially. His best salesmen earned regular raises and substantial cash bonuses. Patterson also offered salesmen status symbols that conferred on them the idea of belonging to an exclusive club. Top sellers won special gifts such as diamond tie-pins and gold-headed canes. He also brought a literal interpretation to this idea of expert salesmen belonging to a special club.
Salesmen who achieved one hundred per cent of their sales quotas were invited to join what Patterson called the One Hundred Point club. Salesmen who achieved this status could feel proud to be among the fraternity of the most successful—and the best paid—businessmen in America.
Patterson sent his top salesmen to his own tailor and generally encouraged his salesmen to make themselves in his own image. Single-handedly he created an ethos of the salesman (and it almost always was a man in those days) as a glorious modern hero which has persisted in the business psyche of the United States, and most other capitalist countries, ever since.
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Thomas Watson believed in these new approaches to motivating salesmen as fervently as Patterson did. By
1910
he had become Patterson’s right-hand man. Then, as is so often the case when a pupil starts to approach a mentor in stature, mentor and pupil fell out. Patterson, having preached a gospel of helping his salesmen reach the very top, now paradoxically started to resent Watson’s ability and success. It didn’t help that Watson was enormously popular with the sales force; Patterson felt his own supremacy was being challenged. He and Watson had also become involved in a complicated and bitter antitrust lawsuit relating to NCR’s attempt to control not only the market for new cash registers, but also for used ones. In this lawsuit Patterson and Watson were, in fact, on the same side, but the stress of the case and problems associated with it threw the final log onto the funeral pyre of their working relationship. One day in
1913
, Patterson abruptly fired Watson.
Watson was stunned, but he never dwelt on negative matters for long and he recovered quickly. Besides, he was not exactly thrown into professional oblivion; he had already made a fortune at National Cash Registers and become a legend in American business by doing so. He was immediately offered a variety of attractive posts paying vast salaries.
To the astonishment of those who had worked with him and thought they knew him, he decided that the job which most appealed to him was Flint’s offer of the post of general manager offered by the C-T-R company. Watson’s acceptance of this job was not due to some superstitious preference for working for an organization whose name consisted of a three-letter acronym; he had, in fact, thought this particular career move out very carefully.
When Watson did take the job, C-T-R was still a tiny organization compared with NCR. But Watson had done his home-work. He had investigated the nature of the patents C-T-R
held. He understood, perhaps even more than Flint or Hollerith did, just how great the potential of these patents really was. At 186
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a more emotional level, Watson—like Flint—was fascinated by the intricacy, efficiency, and bewildering speed of automatic tabulation machines. Instinctively, he had a vision of the possibilities they offered for handling the information generated by America—and the world.
Watson always backed his own hunches. He negotiated a deal for himself whereby he would be paid only a modest annual basic salary, but also an annual commission of five per cent of the profits of C-T-R. If the organization grew according to an ambitious expansion plan that Watson had agreed with Flint, Watson could look forward to becoming the best-paid businessman on the planet. He insisted that as his future and C-T-R’s future were now one and the same, everything would have to be done his way. Flint, not one to obstruct a star employee on the way up, agreed. The instant Watson assumed the captaincy of C-T-R, he started reorganizing it into the kind of company he wanted to lead to endlessly escalating success.
Abandoning Hollerith’s low-key, almost embarrassingly unobtrusive sales techniques, Watson introduced the very same salesforce motivation practices he had helped Patterson deploy at NCR. Watson established a comprehensive system of sales territories, commissions, and quotas. Borrowing Patterson’s idea of the One Hundred Point club, he founded what he termed, with typical increased directness, the One Hundred Per cent club. As with the One Hundred Point club, membership was not for life but had to be continually re-won every year by attaining one’s own maximum sales quota.
Watson inspired his salesmen and paid big commissions for big sales. In return he expected a level of commitment and dedication unprecedented in American business life, even compared with other major organizations such as NCR. Working for Watson was infinitely more than a mere job; it was a vocation that ultimately took over one’s personal life just as it consumed one’s working hours. Anyone who did not see things that way had less chance of staying with C-T-R than a damaged punched card.
