Review of ‘Calculated Risks’: Thomas Watson Sr and the Making of IBM

Kevin Maney’s biography of IBM founder Thomas Watson does justice to his daring personality.

In the 1930s, Americans dubbed Thomas Watson’s products ‘electric brains’. His management mantra, ‘THINK’, set in block capitals in rectangular signs, extended well beyond the boundaries of IBM.

Paid $1,000 a day through his share of IBM’s booming profits, Watson earned more than GM’s Alfred Sloan. He raised production capacity by a third after 1929, spent 6 per cent of IBM’s revenue on a new research lab in 1932, and held his nerve until the 1935 Social Security Act made his machines essential for US national insurance.

When his home caught fire, and when 36 IBMers were injured in a company train crash, Watson got stuck in to dealing with each disaster on-site. Sometimes, as in the slump of 1921-22, he could be wrong; always, his desk was a total mess. Anti-union, he was also outrageously manipulative of his senior managers, and endless in his windy, moralising pontifications about life, the universe and IBM.

But Watson was a force of nature. He fused patents management and progressive R&D with hard-driving sales. His paternalism and the incentives he offered all ranks for staying loyal inspired devotion, not just sycophancy.

A sleepless, caffeine-charged road warrior, the 6ft 2in Watson boasted a confidence that today’s CEOs lack.

This biography is formidable in its research, vivid, insightful and often hilarious. Its style is loose-limbed and balanced.

Maverick suggests that the fact that Watson was found guilty of anti-competitive practices did much to mould his later life. A youthful Watson had been busted alongside many of his fellow top managers at the National Cash Register Company (NCR). He escaped career closure by taking over the reins of the Computing-Tabulating-Recording Company in 1914.

CTR made weighing and computing scales for retailers, punched-card tabulating machines for general admin, and time clocks to help firms keep track of worker hours.

It was only after some years had passed that Watson eventually selected tabulating machines – first designed by Herman Hollerith to aid the administration of the 1890 US census – as the focus for growth. Watson was more businessman than technology visionary. He removed rivals, poured resources into solving customer complaints, took up opportunities with banking and academic science, and showcased industrial design. He exploited international markets, as well as IBM’s conversion to wartime production.

Maney is right that Watson turned IBM into a near-monopoly and, with it, information into an industry. But did he really originate corporate culture, and was he the prototype of the celebrity CEO? As Maney reveals, NCR and the New York shoemakers Endicott-Johnson – firms that were mentors to Watson – had long played up corporate culture. And capitalists like King Gillette had long personified their companies.

Maney, who covers technology for USA Today, only really gets into it when Watson’s son moves IBM into the electronic age. The author’s judgment of Watson’s conduct with the Nazis is, also, too credulous. These flaws aside, his book is highly recommended.

Kevin Maney, The Maverick and his Machine, John Wiley & Sons, 2003.