Father, Son & Co.

by Thomas J. Watson

  Olin, who is a very mild man, said, “Well, yes, that’s a clever design, but why do you object to it? It’s perfectly seaworthy.”

  “Because if we keep fiddling with these rule-beaters,” I said, “they are going to evolve until finally they become unseaworthy and somebody is going to get hurt.” What I didn’t realize was that the particular Cal 40 I’d picked to criticize was actually Learson’s. Suddenly I heard an enraged voice shout, “What did you say?” and from the shadows behind the hull emerged Vin, looking nine feet tall, with his fists clenched. “My boat’s a rule-beater? What do you mean by that!”

  “Oh, no, Vin,” I said. “I didn’t even know this was your boat. I’ve just been talking to Olin here about the way his committee is permitting boats to move more and more in unusual directions. I’m sort of a conventionalist—”

  “Hah!” he said. “You’re trying to knock me off and you have no right to do that!”

  The next day I went to Vin at a pre-race meeting and told him he’d completely misunderstood the bit of conversation he’d overheard. He ignored me and walked away. Olin Stephens tried to tell him the same thing and also got ignored. The spectacle of the two top executives of IBM feuding over their sailboats must have been titillating for people who liked gossip. I wish I could have stopped it, but we both had our pride involved and were both overreacting. We raced—and Thunderbird beat Palawan again, finishing thirteenth in the fleet against Palawan’s twentieth. But when we got back to the office the following week, Vin still wasn’t talking. I heard nothing from him for several days; he didn’t even return my phone calls. It took about a week before he’d cooled off enough to remember we were running a big business and somehow the chairman and president had to communicate. I don’t think he ever believed my explanation, even with Olin’s corroboration, but finally he accepted a phone call from me and agreed that the matter ought to be dropped.

  If there had been any more episodes like this, Vin and I might have parted company. But IBM did fantastically well during that period—thanks largely to his skill as a manager and his success with System/360. After the doldrums of the early 1960s the company was growing again by nearly 30 percent per year—a growth rate more like that of an entrepreneurial startup company and absolutely unprecedented for a multi-billion-dollar corporation. By 1965 we were among the ten largest industrial companies in America, and two years later the market value of our stock was greater than that of General Motors. I was proud of our achievement, but I felt as if I’d seen it all before: great success, huge growth, frequent reorganization, constant hiring and training on an ever increasing scale. The tension at the top of the business really wore on me, and while my life was more frenetically busy than ever, I began to find it impossible to tend the store as single-mindedly as I did right after Dad died. I might have been indispensable to IBM, but the work wasn’t as fulfilling.

  I felt for the first time that my life was going out of control. I’d always been able to find the right answer in any crisis I’d ever faced, and I’d come to believe it was possible to achieve a truly perfect career. By using all the tools at my disposal—money, power, prestige—I knew I could influence events to a greater degree than most people, and I had jumped to the conclusion that with enough effort I could make everything turn out right for myself, my family, and IBM. The complexities I now ran into caught me completely unawares; suddenly nothing was simple, nothing came out quite right.

  I wasn’t the only IBM executive sorting out personal problems in the aftermath of the 360 crisis. Divorce was becoming much more common at IBM—it had been practically unheard of among our senior managers in Dad’s day. Many of the men were also having difficulties with their teenagers, trying in vain to shield the kids from the social ferment of the late ’60s. Drugs caused some real tragedies. One executive’s son was a troubled boy who read that LSD enables you to understand yourself. He figured that if one dose is good, two or three must be better, so he took way too much and destroyed his mind. There was nothing his father could do; the boy had to be committed to an institution.

