Father, Son & Co.

  INTERNATIONAL PRAISE FOR

  FATHER, SON & CO.

  “Father, Son & Co. is an absorbing memoir—a candid portrait of an honest man and a famous company.”

  —Arthur Schlesinger, Jr.

  “A most compelling human drama of the family that dominated the life and times of America’s most famous computer colossus.”

  —The Economist

  “An extraordinary story of family success and succession.”

  —McGeorge Bundy

  “Watson writes with grace and intimacy about coming to terms with his accomplished father.”

  —New York magazine

  “Father, Son & Co. is a marvelously refreshing book.… I believe many will profit from these honest and experienced reflections of an honest and experienced man.”

  —Clark M. Clifford

  “An … intensely human account of how two strong executives struggled to build a great and powerful company while simultaneously managing all of the tensions and loyalties associated with being father and son.”

  —Derek Bok, president emeritus, Harvard University

  “This family drama is doubly fascinating because it is interleaved with one of the most remarkable business stories in history.”

  —Financial Times

  “A welcome antidote to the daily reports of junk bonds, corporate takeovers and human greed which have come to dominate the news of American business.”

  —Robert S. McNamara

  “With two sons following in our own family business, I found Father, Son & Co. riveting. It gave me great insights as well as great inspiration. I urge everyone in a family business to read it and ‘THINK.’ ”

  —Stew Leonard, chairman, World’s Largest Dairy Store

  “It is a lesson to youngsters as to how to get the most out of life.”

  —Tom Cabot, former chief executive officer, The Cabot Corporation

  “A frank and revealing picture of Big Blue, the nation’s dominant computer manufacturer, and a vivid inside look at the family that dominated its years of spectacular growth.”

  —The Boston Globe

  “Thomas Watson’s life values are IBM values: employees as family; integrity above all else; commitment to the community; and as he says, ‘go the last mile to do a thing right.’ These are values which I share, and can only hope to be as successful as Thomas Watson in furthering these values.”

  —Akio Morita, chairman of the board, Sony Corporation

  “A dead-honest, often elegiac memoir that not only provides an inside view of a world-class enterprise but also probes the mysteries of becoming one’s own man, carrying on in the face of loss and wielding power in responsible fashion.”

  —Kirkus Reviews

  “One of the truly great human and business dramas to be made available in recent years.”

  —Charles H. Percy

  This edition contains the complete text

  of the original hardcover edition.

  NOT ONE WORD HAS BEEN OMITTED.

  FATHER, SON & CO.

  A Bantam Book

  PUBLISHING HISTORY

  Bantam hardcover edition published 1990

  Bantam trade paperback edition / March 2000

  All rights reserved.

  Copyright © 1990 by Thomas J. Watson Jr.

  Photo sections designed by M ’N O Production Services, Inc.

  Library of Congress Catalog Card Number: 90-32682

  No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the publisher.

  For information address: Bantam Books.

  eISBN: 978-0-8041-5090-3

  Published simultaneously in the United States and Canada

  Bantam Books are published by Bantam Books, a division of Random House, Inc. Its trademark, consisting of the words “Bantam Books” and the portrayal of a rooster, is Registered in U.S. Patent and Trademark Office and in other countries. Marca Registrada. Bantam Books, 1540 Broadway, New York, New York 10036.

  v3.1

  Contents

  Cover

  Title Page

  Copyright

  Introduction

  Chapter 1

  Chapter 2

  Chapter 3

  Chapter 4

  Chapter 5

  Chapter 6

  Chapter 7

  Chapter 8

  Chapter 9

  Chapter 10

  Chapter 11

  Chapter 12

  Chapter 13

  Chapter 14

  Chapter 15

  Chapter 16

  Chapter 17

  Chapter 18

  Chapter 19

  Chapter 20

  Chapter 21

  Chapter 22

  Chapter 23

  Chapter 24

  Chapter 25

  Chapter 26

  Chapter 27

  Chapter 28

  Chapter 29

  Chapter 30

  Chapter 31

  Chapter 32

  Chapter 33

  Chapter 34

  Photo Inserts

  Dedication

  Acknowledgments

  Selected Bibliography

  About the Authors

  INTRODUCTION

  When my father died in 1956—six weeks after making me head of IBM—I was the most frightened man in America. For ten years he had groomed me to succeed him, and I had been the young man in a hurry, eager to take over, cocky and impatient. Now, suddenly, I had the job—but what I didn’t have was Dad there to back me up. I’d heard so many stories about sons of prominent men failing in business, and I could imagine their devastation at finding themselves unable to fill their fathers’ shoes. I worried I’d end up the same way, but after my father had been dead a year I announced to my wife: “I’ve made it through twelve months without the old boy around!”

  I went another year, and then another. The computer era was beginning and IBM was able to capitalize on it: while I was chief executive the company grew more than tenfold. I like to think that Father would have been impressed with the $7.5 billion-a-year business I left behind when I resigned in 1971. He had always predicted it would someday be the biggest business on earth.

