Watson, Thomson John, Jr.

(b. 8 January 1914 in Dayton, Ohio; d. 31 December 1993 in Greenwich, Connecticut), businessman who led International Business Machines (IBM) into electronic computing and made it one of the most profitable and admired American corporations of the second half of the twentieth century; he later served the Jimmy Carter administration as the ambassador to the Soviet Union.

The eldest of five children, Watson was born the same year his father, Thomas J. Watson, became the chief executive of a newly organized manufacturer of equipment used in business offices and retail establishments. Leaving his wife, Jeannette Kittredge, to run the household in suburban Short Hills, New Jersey, the forty-year-old executive set about cultivating a reputation for himself and his firm, which in 1924 was renamed International Business Machines. Under a contract that gave him a percentage of the profits, the elder Watson in 1936 became the highest-paid executive in the United States, with an income of $1,000 a day. An ardent supporter of Franklin Roosevelt, he was the president’s most trusted confidant among the business community. Though the Watson family never owned more than 5 percent of IBM, T. J. Watson exerted so much influence over its affairs during his forty-two years as CEO that many came to believe he was the proprietor. His portrait hung in every office, and more than thirty top executives reported directly to him.

Aside from the affluence and reputation his father provided, little in Watson’s early years suggested he might someday succeed his father at IBM and ultimately surpass his accomplishments in business and public affairs. The younger Watson struggled as a student at the private Short Hills Academy and frequently got into trouble with authorities at the school and in the community. Lonely and often distressed by the domineering manner with which his father treated him and his mother, Watson suffered throughout his teens from periodic bouts of depression that left him bedridden and delirious. He spent time at three prep schools before finally graduating from the Hun School in Princeton in 1933 at age nineteen. Denied entry to Princeton University, he enrolled that fall at Brown University, whose president had once served as minister to his father. Freely spending his monthly allowance of $300, Watson devoted far more time to activities such as skiing and dancing than to his studies.

Upon graduating with a B.A. from Brown without distinction in 1937, Watson spent a summer in Russia and Asia assisting a colleague of his father’s in marketing exhibition space for the 1939 New York World’s Fair. That fall he joined IBM as a salesman. With his father pulling strings, Watson worked a plum territory in Manhattan, where he lived with his parents in their town house on East Seventy-fifth Street. In 1940 he met his annual quota with a single sale arranged by his father in early January. Embarrassed by such stunts, Watson spent increasing amounts of time carousing and pursuing his passions of sailing and flying. He later characterized his three years as an IBM salesman as “a time of sickening self-doubt.”

Determined to escape IBM, Watson joined the National Guard in spring 1940. By the end of that year he had earned his wings and a commission as a second lieutenant in the 102nd Observation Squadron. When Roosevelt mobilized the National Guard in September 1940, Watson moved to Fort McClellan, Alabama, for further training as a military pilot. Transferred to California for shore patrol following the attack on Pearl Harbor, Watson summoned his fiancee, Olive Field Cawley, to Alabama for a hasty wedding in December 1941. A socialite and fashion model who had graced the covers of several magazines by the time she and Watson first met on a blind date in early 1939, Cawley remained married to Watson for the rest of his life. After losing an infant son in February 1943, the couple raised six children.

Admitted to the Command and General Staff School at Fort Leavenworth, Kansas, through the pull of his father, Watson spent most of World War II as special assistant and pilot for Major General Follett Bradley, head of the First Air Force. Watson later credited Bradley with instilling self-confidence in him and turning his life around. Promoted to captain soon after assuming his assignment in June 1942, Watson helped Bradley coordinate shipments of aircraft to the Soviet Union. He spent several months in Moscow while Bradley negotiated with the likes of Joseph Stalin and Winston Churchill. Although stationed for the remainder of the war near Washington, D.C., where he assisted top brass in inspections and other duties, Watson participated in some harrowing flights in the Pacific theater before resigning his military commission as a lieutenant colonel in late 1945.