  I had problems with my own teenagers, though not nearly as grave. In the spring of 1966 one of my daughters announced that she wanted to drop out of boarding school. For a couple of months I spent a day each week running IBM from the back seat of a limousine as I rode up to New England, trying to persuade her to stay. Ultimately I was successful: she finally graduated and went on to college. But even as I was pressuring this child, part of me understood the confusion of the younger generation. I’d had such a hard time finding my own direction as a young man that I felt sympathy for kids who weren’t conventional achievers. I decided that one of the most important things a college can do is give such people a chance to find their own way. In 1968 I got my brother and sisters to back me in establishing an unusual fellowship program. The Watson fellowships—which are named after my father and financed with money from my parents’ estate—are really a reflection of the kind of kid I’d been, and an expression of my gratitude at not being written off by my father or the administration at Brown. Each year the program picks seventy-five graduating seniors from small liberal arts colleges around the country. Instead of looking for straight-A scholars, we ask colleges to nominate young people whose character, interests, and creative potential make them worth taking a chance on. We pay their way abroad for a year, with very few strings attached, to pursue their own projects, which can be as ambitious as they want. That first year, for example, we had a Watson fellow in Paris doing painting, another tracing cultural vestiges of the legal system of ancient Greece, and another studying the impact of American medical aid on countries in Asia and South America. The choices reflected the extraordinary insight and imagination of Robert Schulze, a former dean at Brown, who was the program’s first executive director.

  I felt proud that we’d come up with a creative response to the generation gap. But I had to admit that this program was very modest compared with the vast disaffection of millions of young people in the 1960s. There were signs of trouble everywhere—on TV you saw college kids taking over campuses and calling for revolution. These protests were very upsetting—it seemed as though our democratic process was on the verge of breaking down—but they also made me stop and think about the social ills that caused them. As a liberal Democrat I felt a duty to solve such problems—but I didn’t know how. I kept looking for ways to make myself relevant on a much wider scale, and for a while even toyed with the idea of jumping into politics. At various times the Kennedy family and other prominent Democrats sounded me out on running for office. Eunice and Sargent Shriver came to visit us in Vermont at one point and Eunice said, “Tom, you know us all and you’re a natural-born politician. I’ve seen you charm people and you can be tough as nails. Why not get involved?” Bobby, who was now a senator from New York, tried to convince me to run against Nelson Rockefeller for governor in 1966, and the following year Ted Kennedy introduced me to influential New England Democrats as a possible senatorial candidate. But each time such an opportunity came up, I’d talk it over with Olive and decide to hold off. I was reluctant to leave IBM and didn’t think I had the fire in the belly you need to go out and win votes.

  Yet if Bobby Kennedy had made it to the White House, I’d have been willing to put my career at stake—either by running for office during his administration or serving as an appointee—to try to help put the country back on track. I pledged my support to him in the summer of 1967, even though the possibility of his becoming president seemed at least five years away. Lyndon Johnson was still firmly in command, and no one expected Bobby to run until 1972. I told him that the nation was not making the kind of progress I had hoped, that I thought he would make the best president, and that I wanted to back him in any way I could. I’m sure he was hearing the same thing from a lot of people. He simply said, “It means a great deal to me to hear that,” and beyond that he was noncommittal.

  I saw a lot of Bobby. He came to visit each winter in Stowe and
each summer in North Haven. I used to lend him the Palawan for a week each year, and he and his friends would stay at North Haven for one or two nights before sailing off. Every bedroom in the house would be filled and it was always an exciting group—people like Sander Vanocur, the television reporter; Rowland Evans, the columnist; and John Glenn.

  To me it seemed that Lyndon Johnson’s animosity was the best thing that had ever happened to Bobby. As soon as it had become obvious that Johnson didn’t want him as a running mate in 1964, Bobby had begun to mature at a rapid rate. During his years as senator he became a great force, much greater than he’d have been as vice president. He fascinated me, though he was not always an easy guy to be around and could be terribly abrupt. I remember taking a walk with him on our North Haven farm. As we chatted it began to mist a little bit, but I paid no attention until he said rather brusquely, “When are you going to turn around?”

  “What do you mean?”

  “Well, it’s raining!”

  “We wouldn’t call this rain.”

