While there are varying opinions regarding which era in America’s history had more influence on its leadership position in global economics, few will argue that the industrial era, and the post World War II era had much to do with the success and prosperity Americans enjoy today.  So, in this chapter, I will be focusing on leaders of that era.

Thomas J. Watson, Sr.

In his 1963 book entitled A Business and its Beliefs, The ideas that helped build IBM, Tom Watson, Jr. writes, “More than most companies, IBM is the reflection of one individual—my father, T. J. Watson.”[1] At the time of this writing, Tom Watson, Jr. was the Chairman and CEO of IBM.  He goes on to state that “Father joined the company at forty, a point at which most businessmen, thinking they were middle-aged, might not feel able to start a new career.  He had, by that time, a firm grip on most of the beliefs he felt necessary to be successful in business.  He held to them so strongly that he was sometimes exasperating.  But the depth of his belief was directly related to the success of our company”.

Thomas J. Watson was born in upstate New York—the son of a simple farmer who was a Scottish immigrant.  He was brought up in a strict and modest home.  His upbringing was considered normal for rural nineteenth-century America where much value was placed on treating people with respect and dignity, cleanliness and dressing neatly, being forthright and eternally optimistic, and above all, being loyal.  These were values that he carried with him throughout his life.  In fact, these values show through in the basic beliefs that the company adhered to under his leadership, and many years to follow.  The three basic beliefs were respect for the individual, best customer service of any company in the world, and excellence in everything we do.  While the wording of these changed ever so slightly over the years, these beliefs were a mantra that could be heard throughout the halls of IBM through the early 1990s.  Today, one does not see much written about these three basic beliefs but the culture that Tom Watson created with those three concepts still echo today.

Tom Watson had fervor for instilling company pride and loyalty in every employee.  He boosted company spirit with employee sports leagues, and family outings and parties.  In the early days there was even a company band and company songs that were sung at sales rallies and the like.  He preached about being eternally optimistic with his favorite slogan, “THINK”.  This also became a mantra for employees for many years, and has even carried over to the notebook computer used to write portions of this book—the IBM Thinkpad.

Over the last few decades, there has been much written and said about the importance of the customer.  Terms like customer facing processes and practices, the customer comes first, the customer is always right, etc. are plastered among company bulletin boards and in company boardrooms everywhere you look.  From his earliest days Watson understood the importance of the customer.  He understood that the success of the customer translated into the success of his company, a belief that, years later, manifested itself in the popular adage, “Nobody was ever fired for buying from IBM.”

Over the years IBM has seen significant change.  Its most explosive growth occurred under the leadership of Tom Watson, Jr.  In the 1990s, the company went through a rebirth under Lou Gerstner.  Through it all however, the fundamentals that have made it endure came from the legendary leadership of Thomas Watson, Senior.  Having spent over 20 years with IBM, I had many opportunities to spend time with some of the “old timers”.  During that time I heard countless Watson stories—all of them told with reverence and affection.  These were not just stories from managers and executives.  These were stories from machinists and assembly line workers who would tell of accounts where “Sr.” would show up unannounced on the factory floor and stop by to introduce himself to them.  Without exception he would call them by name, and ask for advice on how they could help him make IBM a better company.  I have been in people’s living rooms where they had prominently displayed on their wall a photo of themselves shaking hands with Watson.  Each of these people spoke of him as if they knew him personally.  Each of them spoke of how much respect he showed them, and how they worked loyally for years because they believed in him as a leader.  As I would ask each of them what they saw as IBM’s vision and strength they did not speak of computers, typewriters or copiers.  They spoke of respect for the individual, exceptional service, and excellence in their work.  They believed it and their whole family lived it.  I have had the pleasure to work with many second and third generation employees, whose fathers and/or mothers and grandfathers also worked for IBM.  When some companies frowned on husbands and wives working for the same company, IBM seemed to encourage it.  In fact, it was not uncommon for widows of former IBM employees to be offered jobs with the company.

In 1988, when IBM sold its copier business to Eastman Kodak, one of the Kodak executives who had been working with us on the transaction declared, “I now understand how IBM can have such a rich pension plan.  Their people work so hard most of them are not going to live past retirement”.  That kind of dedication and hard work was typical in the years I was with IBM, and I believe much of it stemmed from the basic tenants that were set forth by its founder and leader for so many years—Thomas J. Watson.

Much has been written about the full employment practice that IBM adopted for so many years.  Many have contended that the company’s adherence to that practice for so long had much to do with the troubled times it encountered in the 1980s and early 1990s.  They argue that the company’s unwillingness to shed resources quickly damaged its competitiveness and its ability to rebound quickly.  I have a different point of view.  The full employment practice was never meant to keep people on that were not performing with excellence.  Over the years however, it became increasingly difficult for good managers to remove poor performing employees.  The HR community became so intent on protecting the employees’ rights that it was taking extraordinary effort on the managers’ part to separate an employee.  Furthermore, decisions were being reversed based on technicalities.  There is nothing more de-motivating for a strong manager than to have a good decision reversed for the wrong reasons.  Often, when a termination was reversed the manager was reprimanded for their mistake.  It does not take many of these before management starts to take the easy path, which is to take no action.  Once this happened there were a number of employees that were taking up needless space and financial resources.  I contend to this day that if IBM management had stepped up to the poor performers over the years they would have been able to continue with the full employment practice at least in some fashion.  Few people discuss the loss of loyalty that accompanied the elimination of the full employment practice in IBM.  Few people in IBM today know much about Thomas Watson, Sr. but the lasting effects of his excellent leadership still exist.

