How Father-Son Battles Helped Shape Today's IBM

By Peter Davis

Thomas J. Watson Jr almost didn't survive the four stages of succession. Lessons from Big Blue.

AIthough T.J. Watson never owned more than 5 percent of IBM, he always considered it his business — he did, that is, until he began to lose it to his son, Thomas J. Watson Jr. The son's recent book, Father, Son, and Co.: My Life at IBM and Beyond (Bantam Books), chronicles the relationship between two extraordinary men and the extraordinary business they created. At the same time, it tells the story of every father and son in a family business and the stages of a successful transfer of leadership.

Tom Watson, who retired as CEO of IBM in 1971, has written a passionate account of his experience growing up in the shadow of the most powerful businessman of his age. The book shows us his struggle for identity, his fight for power, his triumph, and his consuming struggle for the love and affection of his father. "Along the way," he recalls, "I learned a great deal about power: being subject to it, striving for it, inheriting it, wielding it, letting it go. I learned lessons for fathers who have dreams for their children, and for children burdened with parental expectations."

T.J. Watson grew up dirt poor in upstate New York in the 1880s. He had a driving ambition and great talent for salesmanship. As son Tom says, "Salesmanship was his ticket into the world." He quickly parlayed his talent into the No. 2 job at the National Cash Register Co., working under the tutelage of the legendary John Henry Patterson, founder of "The Cash."

Patterson was brilliant, demanding, and paranoid. As Watson grew more successful, their relationship became more difficult. Eventually, at age 40, Watson was fired and out on the street. But he found the opportunity he needed. A financier named Charles R. Flint had created a conglomerate that manufactured time-clocks and tabulating machines. The company, called CTR, was losing money fast. Watson was hired to turn it around.

CTR grew into International Business Machines, and Watson became a legend. He had an unshakable vision for the future of his products. He was the ultimate booster. He built a powerful culture based on simple principles: "Give full consideration to the individual employee. Spend a lot of time making customers happy. Go the last mile to do a thing right."

Today we are amused, and somewhat taken aback, when we read about the same intense efforts in Japanese companies to glorify the corporation and establish tight bonds of loyalty. Instinctively, we have trouble with company songs and ritual cheerleading. But, as we know, they were very much a part of T.J. Watson's IBM. "Ever Onward," the IBM sales force would sing in the mornings. "Thou shalt not drink on IBM time" became the rule an employee could get fired for violating. The sales force was also exhorted to "Think, Observe, Discuss, Listen, Read."

T.J. built this culture and administered it with toughness and consistency. Tom Watson Jr. spent most of his life coming to grips with what his father had wrought, and with the expectation that it was his duty to succeed the great man. As in many father-son relationships, words weren't needed to convey that powerful expectation. "I never remember Father coming right out and saying, 'I'd really like to have you follow me in this business,"' Tom says. "In fact, looking at me then, he probably found it hard to imagine a less likely successor. But I got it into my head that the old man wanted me to come into IBM, take it over, and run the whole deal. The very idea made him miserable."

The saga of succession in the Watson family occurred in four stages that are fairly typical: initiation, separation, gaining power, making a difference.

Like many sons of powerful fathers, Tom Jr. was at first a failure, perhaps because he felt overwhelmed by the old man. ("Everything he did left me feeling inconsequential by comparison.") His grades in school were awful. In high school, he changed schools twice and did not graduate until he was 19. With parental influence, he was admitted to Brown, but he barely made it through and, upon graduation, had few job opportunities.

The fateful moment had arrived. He called up Dad and asked: "How do I go about getting a job at IBM?"

T.J. gave his son a sales trainee position. This initiation period was characterized by awkwardness, self-doubt, a lack of realism about how he would be treated, and downright incompetence to managehis own role. "When I got to IBM's sales school in Endicott, New York," Tom recalls, "I was hoping that people would treat me like any other Joe Blow just starting out. How I could think that was possible, I don't know."

