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Thomas J. Watson Jr. 1965-1971

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

Thomas J. Watson Jr. 1965-1971
(Highlights – Milestones – Excerpts)

Competitive environment of IBM in 1965

Watson hiring top lawyers

High-End computer development continued.

Mid-July 1965: OS/360 delivery commitment made on announcement day 16 months earlier could not be met

Autumn 1965: everything looked black, black, black (“Father, Son & Co” by Thomas Watson Jr., published in 1990).  

Delays in Hardware shipments – Watson and Learson drafted 4 senior engineering manager - 4 horsemen – without formal announcement

The friction between Dick Watson and Vin Learson got completely out of hand

“Al Williams and I agreed that if the 360 program was ever to get off the ground, we had to put it under a single manager, a dictator, and we knew it had to be Learson.” (“Father, Son & Co.” by Thomas Watson Jr., published in 1990).    

Williams was nervous about the balance sheet item “work-in-process inventory”: he assigned John Opel to the problem, a fast-rising executive

SABRE (Semi-Automatic Business Research Environment), first online reservation system, fully operational in 1965. “Without SAGE no SABRE.”

IBM System /360 first deliveries in 1965 - By some miracle hundreds of medium-size 360s were delivered on time in 1965.

Selected Statistics for IBM 1956-1965

Mid-January 1966: trauma of developing OS/360 continued – “Brooks Law: adding manpower to a late software project makes it later”.
(“The Mythical Man-Month” published by Frederick P. Brooks, Jr. in 1975: This book is a belated answer to Tom Watson’s probing questions as to why programming is hard to manage. October 1974).                      

Watson reshuffling IBM: Learson elected President, Dick Watson without line management responsibility, Williams became member of the board as head of executive committee; I was out of day-to-day operation. Jan. 26, 1966. 

1966 IBM Annual Awards Dinner - one Award Winner: Steve Dunwell appointed IBM Fellow 

IBM 360 Model 67 first IBM time-sharing system delivered in June 1966.

September and October 1966: “I.B.M.’s $ 5,000,000 Gamble” and “The Rocky Road to the Marketplace” by Fortune editor T.A. Wise

IBM Revenue 1914 – 1946 – 1955 – 1967: first $5B Year.

IBM 360 replaced IBM 7070 at IRS

IBM researcher Benoit Mandelbrot published initial findings of what he would later describe as “fractal geometry”.

High-End Computers IBM /360 Models 91, 95 and 85 shipped in 1967 and 1968 – (NASA: Models 91 and 95). 

December 6th, 1968: IBM announced its intention to unbundle its prices – turning a trickle into a flood of third-party mainframe software and systems houses.

December 8th, 1968, Douglas Engelbart (1925-2013), SRI Campus 40 miles south of SF, Menlo Park: “Mother of all Demos”. Watch it now!

December 1968: CDC filed its private antitrust action against IBM

Leasing companies are biggest domestic competitors. 

IBM 1928 – 1968 – world’s top four office machine suppliers rankings.  

IBM launched the world’s first commercial database management system called Information Control System and Data Language/Interface
renamed in 1969 Information Management System (“IMS”).

Friday, Jan. 17th, 1969, last working day of the Johnson administration, Department of Justice filed its own antitrust suit against IBM.

Department of Justice asked that IBM be divided into four companies: Hardware, Software, Services and Leasing. 

Watson Jr.: “at the beginning I was willing to split IBM in two: large computers – small computers. 

The antitrust case dragged on and paralyzed IBM for 12 years, until the Reagan Administration dropped it in 1981: “without merits”!

The consequences of this case changed IBM forever with its long-term effects. 

1969: IBM computers and personnel help NASA put the first man on the moon.

Plug Competitor Manufacturers (PCMs): strong IBM competitors

June 23, 1969: IBM announced its unbundling plan to take effect Jan. 1st, 1970 (called the “crucial inflection point” by historian JoAnne Yates).

July 8, 1969: the first release of the Customer Information Control System (CICS) program product developed by IBM became available.

IBM’s Teleprocessing Monitor CICS has a monopoly in transaction processing comparable to that of Microsoft’s Windows in desktop operating systems. “If CICS were to vanish, corporate America would grind to a halt. If Microsoft Windows were to vanish, one of the available substitutes would fill the vacuum within weeks, perhaps within days. (“History of Software Industry” by Paul E. Ceruzzi published in 2003, p. 266.)

July 20th, 1969: Apollo 11 mission – First Man on the Moon. IBM designed both the Real-Time Computer Complex in Houston, a.k.a. Mission Control, as well as the Goddard Space Flight Center in Greenbelt, Maryland, both inspired by SAGE and SABRE. 

July 30th, 1969: IBM enters Minicomputer Market announcing IBM System /3 (IBM 5410) developed by the laboratory in Rochester.
Start of “Rochester.” IBM System /3 was withdrawn from marketing by June 1985! >20 Minicomputer Manufacturers  1965-1974 and beyond.

August 20, 1969: High-End Computer System /360 Model 195 – withdrawn February 9, 1977.  

IBM GSD based in Atlanta formed in November 1969; 1968-1972: ca. 100 companies or divisions offered commercial minicomputers.  

