Rating: ••• (Recommended)
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Kevin Maney presents the many facets of the personality and character of the long-tenured CEO of IBM, Thomas Watson, Sr., in his new book, The Maverick and His Machine. Readers will note many similarities to the character of successful modern CEOs, as well as traces of the flaws that have led some CEOs to lead companies astray. It’s clear throughout the book that Watson liked to do whatever he wanted, a trait that most of us would exploit when we can. Watson comes across as self-absorbed and over-confident, with little rein from anyone on his behavior. Here’s an excerpt from Chapter 4, “Brining Up Baby IBM”, pp. 109-114:
Eleven IBM executives took seats in Watson's office on an autumn day in 1928. As the meeting got underway, they might have experienced any number of emotions for their chief executive, but probably none of them at that moment were love.
"I have definitely concluded that you gentlemen do not realize even in a small way what the future is going to demand of you in connection with sales of your products," said a furious Watson. "And incidentally, I might add that I am going to demand more of you, because I've got to."
In 1927, the company made a $4 million profit on $14 million in sales. In the fall of 1928, IBM was on its way to making $5 million profit on $15 million in sales for the year. Almost any businessperson would be impressed by a 25 percent increase in profits in a year. But Watson had ordered his executives to grow the company to at least $20 million in 1928, and then he wanted sales to rise to $28 million in 1929. He fumed at his executives because they were off the pace he'd set.
In that state, anything could have set him off. The spark on this day was his executives' failure to answer a call to dedicate a company-wide sales push during the last four months of 1928 as a tribute to Otto Braitmayer, who was celebrating 40 years with the company.
They'd all received telegrams from Watson about it. In 1928, if you wanted to communicate with another person immediately and convey a sense of urgency or importance, you sent a telegram. When that piece of paper labeled "Western Union" landed on a desk, its message printed in block letters minus punctuation could not be ignored. No one could ever use the excuse, "I didn't see your telegram."
Yet none of IBM's executives responded to Watson's Braitmayer telegram. More than likely, they didn't think that there was any need to respond—Watson didn't ask for their input, and the dedication seemed only symbolic. Yet Watson lit into those present, letting the hyperbole fly.
"I never in all my experience in business worried as I have since last Tuesday morning because I did not hear from you men. Not one of you even mentioned it to me," Watson said. "You men don't know what you are trying to do. Why is the tabulating division in such an awful condition?" The executives must have been thinking: It's not in awful condition! Though they wouldn't dare show it in their faces, much less speak it aloud. "Because you fellows don't know what you want to do. Last month was the biggest month we had, over a half-million dollars net for August. That ought to have been a million dollars. And you should have gone after it. It's right out there waiting for you.""
In that mood, if they'd netted $5 million, Watson would have been mad that it wasn't $6 million. He always pushed himself to chase near-impossible goals, and he had little patience for anyone who didn't do the same. This stance was reflected in two of his many business aphorisms, which were often posted in IBM offices and factories: "They can who know they can," and, "Never feel satisfied."
Watson felt he could unleash tirades at his managers with impunity, and for the most part he could. No one dared question or cross him. Executives rationalized his behavior by telling each other, "If you weren't worth putting together, he didn't bother to tear you apart. They were willing to take it because they wanted to be part of IBM. They were building machines that had never before existed. They worked with brilliant engineers and sharp managers who blended together to form this odd but magnetic cult of sober people who made the company their life and ambition. Few other American companies offered the promise and excitement of IBM—or such an opportunity to get rich. In 1928, Watson received a letter on IBM stationery saying that the undersigned were impressed with the "rapidity" of IBM's stock increase during the year. "We feel it is only proper to tell you at this time just how deeply grateful we are to you . . . for making it possible for us to become stockholders and prosper with the business." It was signed by 20 midlevel IBM executives.
Many felt blessed to be able to follow Watson. He was such a strong personality, so sure of his leadership and so driven. People hitched themselves to him like railcars to a locomotive. Once they did—and once they proved their loyalty—Watson gave back, whether it was with bonuses, quick promotions, paid vacations, or compassion during an illness or family crisis.
The fear of getting cut off from all of that shot ice through executives' arteries. Harry Evans, the peppy young executive, knew exactly how that felt. He believed he was wronged when IBM chose not to give him a bonus for landing a major deal with the U.S. Census. Evans aired his complaint to Watson, who sent back a scathing reply. "I feel very sorry to learn that after your long term of service you seem to be so unhappy regarding your connection with the company," Watson wrote.
