IBM and the Holocaust (8 page)

A year later, in 1913, all defendants were found guilty by an Ohio jury. Damning evidence, supplied by Watson colleagues and even Watson's own signed letters of instructions, were irrefutable. Most of the men, including Watson, received a one-year jail sentence. Many of the convicted wept and asked for leniency. But not Watson. He declared that he was proud of what he had accomplished.
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Then came the floods. The late winter and early spring in Dayton, Ohio, had been brutal. Excessive rainfall swamped the city. The Mad and Miami rivers began overflowing. In late March 1913, a tornado tore through the area, turning Dayton into a disaster scene, with much of the area under water. Some 90,000 people suddenly became homeless. Communications were cut. But Watson and others at NCR controlled one of the few telegraph lines still on high ground.
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The Cash
pounced. NCR organized an immense emergency relief effort. The company's assembly line was retrofitted to produce a flotilla of rudimen-tary rowboats—one every seven minutes. Bottled water and paper cups were distributed to flood victims along with hay cots for sleeping. NCR facilities were converted into an infirmary. Five babies were born there in one day. From New York, Watson organized a relief train of medical supplies, food, and more water. Where roadbed and rail switches were washed away, Watson ordered them instantly repaired. When NCR relief trains encountered irreparable tracks, just a few miles from Dayton, Watson recruited men to carry supplies in on their backs until the goods reached Dayton—all to cheering crowds.
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Patterson, Watson, and the other NCR men became national heroes overnight. A press room was established on NCR premises. Petitions were sent to President Woodrow Wilson asking for a pardon. Considering public sentiment, prosecutors offered consent decrees in lieu of jail time. Most of the defendants eagerly signed. Watson, however, refused, maintaining he saw nothing wrong in his conduct. Eventually, Watson's attorneys successfully overturned the conviction on a technicality. The government declined to re-prosecute.
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But then the unpredictable and maniacal Patterson rewarded Watson's years as a loyal sales warrior by suddenly subjecting him to public humiliation in front of a company assembly. Just as Watson was speaking to a festive gathering of
Cash
executives, Patterson histrionically interrupted him to praise another salesman. Everyone recognized the signs. Shortly thereafter, Watson was summarily fired.
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For seventeen years, NCR had been Watson's life—the fast cars and even faster commissions, the command and control of industrial subterfuge, the sense of belonging. It was now over. Shocked, Watson simply turned his back on his exciting lifestyle at
The Cash.
"Nearly everything I know about building a business comes from Mr. Patterson," Watson would admit. Now he added this vow: "I am going out to build a business bigger than John Patterson has."
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What was bigger than National Cash Register, one of America's largest corporations? Why stop at the American shoreline? Watson contacted the one man who could take him global, Charles Flint of CTR.

WHEN THOMAS WATSON
walked into Charles Flint's Fifth Avenue suite, their respective reputations surrounded them like force fields. Watson's was national. Flint's was international. Watson had manipulated mere men. Flint had catered to the destiny of nations. Yet, the two did not instantly bond.