Watson returned to IBM in January 1946 with a completely different outlook. Focused on succeeding his father as chief executive, he rapidly moved into the top ranks of management. By June he had become one of five vice presidents at the firm, and in October he joined the board of directors. When his most serious rival for the top post died suddenly the following spring, Watson emerged as the obvious leading candidate. Although he would not formally take over full responsibility for IBM until shortly before his father’s death in 1956, during the late 1940s and early 1950s he steadily assumed more duties. After a two-year stint as vice president of sales, Watson became executive vice president in September 1949.

In this post Watson embarked on the major initiatives that distinguished his stewardship and transformed IBM from a respected firm of modest size into the most noteworthy corporation of the American century. Convinced that IBM had outgrown the intensely personal management style of his father, Watson created new staff-level positions and moved toward a divisionalized organizational structure. He authorized new laboratories and manufacturing plants in locations such as Rochester, Minnesota, and San Jose, California, far removed from the established facilities in New York that his father favored. Accepting antitrust regulation as inevitable, Watson over the course of several years negotiated a consent decree with the Department of Justice. Signed in January 1956, it called for IBM to sell as well as rent its products.

During these years before his father’s death Watson also took key steps in moving IBM from its established technological base in electromechanical punched-card equipment into the world of electronics and storedprogram computing. Encouraged by the success of two electronic calculators that IBM introduced shortly after the war, Watson championed the widespread use of emergent technologies, such as magnetic core memory, magnetic tapes, disks, drums, and transistors. With the outbreak of the Korean War, he shepherded a project known as the Defense Calculator, which provided IBM’s first standard stored-program computer to some eighteen military contractors and government agencies. Introduced in April 1953 as the IBM 701, it laid the foundations in logical design, assembly, and service that kept IBM at the forefront of advanced computing in engineering and business into the early 1960s. Watson also personally secured a massive contract to build giant computers for Semi-Automatic Ground Environment (SAGE), a U.S. Air Force antiaircraft defense system that supported new ventures in automated manufacture and ultimately proved useful in IBM commercial products.

While embracing these moves into high-end defense work, Watson pressed for IBM to build more modest electronic computers that would substitute for existing punched-card equipment in the established business market. Machines such as the 650-drum computer and the Random Access Memory Accounting Machine (RAMAC), which gave users access to vast amounts of information stored on disks, sold in the thousands. During the late 1950s they became fixtures in business and also at universities, which could rent them at a steep discount.

As Watson relentlessly promoted the new technology within IBM, he subtly realigned the firm’s public image in ways that associated it with the broadly felt public enthusiasm for a future paved with technical marvels. In 1954 he launched a comprehensive program of modern design that gave a new, clean look to everything from buildings to machines to sales brochures. World-class architects such as Eero Saarinen designed bold new facilities, including a dramatic laboratory in suburban Westchester County, New York. Named for T. J. Watson, the laboratory housed the new research division IBM created in 1955. Though IBM’s most commercially important breakthroughs still emerged from product laboratories located at the manufacturing plants, this research facility carried enormous cachet in scientific and cultural circles.

In imparting a new gloss to IBM, Watson, like his father, did not hesitate to put himself forward as a symbol of the corporation. In June 1955 he appeared on the cover of an issue of Time magazine devoted to new technologies and automation. Later in the decade he and his family were featured in cover articles for Life and Sports Illustrated. The young CEO and his large family, seen skiing at their mountain house in Vermont or sailing off the coast of their island summer home in Maine, personified the energetic jet set, much as their close friends the Kennedys did in the realm of politics. Watson took an active role in philanthropic causes, including the New York United Fund, the Boy Scouts of America, and the United Nations Association. Through organizations such as the American Society of Sales Executives and the Business Advisory Council, he became widely known as a rare liberal voice in business circles.

By the time Watson formally succeeded his father as chairman and CEO in May 1956, four years after he had become president, he had developed the basic strategy and managerial style that characterized his subsequent fifteen years at the helm of IBM. Leaving much of the detailed execution to a trusted set of close associates, Watson concentrated on setting the tone. Typically, this involved grand gestures, as when he declared in January 1958 that all IBM employees would work on a salaried basis. In a move often cited as one of the boldest in the annals of American business, Watson announced in April 1964 that IBM would replace virtually all of its existing products with a new line of computers known as System/360. This venture caused enormous internal turmoil and incurred delays that kept IBM under a cloud of antitrust prosecution for some fifteen years. But the developments it fostered in logical design, programming, and the manufacture of electronic components sustained the firm for another two decades.

