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Thomas J. Watson Jr.: Junior Achievement


As part of its anniversary celebration, BusinessWeek is presenting a series of weekly profiles for the greatest innovators of the past 75 years. Some made their mark in science or technology; others in management, finance, marketing, or government. In late September, 2004, BusinessWeek will publish a special commemorative issue on Innovation.

Sometimes it takes a couple of tries before you can be brilliant. That was certainly true of Thomas J. Watson Jr. and computers. In March, 1946, the son of IBM (IBM) founder Thomas J. Watson Sr. had his first swipe at destiny. IBM was the world's leading tabulating machine company when the younger Watson paid a visit to one of the first electronic computers, ENIAC, which was causing a hubbub in academic circles. Watson left unimpressed.

A few weeks later the tremendous potential of computing sank in. Watson and his father, then CEO, were nosing around headquarters when they found an engineer who had hooked an IBM tabulator up to an electronic gizmo the size of a footlocker. He was making payroll calculations in one-tenth the time it usually took. In his autobiography, Father, Son & Co., Watson recalled telling his father: "We should put this thing on the market! Even if we only sell eight or 10, we'll be able to advertise the fact that we have the world's first commercial electronic calculator."

That epiphany set the course of computing history and helped make the American economy the envy of the world. Watson stands as a towering figure because he saw the importance of the computer as the descendant of his father's first generation of business machines, and then, by launching the System/360 mainframe, he turned IBM into the dominant force in what became the world's most important industry. "The credit for making IBM a great computer company goes to Tom Jr.," says Fredrick P. Brooks Jr., professor at the University of North Carolina at Chapel Hill. While he was CEO, from 1956 to 1971, IBM's computers became the gold standard worldwide.

This was a surprising accomplishment for a man who was a screw-up in his youth. Thoroughly intimidated by his overbearing father, Watson had poor grades and took six years to get through high school. As a junior salesman for IBM, he resented the cultlike worship of his father and argued bitterly with him. The U.S. Air Force straightened him out. An aide to generals during World War II, he learned to command by watching them in action. Back at IBM after the war, he was determined to follow dad's footsteps and run the company.

What set Watson apart as an innovative leader was nerve. In 1964, he bet the company on replacing all of IBM's existing computer lines with a radically different type of machine, the System/360. Previously, businesses needed different software programs for each computer model. But System/360 was a family of computers, and a program written for one would run on the others. Companies could buy a starter version and keep the same software when they traded up. The System/360 made IBM so successful that its rivals became known as the Seven Dwarves.

Late in life, Watson lived across the street from Louis V. Gerstner Jr., the CEO who took over after IBM hit tough times. One morning in 1993, the 79-year-old gentleman approached him and urged him to do whatever was necessary to turn IBM around. Watson died later that year -- with IBM's fate still hanging in the balance.

While Gerstner saved the company and Thomas J. Watson Sr. created it, Watson Jr. deserves to be remembered as the leader who built IBM into the bluest of blue chips. Not bad for the black sheep of the family.

By Steve Hamm


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