People trying to win favor with his father would try to make junior look good, which had a terrible impact on his self-esteem. The father himself only made things worse. A man with an incredible genius for motivating people could at times turn on his own son and brutally tear him down: "My father never praised me for my work as a salesman. It was so easy for him to deprive me of my self-confidence with just a word. We'd be having a casual conversation at home and he'd say, 'What do you think of Mr. Jones?' No matter how I responded, he'd listen for a minute and then come back with something terribly cutting like: 'You know you are not really experienced enough to have an opinion on Mr. Jones.' I think father must have enjoyed these petty emotional exercises. Maybe he was trying to test me, but it was a test no one could pass."

The three years of initiation were very painful and unsatisfying for both father and son. The son felt demeaned, unacknowledged, and useless. He began to resent IBM and to act rebelliously, which could have begun a drawn-out phase of mutually destructive behavior. Tom could have stormed out of the company at any time, which would have left a lasting chill on family relationships.

They were saved by World War Il. Tom left the company to become an officer in the Army Air Corps, which gave him what he could not get at IBM: a chance to grow up. In this separation phase, he was able to test his own competence outside his father's shadow. He was able to experience the leadership of other men who dealt with him more dispassionately. His self-esteem grew as he realized that he had good sense and could build loyalty among others.

Watson's experience highlights once more the importance to young family members of time outside the family business. During the early stages of succession, it is important to build in a period of separation. This phase either precedes or immediately follows initiation.

When he returned to the head office of IBM, Tom Watson was a new man as a result of his experience. At 32, he entered a new phase of the succession process — that of gaining power. He was a young man who wanted to move ahead quickly. He was primed for battle with the old man, and ready to sweep aside anyone who was getting in his way. The father still had total control, however, so Tom Jr.'s struggle for power became desperate and consuming.

As we read Tom Watson's account of these years, we see why non-family managers become terribly afraid of this part of the succession process. Tom Watson at 32 was dangerous. He had his eyes on the prize. If a manager competed with Tom, especially for the attention of T.J., he was likely to be a target. If, on the other hand, a manager was too much of a yes-man, he lost young Tom's respect.

Charley Kirk, T.J.'s right-hand man, was the first to feel the impact. Tom Jr. vividly describes how he and Kirk circled around and began "some serious reassessment" of each other: "Kirk probably started worrying what was going to happen to his job...He knew Dad was a hard-driving character. He knew I was the son and the apple of Dad's eye. And he knew that the more he taught me about the job, the less his chances were of coming out on top...Part of my dislike of Kirk stemmed from competitiveness and jealousy of his relationship with my father. . . "

Finally, the gauntlet was thrown. "Look, Dad," Tom Jr. said to his father one day in April 1947, "1 can get along with all the people you've hired, but not Kirk. He's not my kind of guy."

Kirk, who in some ways served as a buffer between father and son, died suddenly the next month. With his death, father and son were left to face each other. Their battles intensified, and were sometimes fought in the presence of IBM employees. Tom, for example, felt the company's R&D was woefully inadequate. When he told his father, he became furious. T.J. called in his vice-president of engineering and fumed, "My son tells me that we don't have any kind of research organization. Is that true?" The vice-president replied that IBM had the finest research organization in the world. "That was the end of him as far as I was concerned," Tom writes.

Emotional outburst followed emotional outburst at the office, and inevitably other family members were drawn into the struggle. Tom's relationship with Jane, the oldest of his two sisters and his father's favorite, began to deteriorate. His younger brother Dick's appointment as head of IBM World Trade led to huge arguments between Tom and his father; Tom felt his father was protecting Dick, and did not trust him to look after Dick's interests.

Even Tom's appointment as president in 1952 touched off an explosion, because the spur-of-the-moment promotion grew out of a complaint he had made to his father about the incumbent president, who was little more than a secretary to T.J. Tom felt this promotion should have been a more momentous occasion. "Dad and I were so addicted to fighting that we even managed to make a struggle out of my promotion to president of IBM."

