Rummaging around at my folks’ place over the weekend, I stumbled upon a slim hard cover with a tattered jacket that I recall having seen around the childhood homestead most of my growing years. A Business and its Beliefs: The Ideas That Helped Build IBM, published in 1963 By McGraw-Hill Book Co., is a collection of essays by Thomas Watson Jr. developed from a series of lectures he gave at Columbia University’s Graduate School of Business.
(My old man was an IBMer way back, and I suspect all the employees had a copy.)
Watson, who died on New Year’s Eve, 1993, was the son of Thomas Watson Sr., who pulled together the loose alliance of three companies that would become International Business Machines. Watson Jr. would run the company from 1952 through 1971.
Some of the philosophy Watson propounded was maverick at the time. Respecting people and helping them to respect themselves will make the company profit. The Open Door policy. Job security for the folks on the floor means better product and productivity. (At least, in 1963, Watson could boast that in 25 years, not a single worker hour had been lost to layoffs, even though the company went through many major product shifts.)
In the book, he outlined five principles on which the IBM business philosophy was based: That there is no substitute for good human relations and the morale that results; that communication — upward and downward — education and retraining must increase out of proportion to growth rate to overcome change; that complacency can be avoided if management sets the right tone; that company interests must come before that of a division or department; and that belief must always come before policies, practices and goals.
It isn’t hard to believe that those ideas might at one time have seemed radical when one considers that they are, to too large an extent, honoured only by lip service by many companies today. If you want to argue that point, open your newspaper and count the layoffs and the whole industries that have lost touch with their markets.
The last of those principles — the one that Watson Jr. considered the most important — may be the most irretrievable. Company beliefs (and I’m cribbing from the book here) are often an extension of the beliefs of the founder or owner. In a business world increasingly funded by venture capital, where’s the human source of a belief other than in doubling your money?
One telling anecdote in the book will resonate now, as we’re poised on the brink of an economic collapse. During the Great Depression of the 1930s, IBM bucked the trend and expanded. Rather than lay off workers as demand shrank, the workers produced parts for inventory. Meeting at an art gallery, one of Watson Sr.’s competitors told him he’d heard IBM had been hiring salesmen; the competitor didn’t think that was prudent during a depression. “Well, Bill,” Watson Sr. said, “You know when a man gets about my age, he always does something foolish. Some men play too much poker, and others bet on the horses, and one thing and another. My hobby is hiring salesmen.” When U.S. Congress passed the Social Security Act in 1935, IBM was best positioned to take on one of the largest government projects to that date.
If you’d read this book in the nineties, or even in the first years of this decade, it might have seemed laughably quaint. But our economic position today is very much like that of the 1930s — decades of unrestrained and unregulated capitalism have come home to roost. The economy is teetering on the abyss. This is a time for leadership, in business as well as politics, and a simple statement of inviolable belief (Obama’s “Yes, we can,” for example) that defines policies, practices and goals should trump spreadsheets and algorithms.