  “I call it rain. Let’s go back to the house.”

  I could imagine having a cozy talk with Jack Kennedy, but never Bobby. He was terrific with little kids, but in conversation with adults he was always serious-minded, more conscious than most people of his duty to his country, and he never let down the bars. I don’t think he was very comfortable with me, either. But soon after he became a senator he made a recommendation that had a far-reaching effect on IBM. We were at my ski lodge at Stowe, and during a quiet moment Bobby said, “You’ve done a lot for the Kennedys, Tom. Is there anything we can do for you?”

  I’d never thought about it, but intuitively I knew what to say. Bobby’s team at the Justice Department was disbanding, and he had brilliant men. “Can you recommend a lawyer who might be willing to come to IBM as our general counsel?” I said. Given IBM’s size and dominance of the computer business, I felt sure we would eventually face more antitrust problems.

  “There are only two people you’d want to consider,” Bobby said. “Burke Marshall and Nicholas Katzenbach. If you can get either of them, you’ll do very well.” Katzenbach had succeeded Bob as attorney general, and Marshall had been head of the Justice Department’s Civil Rights Division and played a key role in the desegregation of schools in the South. I went to Washington, talked to both men, and both ended up joining IBM, Marshall right away, and Katzenbach a few years later, after working for Johnson as attorney general and as undersecretary of state.

  As a senator representing New York, Bobby was interested in cultivating the business community. That was a hopeless cause, but I dutifully gathered up all the moderates I could find and held dinners and lunches for him in New York. These occasions never worked particularly well, because Bob was at his best when he felt sympathy for his audience, and when it came to businessmen, there wasn’t much sympathy on either side. The only time I ever saw him attract business backing was in 1966 when he decided to tackle Brooklyn’s Bedford-Stuyvesant ghetto. It was the worst slum in New York, bigger and more neglected than Harlem and in many ways a tougher and more frightening place. There had been race riots in the Watts section of Los Angeles the previous summer, and nobody wanted the violence to spread.

  Bobby’s idea was to have a committee of white business leaders work in partnership with a black community board, providing managerial advice and access to capital, and when Bobby felt passionately about something, people rallied to him. He persuaded both Mayor Lindsay and Senator Javits to pitch in, and then recruited a bipartisan team of top businessmen, including me, Bill Paley of CBS, Andrew Heiskell of Time Inc., George Moore, the chairman of First National City Bank, André Meyer, a senior partner at Lazard Frères, Benno Schmidt of the Wall Street firm J. H. Whitney, and others. Bobby would fly up from Washington to New York for our meetings, and unlike other blue-ribbon committees, this one worked. The white and black groups put together a combination of new jobs, housing renovations, and social services that gave Bedford-Stuyvesant a bit of new life. It was a modest success—but in the context of all the other failed efforts to revive ghetto communities, that was quite a remarkable accomplishment. During the “long hot summer” of 1967, when there were race riots in dozens of cities, Bedford-Stuyvesant was quiet, and Bobby deserves some credit for that.

  IBM made the biggest contribution of all to the effort in Brooklyn: we put a new plant there. People in the late 1960s had begun to talk in terms of “corporate social responsibility”—the use of the economic power of big business to right some of the country’s wrongs—and there was no question in my mind that IBM ought to extend itself. No one expects much in the way of corporate citizenship from a company that makes only a few million dollars a year, but when you make hundreds of millions, you ignore public opinion at your own peril. I’d already enlisted IBM in President Johnson’s War on Poverty a couple of years earlier. Through a subsidiary we were running a major Job Corps center at Camp Rodman, an abandoned army base in New Bedford, Massachusetts. The idea was to train seven hundred fifty “hard-core unemployed” each year—black high school dropouts from the inner city who had never held jobs. We ran Camp Rodman for several years, and the experience caused us some real soul-searching, because there were more problems than we anticipated. Groups of Job Corps trainees started roaming around New Bedford at night, getting into fights with local gangs. The incidents became worse and worse until there was one in which six policemen got hurt and the city council petitioned President Johnson to close the camp. We changed directors and improved the discipline, but we never solved the basic problem: the Job Corps trainees had spent so many years out of work and in many cases drinking and taking drugs that they had no real motivation, and therefore it was virtually impossible for them to learn. IBM ended up hiring very few Camp Rodman “graduates,” and I doubt any other company did either. Other Job Corps camps had the same difficulty, and the government finally closed down the entire project.