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Above all, Watson demanded total loyalty to the corporation from everybody it employed. ‘Joining a company,’ he would tell his staff, ‘is an act that calls for absolute loyalty in big matters and little ones.’ His message was that the company was the employee’s ‘friend’ and that a ‘family spirit’ combined with
‘vision and faith’, was as important for its success as an array of products that knocked the competition for six. He insisted that no drinking took place during business hours. His salesmen also had to adopt the same type of formal, neatly pressed suits and smart, pale shirts that Patterson had required his sales staff to wear at NCR. Members of the One Hundred Per cent club were celebrities within C-T-R, role models for everyone. When the club had a sales rally, this invariably took place at the best hotels in America. New York’s Waldorf Astoria was a popular venue. The events had a jaunty and exciting sense of occasion and razzmatazz that made them more resemble a political rally than something run by a corporation. Salesmen and their wives were the company’s celebrities and were showered with gifts and high-quality entertainment provided by America’s leading artistes.
Nor did Watson only focus his attentions on C-T-R’s sales force. One of the first things he did was to launch a research and development department dedicated to improving the tabulators.
Typically, an activity that Hollerith had handled personally in a resourceful but ultimately informal and even undisciplined way was transformed by Watson into a formal, official, systematic function under his own direct control. Watson also very sensibly created a corporation-wide initiative to identify new types of markets where the tabulation system would prove irresistible.
Again, Hollerith had run his business activities like an extended one-man band, but Watson was a ‘big company’ man who believed in everyone pulling together under a strong unified corporate branding, focus, and purpose.
One of Watson’s many passionately held beliefs was that too many people failed to fulfil their potential because they didn’t 188
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make enough effort to use their brains. He insisted that the word
‘THINK’ be posted on placards around C-T-R’s offices and also on people’s desks. Had personal computers been around in his day, no doubt Watson would have required that ‘THINK’ be placed on all the screensavers (as, indeed, it is on many screensavers at IBM today). Watson was a man who lived and breathed a mission of continuous business improvement, and he expected those he employed to do the same. It is an indication of his energy, drive, and determination that even
reading
an account of his career is exhausting. Watson ran C-T-R like a combination of international think-tank, army, church, political party (everyone certainly knew who the president was), and holiday camp. There were company flags, endless group photographs of everybody being cheerful together, a daily company newspaper, banquets at horseshoe tables, and even company songs. Watson pioneered what are today regarded somewhat erroneously as Japanese-style business practices decades before Japan actually got in on the act.
With the new man at the helm of C-T-R being about as much like Hollerith as a young tiger resembles an old bear, it was inevitable that before long Watson and Hollerith would rub each other up the wrong way. Both were strong-willed men with great minds that thought unalike.
Hollerith was at heart an academic inventor whose commercial success, though not his technological achievement, had in a sense been something of an accident. Watson believed that in business, as in life, things did not happen by accident but because you willed them to happen and took the practical steps to turn your wishes into reality. For Watson, making customers happy was the most serious thing in the world. Hollerith, though, was much more interested in technical issues. There were strict limits to his commercial intelligence, and he did not fully appreciate Watson’s conviction that technical improvements are only important if customers gain increased levels of benefit from them.
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Hollerith had a consulting contract with C-T-R. This left him free to do more or less what he wanted to do as far as involving himself with the Tabulating Machine Company was concerned.
He came and went as he pleased. But Watson, needing total commitment from everyone in his team, could not accept that even the man who had invented tabulation machines should have this special status at the company. While always respectful to Hollerith, Watson saw him as one of the old guard who ought to accept that his main task now was to transfer his experience and knowledge into the minds of the new generation of employees.
Hollerith had never been particularly keen on delegating expertise; his style was to try to do everything himself. Watson, on the other hand, was a motivator who saw that he could never grow an organization on the scale he wanted to create unless he could initiate legions of talented and hard-working people into his gospel of total commitment and total devotion.
To take one example: Hollerith regarded engineers as back-room boys who worked best when they were left alone. Watson, on the other hand, was quick to chase engineers out of the laboratory and into customers’ offices to find out precisely what functions and features customers needed from their machines.