  I was so intimately entwined with my father. I had a compelling desire, maybe out of honor for the old gentleman, maybe out of sheer cussedness, to prove to the world that I could excel the same way he did. I never declared myself winner in that contest, because many of my decisions were based on policies and practices learned at his knee. But I think I was at least successful enough that people could say I was the worthy son of a worthy father.

  It could have turned out very differently. The kind of privileged upbringing I had—private school, world travel, wealth—often leads to disaster for a son. I knew I was supposed to follow in my father’s footsteps, but I did not see how that was possible. I was in awe of the man, yet we both had such hot tempers that it was hard for me to be in the same room with him, much less try to learn from him how to run a company.

  I didn’t have much motivation as a youth. At Brown University, I spent so much time flying airplanes and fooling around that I barely graduated. In the yearbook you had to have a line next to your photograph. The only thing in mine was the name of the prep school I’d gone to. There was nothing else to say. I had no distinctions, no successes of my own, and only a vague notion of how to be sympathetic and understanding to others. I was totally qualified to be either a playboy or an airplane bum.

  If it hadn’t been for World War II, I might never have become my own man. After 1939 my favorite recreation, flying, suddenly became
serious business. I joined the Air Force as a pilot and learned to be responsible for an airplane full of men. The military took me far outside my father’s influence, and by 1943 I had made it to lieutenant colonel. Though I never got promoted beyond that, I came back from the war confident, for the first time, that I might be capable of running IBM. But I’d been so unimpressive before the war that it was hard for my father to believe it. It took him years to convince himself that I’d changed, and I don’t think he was ever completely sure. You can see that in the photograph of us that appeared in the New York Times when he turned IBM over to me. It shows us in our pin-striped suits, shaking hands in front of a bookcase. On my face is a look of great self-assurance and I’m obviously enjoying the occasion tremendously; but on Dad’s face there is a faint, uncertain smile.

  He ran IBM for forty-two years and I ran it for fifteen—all told, nearly six decades of Watson management. My job was to lead the company into the computer business, but it was he who put IBM on the map. By the time I joined the Air Force he had built the business from almost nothing to revenues of nearly forty million dollars a year. IBM was still really an insignificant part of the American industrial scene, but thanks to T. J.’s genius for selling, it was fast growing and highly profitable, and it attracted a lot of attention. Father knew how to project an image as well as any salesman who ever lived. At the New York World’s Fair of 1939 there was a General Motors Day, a General Electric Day, and an IBM Day—two elephants and a gnat all getting the same treatment. We even had Mayor La Guardia as our guest at the Fair. President Franklin Roosevelt, whose confidant Father had become, sent a greeting by telegram.

  During the ten years after World War II Father taught me his business secrets as we worked together. It was a stormy relationship. In public he would praise me lavishly, and I’d hear from other people the nice things he was saying about my shrewdness and brains and talent as a manager. But in private Father and I had terrible fights that led us again and again to the brink of estrangement. These arguments would frequently end in tears, me in tears and Dad in tears.

  We fought about every major issue of the business—how to finance IBM’s growth, whether to settle or fight a federal antitrust suit, what role in IBM other members of our family ought to play. From around 1950 my goal—one of the things on which we never saw eye to eye—was to push into computers as fast as possible. That meant hiring engineers by the thousands and spending dollars by the tens of millions for new factories and labs. The risk made Dad balk, even though he sensed the enormous potential of electronics as early as I did.

  When I finally took over I was excited about change. Computing was a brand-new industry, and I always felt that if IBM didn’t grab the opportunity, somebody else would. So we taught ourselves to ride a runaway horse, expanding on a scale that no company has ever matched. We grew so fast that some years we had to cope with the problem of training twenty thousand or more new employees.

  I kept myself where employees could see me, out in front, setting a fast pace. I had learned from my father that by seizing opportunities for dramatic action—personally answering an employee’s complaint, slashing the price of a new computer that failed to perform as promised—I could set an example of how IBM should do business. At the same time I had yearnings outside the company that would have been hard for my father to understand. In the top drawer of my desk I kept a list of adventures, like climbing the Matterhorn and retracing the South Sea voyages of Captain Cook, for which I simply had no time.

  All that changed in 1970, when I had a heart attack. I was only fifty-six, and I think many executives would have been back in the office before their triple-bypass scars had even healed. But my experience at the hospital changed my life.

  I had a chest pain in the middle of the night and drove myself to the emergency room. They put me on a monitor, but early the next morning I stopped the doctor and said, “Look, I’ve got to get out of here. My best friend is dead and I’ve got to go to his funeral, then I have to fly right out and give the inaugural address at the Mayo Clinic medical school, then—” He told me, “You’re not going anywhere. You’re having a heart attack.” They moved me into intensive care.