December 5, 1969: the entire four-node Advanced Research Project Agency (ARPA) network was established connecting UCLA SDS Sigma 7 (Leonard Kleinrock), SRI’s Augmentation Research Center’s SDS 940 (Douglas Engelbart), UCSB’s IBM 360/75 and University of Utah’s DEC PDP.10 (Ivan Sutherland) via Interface Message Processor (IMP) Honeywell DDP-516.
DARPA approached AT&T and IBM to build such a network. Both companies declined the request believing it would be a threat to their business (“The Entrepreneurial State” by Prof. Mazzucato, published in 2014, p. 104). ARPA-net was succeeded by Internet and Worldwide Web.   

In 1969, Ken Thompson wrote the first UNIX system in assembly language on a DEC PDP-7

Data General Nova: a popular 16-bit minicomputer built by the American company Data General starting in 1969.  

“Computers will spread to homes and apartments” (“THINK” published by William Rodgers in 1969.)

1969: Europe’s and Japan’s Computer Industry – once again IBM WTC prevailed.
1970-1990: Supercomputers – Mainframes – Minicomputers – Microprocessors

1970: women join the IBM Executive Resources Program and IBM promotes its first female Branch Office Manager in Reno, Nevada.

March 1970: Arthur K. Watson named ambassador to France by President Nixon and left IBM.

World Trade Corporation (WTC) on the brink of surpassing Domestic in terms of revenue split into three segments: EMEA run by Maisonrouge,

A/P and Latin America soon integrated into America/Far East run by Gordon Williamson.  

April 1970: GE computer operation sold to Honeywell.

Watson laboratory, NY, moved to Yorktown Heights.

IBM /360 Sales Success – radically recast and defined the evolution of the computer industry (Alfred D. Chandler, p. 244).

Minicomputer business 1970 250 M$ o/w 135 M$ DEC with plenty of competition - 1965 chartered by DEC.  

IBM competitors – historic reflection: William Norris’s CDC entered the high side with supercomputers and Ken Olsen’s DEC the low side with minicomputers growing up. Both started in 1957.  

June 30, 1970: IBM /370 Announcement – Watson’s Gamble Pays Off. 

September 1970: Gene Amdahl left IBM again and creates his own company. 

IBM Researcher Ted Codd defines Relational Database which became the foundation for IBM DB2 products.

IBM replacement table – SMASH Program – Learson’s strong competitive drive.

Tom Watson mid November 1970: I can’t keep this up – heart attack. Vin Learson came to the intensive care station – I put IBM in his hands.

June 1971: the world’s first commercial computer IBM /370 Model 145 with an all-semiconductor main memory was introduced.

Selected Statistics 1969-1973 – Software and Services Business 1960s and early 70s: programming services, facilities management, teleprocessing services. Only the best-managed firms survived: by 1971. Half of the estimated 3000 firms “simply faded away.”   

Tom Watson: “I gave the board my letter of resignation at the end of June 1971, agreeing to stay on as head of the board’s executive committee, just as Al Williams had in the first stage of his retirement. … the Watson Dynasty, after almost six decades, was over.”

“I like to think that Father would have been impressed with the 7.5 B$ a-year business I left behind when I resigned in1971.
He had always predicted it would someday be the biggest business on earth.”

“I stayed Chairman of the executive committee until 1979 and at first I did a fair amount behind the scenes.”

T. Vincent Learson succeeded Tom Watson Jr. 

IBM Worldwide: IBM Domestic < IBM WTC in 1971.

Meeting of Thomas J. Watson Jr. with Frank T. Cary and Thomas J. Watson Jr. in Stowe, Vermont, March 1973:
I told him a saying of Dad’s how the head of business should behave: “Act like a beggar, feel like a king.” …
“I told him the real test of his leadership would be whether he could keep IBM, as immense as it was, from becoming cold and impersonal. … IBM is a service company, and the more personal the tone, the more your employees and customers will respond.”

When I turned 60 and formally retired in January 1974 I told Frank I would not come into the building for 100 Days.
Then I had to struggle to get used to being a retiree. (“Father, Son & Co by Thomas J. Watson Jr. and Peter Petre published in NY 1990, p. 399ff.

Stock of general-purpose computers, 1955-1971-1974 US/World: 1955: 240/246; 1971: 54,400/90,600; 1974: 65,040/111,840. 

Thomas Watson Jr.’s secret from his father revealed to a reporter: “The fundamental for our success was running scared.”

Opel urged me to rejoin the board: “You’re too much a part of the history of this business not to come back and pointed out that I was only 67 (1981). … A few years later, when I turned 70 (1984) I insisted on retiring from the board like any other IBM director.”  

IBM Leadership and Management “precepts” as seen by Emerson Pugh in his “Memories that shaped an Industry” published in 1984

IBM lessons from an insider’s perspective – attributes that made IBM great: William W. Simmons published in 1988. 

Here is what happened after Thomas J. Watson Sr.’s death to some of those who most affected his life: 1956-1993.
1956/1964/1971: Revenue 892 M$/3.23 B$/8.27 B$. Net Earnings: 87 M$/431 M$/1.07 B$. Employees: 72.504/149.834/265.493.  

Fortune Magazine, November 22, 1999: the four greatest business men of the 20th century - Ford - Sloan - Watson Jr. – Gates.

Corporate Leadership in Environmental Responsibility dates back to Thomas Watson Jr – IBM 100 Icons of Progress published in 2011.