That was all Evans needed to hear. Petrified of Watson's disapproval, he wrote back immediately. "I have always been and am now very happy in my work for and with every division of our company and all our executives and representatives," Evans wrote. "No one could be happier in serving with you and for you than I am. I believe I have enthusiastically proved on all occasions my whole-hearted loyalty and joy in cooperating with your good self. . . to the best of my ability." Whatever Watson decided about the bonus, Evans promised he would "cheerfully abide" by it.
Watson's dictatorial tendencies were served by his inability to create an effective management structure suitable for a large company. When C-T-R was small and spunky, decisions funneled through Watson—big ones about new products or factories and little ones about the wording of an advertisement or the seating at a convention. He would listen to members of his team and rely on their input, but he wanted the final say. As the company grew, decisions continued to go through Watson. To be sure, IBM managers had plenty of responsibility; however, the company revolved around its president, who at any time might undo a decision or promotion made by an executive.
An organizational chart from the period looked like bird tracks in the snow, jammed full of lines, tiny squares, and initials. With subsidiaries, legal entities, and international entities, IBM consisted of 13 different companies, including the umbrella IBM Corporation. A matrix of the top executives involved in running IBM listed the 13 entities across the top and 14 executive titles down the left-hand column. The boxes formed by the intersection of a company and a title (Tabulating Machine Company and treasurer; Dayton Moneyweight Scale Company and secretary) were filled in with the initials of the person who had the job. Eighteen different individuals held 182 jobs among them. A matrix of IBM directors was even more difficult to follow. There was no chain of command at IBM, but something more like a web, with Watson as the spider.
Watson continually pledged—usually to Nichol—to simplify the structure and push more duties off his desk and onto others, but he found it difficult to do either. Watson was not a systematic man, nor was he one who easily gave up control. However, he easily gave up credit. In speeches and interviews, he would never fail to put the spotlight on others, whether honoring Braitmayer for 40 years of service, naming every IBM inventor in a business club speech, or publicly thanking the Endicott factory workers. To Watson, though, credit was one thing; control was something else entirely.
As the checks on Watson disappeared, he had fewer ways to find out when he was deluding himself. He believed he was a powerful speaker who could rouse a sales force or draw tears from a dinner crowd. For the audience, however, many of his speeches were dull and long. He often spoke in a flat voice and had a habit of loudly clearing his throat every few minutes. He sometimes read from prepared texts; other times he referred to brief notes typed vertically on the backs of unpunched punch cards. At times he spoke extemporaneously. However he prepared, he never hesitated to vary from whatever he'd planned to say. Generally, he spoke about broad concepts and generalities, rarely using anecdotes. The result was that many of his speeches meandered aimlessly and went on far too long for the audience.
Though Watson had a sense of humor, his speeches were humorless. He sometimes opened with one of a few tired jokes. He'd stride to the podium after Nichol or someone else gave him a flowery introduction, and say the introduction reminded him of a funeral he went to. The minister went on and on about the good qualities of the deceased, Watson would explain. Finally, a man tiptoed up and peered into the casket. "I asked him why he did that," Watson would say, closing in on the punch line. "He said, I thought I was at the wrong funeral.' "
Another opening joke: "Why is a public speaker like the wheel of an automobile? The more he spoke, the bigger the tire." Then, with no sense of irony, Watson would speak too long.
Watson also started to believe he was as important outside of IBM as he was inside the company. More than once, he sent a conductor to order the engineer to stop a train so he and his party could view the scenery. On one trip from New York to San Francisco, the engineer cranked up the train's speed to make up for falling behind schedule. Watson, who had booked the entire train for a party of IBMers, overheard one passenger say, "Mercy, we're just whizzing along, aren't we?" Watson suddenly feared a wreck, and yelled for a conductor—who tried to explain that the train was traveling at a safe speed.
"Don't talk to me!" Watson said. "If you don't slow up this train, I'll pull it down myself." He reached for the cord that would trigger the emergency brake.
"If you touch that cord you're likely to hurt somebody," the conductor said.
"Listen, who's boss of this train?" Watson bellowed.
"I am," said the unimpressed conductor.
"Well, I'm paying for it. I'll have you fired! "
"Maybe you will," said the conductor, "but you won't touch that cord.""
That time, Watson lost the argument. But clearly he felt that in any situation, he should be able to do as he wished.
By the end of The Maverick and His Machine, readers will marvel at Watson’s successes, his personal volatility, and his significant character flaws. This book is a great reminder of the complexity of human behavior, and the many ways in which strengths can become weaknesses, and unchecked weaknesses can lead to disaster.
Steve Hopkins, September 23, 2003
ă 2003 Hopkins and Company, LLC
The recommendation rating for this book appeared in the October 2003 issue of Executive Times
URL for this review: http://www.hopkinsandcompany.com/Books/The Maverick and His Machine.htm
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