While critics and admirers alike regarded IBM as an exemplar of modern bureaucratic management, the image belied the often tempestuous climate in which critical decisions were made. A method known as the contention system openly encouraged disputes among top managers. Watson filled these posts with “sharp, scratchy, harsh, almost unpleasant guys,” many of whom he did not like. With his own fiery temper on frequent display, Watson set a tone that could easily overwhelm the faint of heart. “I was a volatile leader,” he recalled in his memoirs. “I wanted all the executives of IBM to feel the urgency I felt.” That sense of urgency ran deep. Watson later confessed that, upon his father’s death, “fear of failure became the most powerful force in my life.”

IBM’s financial performance during his tenure as CEO branded Watson as anything but a failure. By 1961 annual sales exceeded $2 billion, over two and a half times their level when his father left the firm. By 1970 sales had topped $7.5 billion. The value of IBM stock rose even faster, quintupling during the first five years of his stewardship alone. In 1967 its value surpassed even that of General Motors. Fortune magazine called Watson “the greatest capitalist who ever lived.”

But the intense pressure to succeed took its toll. Strained relations with coworkers and family members and worries about diminished growth and an antitrust suit filed by the Department of Justice in January 1969 left Watson increasingly distraught. “If I had been a drinker in those days,” he later surmised, “I’d have quickly killed myself.” After a serious heart attack left him near death in November 1970, Watson decided to relinquish his post as CEO the following year. He did not formally retire as chairman until his sixtieth birthday in 1974, and he remained chairman of the executive committee of the board of directors for another five years after that. Nevertheless, his involvement in the key affairs of the company dwindled. Watson spent much of his time taking extended sailing trips on his new yacht, once venturing far above the Arctic Circle off the coast of Greenland.

With the 1976 election of President Jimmy Carter, Watson fulfilled his longtime ambition to work full-time in public service. Long active in Democratic politics, Watson had spent considerable time in Washington, D.C., while still at work for IBM. In 1960 he chaired a panel on technological change for President Dwight D. Eisenhower’s Commission on National Goals. Watson served on several committees during the John F. Kennedy administration, including the steering committee to the Peace Corps and the Advisory Committee on Labor-Management Policy, a group of nineteen leaders from business and labor organizations who advised the president on joblessness. Watson focused on automation. During the Lyndon B. Johnson administration he committed IBM to a program of corporate citizenship that included building a plant in the impoverished Bedford-Stuyvesant district of Brooklyn, New York. Testifying before the Senate Foreign Relations Committee in June 1970, Watson advocated immediate withdrawal from Vietnam. His remarks appeared on the front page of the New York Times on 3 June.

Under President Carter, whose secretaries of state and defense both had served on IBM’s board, Watson concerned himself primarily with foreign affairs. In the summer of 1977 he began chairing the General Advisory Committee on Arms Control and Disarmament. Two years later he became ambassador to the Soviet Union on the eve of the Soviet invasion of Afghanistan. After leaving this post with the change of administrations in January 1981, Watson spoke frequently in favor of arms control. His 1981 commencement address at Harvard University covered this topic. He helped found the Center for Foreign Policy Development at Brown University.

Watson died within weeks of suffering a serious stroke in suburban Greenwich, Connecticut, where he had made his home since 1946. He is buried in Sleepy Hollow Cemetery in Westchester County. Holding many honorary degrees, he also received the Presidential Medal of Freedom. In November 1999 Fortune named him one of the four greatest American businesspeople of the twentieth century.

Watson’s best-selling memoir, Father, Son & Co.: My Life at IBM and Beyond (1990), offers a detailed survey of his career and a startlingly frank assessment of his stormy relationship with his father. Other helpful sources are Robert Sobel, IBM: Colossus in Transition (1981), and Emerson W. Pugh, Building IBM (1995). Obituaries are in the New York Times and Washington Post (both 1 Jan. 1994).

Steven W. Usselman