Flint was shorter and much older than Watson, although filled with just as much energy. After all, Flint had soared amongst the clouds in a Wright Brothers plane and driven automobiles, sailed the fastest boat on many a river or lake, and seen the world—all while Watson was still traversing back roads on horseback. Yet, during their first meeting, Watson was almost disappointed in the legendary financier's presence. But it was Flint's ideas that spoke louder than his physical stature.
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As a nineteenth-century international economic adventurer, Flint believed that the accretion of money was its own nurturing reward, and that the business world functioned much as the animal kingdom: survival of the fittest. Watson found nothing unacceptable in Flint's philosophy. Heading up CTR could be the chance Watson knew he deserved to be his own boss and make all the decisions. CTR's diverse line was better than cash registers because the dominant product was Hollerith's tabulator and card sorter. The two men could work together to make CTR great—that is, if Watson's management deal was structured right.
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But from Flint's point of view, he was hardly ready to stroll across the street to CTR's headquarters and install Watson. The supersalesman before him still walked under the shadow of a criminal conviction, which at that point had not yet been overturned. Although under appeal, it could cast the company in a bad light. During one of several board meetings to consider hiring Watson, at least one CTR director bellowed at Flint, "What are you trying to do? Ruin this business? Who is going to run this business while he serves his term in jail?"
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It was a process, one that Watson was determined to win, and so he spoke frankly to the reluctant directors. First, he sold himself—like any adroit salesman—and then worked around their collective worries about his conspiracy conviction. Visions of products and profits proliferating worldwide, million-dollar growth projections, ever-increasing dividends—these were the rewards the directors embraced as most important. CTR bought in. Watson was offered "a gentleman's salary" of $25,000 per year, plus more than 1,200 shares of the firm. But Watson wanted better. He wanted a slice of the profits. His commissionable days at NCR had whetted his craving for more of the same. Much more.
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"In other words," said Flint, "you want part of the ice you cut." Indeed. Watson negotiated a commission of 5 percent of all CTR after-tax, after-dividend profits. However, in light of Watson's conviction, he would not join the firm as president, but rather as general manager. It didn't matter. Watson would call the shots. May 1, 1914, was his first day at CTR. Hollerith's company, now Flint's company, would never be the same. It would soon become Watson's company.
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Copying many of NCR's sales development and promotion techniques, Watson built an organization that even Patterson would have marveled at. Just as Patterson had organized the One Hundred Point Club for salesmen hitting their quota, Watson began a festive Hundred Percent Club. Patterson had demanded starched white shirts and dark suits at NCR. Watson insisted CTR employees dress in an identical uniform. And Watson borrowed his own NCR innovation, the term THINK, which at CTR was impressed onto as many surfaces as could be found, from the wall above Watson's desk to the bottom of company stationery. These Patterson
cum
Watson touches were easy to implement since several key Watson aides were old cronies from the NCR scandal days.
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But Watson understood much more about human motivation than Patterson had ever allowed to creep into NCR. Watson wanted to inspire men to greater results, not brutalize them toward mere quotas. His way would imbue a sense of belonging, not a climate of fear. As a general understood his troops, Watson well understood the value of the workingmen below to the executive men above. Moreover, any limitation in his general manager title was soon overcome. In 1915, his conviction was overturned and within forty-eight hours the board approved his ascent to the presidency of CTR.
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For the first years, Watson worked quietly out of his sparse office at CTR, cementing the firm's financial, labor, and technical position. He did his best to outmaneuver and neutralize the competitor tabulating machines. Patent wars were fought, engineering campaigns commenced, research undertaken, and major clients either conquered or re-conquered. When needed, Watson arranged bank loans to see the company through lean times and help it grow.
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Hollerith, although no longer in control, remained as an active consultant with the company, but found Watson's style completely alien. Years before, while still at NCR, Watson had ordered a Hollerith machine, but Hollerith declined to send one, fearing Watson would copy it for Patterson. Now that they were in the same firm, the two frequently butted heads on a range of issues, from commercialization to technical research. Unlike Hollerith, who was willing to do battle with customers over some barely discernible personal principle, Watson wanted to win customers over for the money. Money was his principle. Flint's chairman, George Fairchild, was also a towering force at CTR to be reckoned with. Watson navigated around both Hollerith and Fairchild. Without Flint's continuous backing, Watson could not have managed. Nonetheless, without his unique winning style, Watson could not have persevered.
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Watson became more than a good manager, more than just an impressive executive, more than merely a concerned employer, he became central to the company itself. His ubiquitous lectures and pep talks were delivered with such uplifting passion, they soon transcended to liturgical inspiration. Watson embodied more than the boss. He was the Leader. He even had a song.

Clad in their uniforms of dark blue suits and glistening white shirts, the inspirited sales warriors of CTR would sing:

Mister Watson is the man we're working for,
He's the Leader of the C-T-R,
He's the fairest, squarest man we know;
Sincere and true.
He has shown us how to play the game.
And how to make the dough.
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Watson was elevating to a higher plane. Newspaper articles began to focus on him personally as much as the company. His pervasive presence and dazzling capitalistic imperatives became a virtual religion to CTR employees. Paternalistic and authoritarian, Watson demanded absolute loyalty and ceaseless devotion from everyone. In exchange, he allowed CTR to become an extended family to all who obeyed.
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In 1922, Patterson died. Many have said his death was an emotional turning point for Watson, who felt his every move was no longer being compared to the cruel and ruthless cash register magnate. Some two years later, CTR Chairman Fairchild also died. By this time, Hollerith had resigned in ennui from the CTR board of directors and completely faded away in poor health. Watson became the company's chief executive and uncontested reigning authority.
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Now CTR would be completely transformed in Watson's image. A new name was needed. In Watson's mind, "CTR" said nothing about the company. The minor products, such as cheese slicers and key-activated time clocks, had long been abandoned or marginalized. The company was producing vital business machines for a world market. Someone had suggested a name for a new company newsletter: International Business Machines.
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International Business Machines
—Watson realized that the name described more than a newsletter. It was the personification of what Watson and his enterprise were all about. He renamed the company. His intensely determined credo was best verbalized by his promise to all: "IBM is more than a business—it is a great worldwide institution that is going on forever."
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More than ever, Watson fused himself into every facet of IBM's operations, injecting his style into every decision, and mesmerizing the psyche of every employee. "IBM Spirit"—this was the term Watson ascribed to the all-encompassing, almost tribal devotion to company that he demanded. "We always refer to our people as the IBM Family," Watson emphasized to his employees, "and we mean the wives and children as well as the men." He continually spoke in terms of "oneness" with IBM.
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Employees were well treated, generously compensated, entitled to excellent working conditions with the most liberal benefits and vacation times, enrolled in the IBM Country Club at Endicott, New York, and invited to endless picnics, rallies, and dances. Plus they were inducted into the IBM Club. "The company just won't let you get lonesome," assured one Club member. Children began their indoctrination early, becoming eligible at age three for the kiddy rolls of the IBM Club, graduating to junior ranks at age eight.
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"Look upon me as the head of the family," Watson would preach. "I want you to come to me as often as you feel that I can do anything for you. Feel free to come and open your hearts and make your requests, just the same as one would in going to the head of a family." So penetrating was the Watson father image that employees routinely did ask his permission for ordinary personal decisions. John G. Phillips, for example, a man so powerful within the IBM organization that he ultimately became its vice-chairman, did not own an automobile until 1926; in that year, he finally approached the Leader. "Mr. Watson," declared Phillips, "I have enough money to buy a car, but I would like your permission to do it."
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