  It seemed clear that to have any impact on unemployment, we would have to get to people before they reached the Job Corps stage—and that meant improving the slums in which they were growing up. I’d gone to the inner cities as a member of Johnson’s anti-poverty commission, and the riots of 1967 didn’t surprise me because I could see why people would want to tear up those slums. Many of my business peers still thought that in America if you worked hard you reached the top. But it was obvious to me that in the ghetto, if you worked hard, the chances were you’d still be at the bottom when you died. Somehow we had to reestablish the relationship in those communities between effort and personal integrity—and reward. That was the philosophy behind the Bedford-Stuyvesant plant. Talking to Bobby Kennedy, I became convinced that what the ghettos needed were plants in which people could acquire skills, earn decent wages and benefits, and develop a sense of pride in their achievement. If IBM could prove such a plant could be operated, other companies might follow our lead and eventually enough might happen in the ghetto to make a real difference.

  We leased the biggest building we could find, a grimy eight-story stone and brick warehouse on Nostrand Avenue in the very center of Bedford-Stuyvesant. Our plan was to employ around five hundred workers—not as unskilled labor, but in real IBM jobs, with good wages, benefits, training programs, and the chance to advance and even move out of the ghetto by transferring to other IBM plants. Five hundred was a small number compared with, say, our plant in Rochester, Minnesota, where thirty-five hundred people worked, but we were in uncharted territory and the handful of other corporations that were trying to run inner-city factories were having a terrible time. Aerojet-General in California, for example, hired unskilled youths in Watts and put them to work making tents for the Vietnam War, a business it knew nothing about. The factory lost millions of dollars and the company finally had to lay people off.

  To reduce the risk of similar embarrassments, we decided we’d stick to making products we understood—cables and other parts for our computers—and that we’d re
ly on experienced IBM managers. The man I picked to run the project was Ernest Friedli, the assistant manager of our giant Kingston plant. Friedli was white but he’d grown up in an immigrant family in a tough section of Brooklyn, and he called Bedford-Stuyvesant “my old neighborhood.” He could be pretty blunt. At one point in the planning process I questioned whether we ought to air-condition the plant. No other business in Bedford-Stuyvesant was air-conditioned, and I didn’t want it to look as if we were overdoing it. Friedli came right back at me by saying, “Put yourself in the place of a factory worker. Suppose you had to go up to Endicott for training and found air-conditioning there, and came back to a sleazy, non-air-conditioned building; wouldn’t that be bad?” I immediately agreed that the last thing we wanted was to make people feel like second-class citizens. Friedli was a real leader. He went around the company and recruited a team of supervisors, four black and two white, asking them to take the transfer with no immediate raise, because this was a job that required dedication. All six said they’d like to go.

  The toughest call I had to make was whether to put IBM’s name over the door. We could have worked through a middleman—one idea was for us to find a black entrepreneur and offer him financing and a contract to serve as an IBM supplier. Our studies showed that a middleman could turn a profit after just one year, if he was frugal and did without a lot of IBM extras—such as a community relations manager, a plant psychologist, a big personnel staff, maybe even a plant receptionist. Vin Learson and other executives were for this approach, and so was I at first, because it was much safer and cheaper. But I changed my mind because I noticed that other companies were taking middleman approaches to the inner city, and I thought this would only reinforce the residents’ feeling that nobody wanted to bet on them. I thought the courageous thing to do was to accept the risk and make it an IBM plant.