  The doctor, Mark Newberg, was someone I grew to like very much. Over the next three weeks we had long discussions, and finally one morning he looked me right in the eye and said, “Why don’t you get out of IBM right now? I think you’ve proved just about everything you can up there.”

  He left. I didn’t want any lunch, it was such a shock. By dinnertime I started thinking about the responsibilities I’d carried for so many years and all the things I could do outside business. The next morning I woke up at dawn and got a cup of coffee at the nurses’ station. When I got back to my room, sunlight was streaming in the window and I felt better than I had in decades. It was as if somebody had lifted a heavy pack off my back.

  Before I left the hospital I told the people at IBM that I was thinking of getting out. The board of directors did everything in the world to keep me in the company. They came to me individually and as a group. But I knew I was doing the right thing. I wanted to live more than I wanted to run IBM. It was a choice my father never would have made, but I think he would have respected it.

  This is the story of my father and myself, of my years alone at IBM’s helm, and of what I’ve done since leaving the company. Father and I played out our rivalry and our love for each other in the great American business that he created. I helped build it and then left it behind me twenty years ago. Along the way I learned a great deal about power: being subject to it, striving for it, inheriting it, wielding it, and letting it go. I learned lessons for fathers who have dreams for their children and for children burdened with parental expectations. Lots of sons ask me if they should follow their fathers into business. My answer is: If you can stand it, do it.

  In the spring of 1987, not long after celebrating my seventy-third birthday, I took my helicopter out to follow the scenes of my childhood. I went by myself, the way I often fly when there is something that I want to see. Helicopters are noisy and sometimes hard to handle, but they can take you exactly where you feel like going. You can land on a flat rock only ten feet by ten feet far out in the sea, or tuck into a garden behind the house of a friend. On that spring day I wanted to learn what remained of the world in which I was raised.

  I flew down the Hudson River alongside Manhattan, swinging west off Broad Street, where my father would catch the ferry after work. On the New Jersey side of the river Dad would get on a train. I followed the railroad west over the rolling hills and fields of New Jersey, where he’d ride talking politics with other early suburbanites like Malcolm Muir, the founder of Business Week magazine, and André Fouilhoux, an architectural engineer who was one of the chief designers of Rockefeller Center.

  I spent my boyhood in the village of Short Hills, twenty miles from New York. In the 1920s it was a fashionable little community populated mainly by the families of commuters like Dad, called “downtown men.” It had a train station, an Episcopal church, a private school and a public school, and the houses were large and set on three- or five-acre tracts. It was easy for me to spot the big gabled place where I grew up. It sits on top of a low hill, a near duplicate of our first house on that site, the one my father accidentally burned to the ground. It happened when I was five, and Dad was still in his early days of struggle and debt. The fire started when he was trying to demonstrate the use of a fireplace. He became very conscious of fireproofing after that; the roof of today’s house is made out of slate.

  In back of the house we’d had chicken coops, a big vegetable garden, and a pony corral; all of those were gone now. But I saw the long winding driveway where my mother taught me to drive a car when I was eleven. Nearby I spotted the two ponds that were a big part of my boyhood. That part of New Jersey was so rural in those days that right near our town there were people who made a living running traplines in the local swamps. No one lived around those ponds when we
moved in. There was only a big wooden icehouse, where horse-drawn sleds would haul huge blocks of ice in the winter. When I was eleven or twelve, my friends and I used to take girls behind the icehouse to play kissing games.

  I wanted to set the helicopter down and walk around. But now the banks of the ponds are covered with houses and there was no place to land. So I climbed up and flew out along the winding road we used to drive to get to Dad’s country place: a farm he bought in 1927 when he was feeling the first flush of wealth after running IBM for thirteen years. The farm, which we called Hills and Dales, was near the town of Oldwick, twenty miles west of Short Hills. I found Oldwick quite easily, but when I looked for Hills and Dales outside the town, there were so many highways and corporate headquarters that I never found it.

  In Short Hills I was known as Terrible Tommy Watson. Whenever there was trouble, I seemed to be involved. Youthful rebellion was not in fashion in the 1920s, so I was not at all popular. Most of the kids in my school could see that at the slightest opportunity I would goof off, and none of them thought I would amount to a hill of beans. I had only a handful of friends. The other kids thought they were superior. Worse still, I was very sensitive about the fact that they avoided me.

  When I was ten a friend named Joe and I were fooling around near a house being worked on in our neighborhood. The door to the screen porch was open and we could see cans of paint and brushes and turpentine. We took a couple of cans and somehow ended up painting a street.

  Mother asked us about this and we confessed that the paint was stolen. She had lectured me before about swiping things, to no avail, and I think this time she decided that unless she did something dramatic, I was going to end up a felon. Usually Mother was mild and sweet tempered, but if she thought things were getting out of hand, she would move with real force. So she took us to the police station. She must have called the chief beforehand. He shook our hands and said, “It’s nice to see you. I want to tell you about who we have locked up here. We have people in here for murder and robbery, but most of the people who come in are petty thieves.”