The struggle reached a crescendo one day in early 1952 when the son was rushing to catch a plane and got into an argument with his father. His father, then 78, jumped into a car and pursued him to New York's LaGuardia Airport, catching up with him on the tarmac and continuing the argument while holding his arm.

Tom doesn't say what the dispute was about but remembers: "I completely lost my temper. 'God damn you, old man! Can't you ever leave me alone?' I said. I didn't strike him, but I ripped my arm away with great vigor, turned my back and went up into the plane."

The explosion, however, brought a catharsis that gradually enabled Tom Jr. to accept and appreciate his father. Tom Jr. realized that his father loved him and wanted him to thrive. He, in turn, loved his father and "wanted to see him live his life without trauma." He also realized that, apart from a few skirmishes, he had won the battle to take control of IBM, and that his father would soon die.

For Tom, the phase of gaining power had ended and he became concerned with leaving his mark on the company. The period of making a difference had begun. "It's an odd thing, inheriting a one-man show from your father," Tom recalls about that time. He began to wonder whether he was "having any real impact on the company at all."

So he looked for ways to create an impact and to send a signal that he was really in charge. He slowly modified aspects of the culture, lessening the cult of personality at the top and building greater teamwork. He completed the transformation of the company from punched cards to computers and from the mechanical to the electronic age. He brought modern design to IBM.

Tom Watson Jr.'s tenure as CEO was relatively brief. He was given the top job in 1956, when he was 42, and lasted 15 years. A heart attack in November 1970 precipitated his retirement.

For Tom and his father, the succession process worked. Several factors saved the relationship. Tom's time in the military was one key. Later, when the son returned to IBM, his father was able to delegate broad areas of responsibility to him; they clashed only on things that required the father's approval. At the same time, Tom learned that he could not argue with his father in the abstract and win, but he could persuade him by developing an idea that he could show him. Thus Tom, who brought to IBM some of the best modem architects and industrial designers, convinced his father to redesign the company's products and buildings by showing him an Olivetti catalog that was full of stylish-looking products.

Other fathers and sons, can learn much from the tremendous recuperative powers in the Watsons' relationship. Both men knew how to write, and, after arguments, they were not ashamed to write notes that expressed their love and admiration for each other in very moving words. After the first six months of Tom's presidency — and the fight at LaGuardia Airport — he wrote to his father, "I began to think of our 38 years together. My main theme seemed to be to realize again and again how very wonderful, fair, and understanding you have always been to me.... What I'm trying to say is that I love and respect you deeply and want to have a chance to try again to show you."

Despite the agony, the Watsons' father-and-son relationship worked both for them as individuals and for IBM. These two men created the most successful business enterprise of modern times. They built it with vision, single-mindedness, and a genius for organization that they shared but applied in different ways. They fought each other at every step, but in many respects they were a great team. What the father created, the son adapted. The patriarch took the business to one plateau; the son transformed it and moved it to the next.

Tom learned important lessons in running a company from his father. He learned to place a high value on his sales force and to give them incentives to produce. He learned to build for the future, to persist in doing what was needed for the long-term growth of the company, despite peaks and valleys. And he learned that respect for individuals, for example the open-door policy that enabled employees to take their complaints right to the top, and job security, the policy of no layoffs, would pay off for IBM.

More than anything else perhaps, it was these values that enabled father and son to work together, get through their stormy battles, and pass the mantle of leadership. They knew that the company and what it stood for was bigger than both of them. It gave them something to believe in, something that no doubt tempered their disputes.

The events, the circumstances, the magnificently rich personalities described in Father, Son, and Co. (written with a co-author, Peter Petre), are an important part of our business history. The book describes a commonplace succession in a big company. But the story is so extraordinary, and the writing has such integrity, the book will no doubt resonate with readers in all sizes of family businesses and inspire their own efforts.

 

Peter Davis is director of the Division of Family Business Studies at the Wharton School.

 

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September 1990

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