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CEO / President IBM

Thomas John Watson, Jr. (January 14, 1914 – December 31, 1993) was an American businessman, political figure, and philanthropist. He was the 2nd president of IBM (1952-1971), the 11th national president of the Boy Scouts of America (1964-1968), and the 16th United States Ambassador to the Soviet Union (1979-1981). He received many honors during his lifetime, including being awarded the Presidential Medal of Freedom by Lyndon B. Johnson in 1964. Watson was called "the greatest capitalist in history" and one of "100 most influential people of the 20th century".

Tom Watson, Jr. became president of IBM in 1952. Up to this time IBM was dedicated to electromechanical punched card systems for its commercial products. Watson, Sr. had repeatedly rejected electronic computers as overpriced and unreliable, except for one-of-a-kind projects such as the IBM SSEC. Tom Jr. took the company in a new direction, hiring electrical engineers by the hundreds and putting them to work designing mainframe computers. Many of IBM's technical experts also did not think computer products were practical, since there were only about a dozen computers in the entire world at the time. Even the supporters of the new technology underestimated the potential. Cuthbert Hurd, brought in from the Atomic Energy Commission's Oak Ridge National Laboratory to determine if there was a market, predicted "... he could find customers for as many as thirty machines."
Even so, until the late 1950s the custom-built US Air Force SAGE computerized tracking system accounted for more than half of IBM's computer sales. The company made little profit on these sales but, as Tom Jr. said "It enabled us to build highly automated factories ahead of anybody else, and to train thousands of new workers in electronics."
Tom Jr.'s decision was justified; in the longer term it redirected IBM to its later position dominating the computer market. Even in the short term it paid off; for revenues more than tripled in six years, from $214.9 million in 1950 to $734.3 million in 1956. This dramatic rate of growth almost matched the wartime years; a better than 30% compound growth rate that Tom Jr. maintained for much of the twenty years of his leadership of IBM. It was a record even better than that of his father.

Despite the presence of his son, Thomas Sr. kept a firm grip on the reins until 1955. Tom Jr. described the position of his father as "He wanted to make me head of IBM, but he didn't like sharing the limelight."

Tom Jr. took over effective control in a dramatic moment; though the formal handover took place a few months later. The occasion was signing the Consent Decree which was offered by the government after its latest anti-trust investigation. Tom Jr. saw that the Consent Decree, which sought to strip IBM of half its card-making capacity, was largely irrelevant since the future was in computers not cards. There was another condition: IBM had to sell machines outright as well as lease them. This had repercussions in the late 1960s when leasing companies recognized the financing loophole that it created.

Behind this decision was another: spending more on research and development. IBM was only spending 3% on research and development when other high technology companies were spending between 6% and 9%. Tom Jr. learned the lesson, and thereafter — at least until the 1990s (when, even then, Gerstner only dropped it to 6%) — IBM consistently spent 9%. By comparison, the equivalent figure for Japan was 5.1%, though its high technology companies exceeded even the IBM level, with the 1983 spending for Canon being 14.6% and that for NEC being 13.0%.
This training program was to take him, over the next five years, through many of IBM's operating groups. Tom Jr. believed his most important influence was Albert Lynn Williams, a CPA, who became president of IBM in 1961. Although the initiative, and as such much of the credit for the birth of the information revolution, must go to Tom Jr., considerable courage was also displayed by his then aging father who, despite his long commitment to internal funding, backed his son to the hilt; reportedly with the words "It is harder to keep a business great than it is to build it."
Source : Wikipedia

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