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Thomas J. Watson Jr. 1956-1964

 
IBM CEOs: Leadership ⇔ Challenges ⇔ Transformations in the IT Century

Thomas J. Watson Jr. 1956-1964
(Highlights – Milestones – Excerpts)

“When my father died in 1956 – six weeks after making me head of IBM – I was the most frightened man in America.”

“Fear of failure became the most powerful force in my life.”

Thomas Watson Jr. reasserts to IBM senior management his commitment to assure a workplace free of racial and religious bias.

Thomas Watson Jr.: Executive Development: “not using Harvard Business School cases … but become educated in IBM management.”

Thomas Watson Jr. hired architect and industrial designer Eliot Noyes to create the Corporate Design Program at IBM

November 1956: a contract was signed for the delivery of the STRETCH computer – later called IBM 7030 - to the AEC at Los Alamos.

Business Status 1956/09/01 - End of 1956: Lead in computers passed from Remington Rand to IBM – other companies entered the field

Radio Corporation of America (RCA) introduced the BIZMAC Computer in 1956 – RCA and IBM competed in the DP field for about 15 years.

Smaller stored-program computers: 11 companies

IBM 305 Random Access Memory Accounting System (RAMAC) – with the first magnetic hard-disk drive - announced in September 1956

Ken Olsen used the knowledge he gained from Whirlwind => SAGE to found Digital Equipment Corporation in 1957

John Backus and his team produced the first high-level language: FORTRAN (FORmula TRANslator) – FCS April 1957 - still used every day.

Model corporation largely owned by employees: stock purchase plan established 1958. People never used the plan to the extent I envisioned.

Memorandum: “After October 1, we will design no more machines using vacuum tubes. Signed, Tom Watson Jr.”

December 1957: IBM shipped IBM 608 believed to be the world’s first fully-transistorized commercial calculator.

“We hit the billion-dollar mark at the end of 1957.”  

IBM, a non-union company, was the first industrial organization that put its hourly workers in the factory on salaries – February 1, 1958

Three categories of competitors: Large companies – Old Line Business Machine Producers – New Companies

Time Equipment business sold

Insiders spoke of “Snow White and the Seven Dwarfs”: IBM, BUNCH, GE and RCA.   

Behind the Seven Dwarfs were some interesting companies or small entities: DEC, HP, Scientific Data Systems, Varian Associates.

DPD split into Data Systems Division (DSD) and General Products Division (GPD)  - May 1959. T. Vincent Learson group executive.

Nikita Khrushchev visits USA – September 1959. IBM site visit included.    

October 1959: all-transistorized IBM 1401 Data Processing System announced – withdrawn February 8, 1971.  

IBM STRETCH technologies used in IBM 7090 – FCS December 1959.

Peter F. Drucker in “The Ecological Vision” published in 1993: IBM the role model for the Japanese recovery after WW II, pp. 47-58.

By 1960 IBM dominated the computer industry

Competition within IBM: Endicott laboratory versus Poughkeepsie laboratory

IBM was marketing six kinds of solid-state computers, incompatible at several levels.  

1961: Japan Big 6 Competitors

STRETCH Performance and Pricing problems

IBM Series 8000 project cancelled

Al Williams promoted to President

HQ for the IBM Research Division in Yorktown Heights

Revolutionary IBM Selectric Typewriter with the “golf ball” typing element introduced on July 31, 1961

Watson gives a series of lectures at the Graduate School of Business of Columbia University in 1962 – Change versus Complacency – published in 1963 as “A Business and its Beliefs”. “Our respect for the individual: the manager must know how to work with his people, how to help them, and how to train them; We want to give the best customer service of any company in the world, we long ago established high standards for the selection of salesmen and customer engineers; IBM expects and demands superior performance from its people in whatever they do: in all good human relations communication plays a very important part. People can be directed, but they respond best when they understand what they are supposed to do and why. We have learned that a company must be prepared to make a commitment to internal education and retraining which increases in geometric proportion to the technological change the company is going through. And finally, I believe that if an organization is to meet the challenging world, it must be prepared to change everything about itself except those beliefs.”

SPREAD Report (Systems Programming, Research, Engineering, And Development) signed by 13 men approved by CMC in May 1962:
the system called NPL (New Product Line) was marketed as IBM /360! SLT Report: Components make or buy!       

“System/360 was the biggest, riskiest decision I ever made, and I agonized about it for weeks, but deep down I believed there was nothing IBM couldn’t do.” – Tom Watson Jr. in Father, Son & Co. 1990.

Early 1963: IBM Fellowship program inaugurated

August 1963: CDC 6600 announced – bombshell – on August 28, 1963 I sent my top men a memo later called the “janitor memorandum”

Dick Watson moving to IBM corporate HQ

G.E. Jones, new WTC President to Tom Watson: CERN reported its decision to order a CDC 6600 – prestige loss in Europe, and entire world.  

Commercial Computing and the Rise of IBM – Status 1964

IBM Mainframe Family tree and chronology

Philco (division of Ford) left the business
Warren C. Hume, President DPD: “Help – I’m being slaughtered”, 28th Jan. 1964 – 196 “losses” to Honeywell in 8 weeks. 

February 1964: Ferrite core memories: freedom to use all necessary patents

18th-19th March, 1964: final make-or-break decision “Going – going – gone!” 3 weeks later the entire System /360 product line was launched. 

7th April 1964: IBM System /360 “the computer that IBM made, that made IBM.” Revolution, not Evolution!

“It was the biggest privately financed commercial project ever undertaken.” Thomas J. Watson Jr. in his book “Father, Son & Co., 1990. 

Watson: rules of integrity

IBM System /360 post-announcement troubles abound.

CDC 6600 prepared to initial delivery in August 1964 – Watson irate.

To indicate more accurately the scope of the product line, the Electric Typewriter Division renamed Office Products Division in August, 1964.

Thomas J. Watson Jr. honored with Medal of Freedom on September 15th, 1964.

New corporate HQs facility in Armonk: October 21st, 1964.

Trauma of developing OS/360 – a major catastrophe may be in the wind.

Database systems came into use.   

IBM 360 Order inflow: >1000 orders in the first 4 months after announcement and another 1000 during the next 4 months.

1964: Revenue 3.23 B$; Net Earnings 431 M$. Employees: 149.834.