A Business and Its Beliefs

THOMAS J. WATSON JR.

Reviewed by Jack

Thomas J. Watson Jr. took the helm at IBM from his father in 1952. During his twenty-year tenure at IBM, he moved the company forward on several fronts, including the transition from mechanical to electronic computation. In 1962, Watson was asked to give a number of lectures at Columbia Graduate School of Business as part of a series that featured speakers presenting on the management of large organizations. A Business and Its Beliefs grew out of Watson’s presentation. In it, Watson discusses the humanistic philosophy of management that has defined IBM and revolves around three tenets: respect for the individual, giving the best customer service in the world, and the responsibility to “pursue all tasks with the idea that they can be accomplished in a superior fashion.”

Watson believes that a thriving organization needs the people within to embrace these basic tenets of the organization, that they should not be simple hollow sentiments in the form of a mission statement. His conviction is strong.

I firmly believe that any organization, in order to survive and achieve success, must have a sound set of beliefs on which it premises all its policies and actions.

Next, I believe that the most important single factor in corporate success is faithful adherence to those beliefs.

And finally, I believe that if an organization is to meet the challenges of a changing world, it must be prepared to change everything about itself except those beliefs as it moves through corporate life.

The policies set the style and substance of the organization, and, in turn, the way the organization interacts with its clients and society.

As you would expect, throughout A Business and Its Beliefs, Watson uses IBM as a case study. He explains that his father learned humanistic management as a young salesperson at the National Cash Register Company, one of the first sales-driven companies to focus on the employees, under the leadership of John Patterson. For example, Watson Sr. instituted an open door policy that offered the individual employee recourse if his manager was being unfair. Hundreds of employees would come to the corporate headquarters on their day off to talk with the senior Watson about workplace issues. This helped connect the senior management to the shop floor. As a result, Watson Jr. was made aware of the discrepancy between hourly and salaried employees’ pay, and, in 1958, IBM put everybody on salary to eliminate that unfair practice. In the book, Watson Jr. likens employees to Kierkegaard’s wild ducks, each free and individual, flying as individuals, but in a group to one destination.

From 1914 to the end of World War II, IBM experienced accelerated growth and the leadership at IBM had to make decisions based on instinct rather than patient, scientific study. The success of these quick decisions was a direct result of the guiding hand offered by the organization’s strong belief system. As the company continued to grow, IBM’s middle managers were, quite necessarily, new to the company, so IBM created two management schools, one for junior executives and one for line managers, to teach IBM’s outlook and beliefs to new employees.

“It is better to aim at perfection and miss it than it is to aim at imperfection and hit it.”

This slim, concise volume shows why IBM has thrived for almost a century and how the Watson family created a modern, humanistic organization in which shared core beliefs allowed the company to expand and adapt to change. It’s a model for every company, large or small. JC

A Business and Its Beliefs: The Ideas that Helped Build IBM, McGraw-Hill, Hardcover 2003, ISBN 9780071418591

WHERE TO NEXT? Here for the company’s turnaround story Here for another example of a values-based organization | EVEN MORE: Father, Son & Co. by Thomas J. Watson Jr.; Built to Last by Jim Collins and Jerry I. Porras; The Wizard of Menlo Park by Randall Stross