Walter Elias Disney

At the age of 14 Walter attended the Kansas City Art Institute.  At that time he was the only boy left at home since his older brother Roy had left home at the age of 18 to live with his uncle Will – also in Kansas City. In 1917, what was left of the nuclear family moved back to Chicago.  Walt stayed back until he graduated in June from Benton School (8th grade).  His brother Herbert agreed to stay with Walt until he could join his parents.  After all he was only 14. After re-joining his family in Chicago Walt enrolled in McKinley High School.  At the same time be began taking night courses at the Chicago Art Institute.[2]

The reason I provided you with this brief history is to give you a glimpse of the early life of one of the most famous names in modern history.  Walt Disney had his beginnings as a middle child in a middle class family, in “middle” America.  As we can see however, he had a passion for art in his early years, and was willing to invest his extra-curricular energies into pursuing that passion.  In fact his passion became so intense that in 1919 after having finished his freshman year of high school, he moved back to Kansas City to begin a career as a commercial artist.  In 1920, Walt’s career started to form as he joined the Kansas City Slide Company for $40 per week.  It wasn’t long after that Walt started producing animated films.

Rather than take you through a complete chronology of events in the life and career of Walt Disney, I will provide you with some defining moments that I hope will point out some of the leadership attributes we will be talking about.

Fifteen years after Walt Disney started his career as a cartoonist the League of Nations presented him with a special medal of recognition of the fact that: “Mickey Mouse is a symbol of universal goodwill”.  This particular recognition has great significance regarding the vision Walt had for his cartoons.  He saw them as more than just entertainment.  He saw them as a means of challenging the entire world to embrace honor and goodwill. Just one year later, in 1936, Walt received the French Legion of Honor award.  Contrast that with one of the more popular cartoon characters of today – Bart Simpson!  This was only the beginning of things to come.  In 1938 Walt received honorary Masters degrees from Harvard, Yale and the University of Southern California, 22 years before he would receive his honorary diploma from his high school in Marceline, Missouri.

Corporate Citizen

In 1941 Disney issued their second annual report, and the Japanese attacked Pearl Harbor.  Like many corporate leaders in those days Walt Disney turned his attention to how Disney could help the country in a time of need.  In that year Disney’s soundstage was used for the repair of military vehicles and anti-aircraft guns, and was used as a primary defense station to guard the nearby Lockheed plant against possible air strikes.  At the same time Disney’s production of animated films focused on aircraft and warship identification for the US Navy, and a film for the US Treasury Department and IRS to promote paying taxes.  During the war years over 90 films were produced by Disney for the US Government in an attempt to be a good corporate citizen.  This took place from 1941 to 1946.  Interestingly, it was in 1941 that Walt announced to his family that he had decided to retire from making movies.  I guess his need to serve mankind was greater than his own personal goals.

Vision

Through this time period however, it appears that he continued to nurture his vision to move beyond film making because in 1949, the Walt Disney Music Company was formed for sheet music sales.  In that same year the Disney studio purchased 11 acres of vacant land across form the studio on Riverside Drive.  That land purchase was a foreshadowing of things to come.  In 1951 Walt Disney established Disneyland Incorporated, and in 1952 he formed Walt Disney Incorporated, to develop ideas for a “family park” to be called “Disneyland”.  He spent the next two years nurturing this vision for a theme park and in 1954 he purchased 244 acres of land near Anaheim, California.  It was in July of 1955 that Disneyland was opened at a cost of $17 million. Recorded attendance for that day was 28,154 guests.  While $17 million may not sound like much today it was a staggering sum in 1955.  The cost of admission when the park opened was $1.  While many leaders would have looked at these sums and said that it would never pay for itself, Walt knew he was on to something.  In its second month of operation Disneyland welcomed its one millionth visitor, and within 18 months its five millionth guest.

In 1959—just four years into its operations—Disneyland welcomed its 15 millionth guest.  During that timeframe, Walt never became complacent.  Even though then NBC president David Sarnoff told Walt that “Television will never be a medium of entertainment” he had a vision of using it for just that.  He created countless Disney TV shows and movies, and in 1958 Walt commissioned Economics Research Associates to find a suitable location for a second Disney attraction.  The recommendation was Florida, and in 1961 a study for a location of a second Disney park recommended Ocala or Orlando in Florida.  In the forth quarter of the following year, Walt and others took a plane trip across the US to make a final location selection.  Over the next four years Disney planners staged a stealth mission for acquiring land in Central Florida that would make the CIA look like bunch of amateurs.  In doing so they were able to acquire 43 square miles of land at a cost of just over $5 million.  Had people known what this was all about the cost would have been many times that amount.  In November of 1965 Walt and Roy Disney, and Florida Governor Hayden Bruns made the first public announcement of plans to build a new theme park in Florida.  Walt Disney did not live to see the fulfillment of his vision for the second theme park.  He died on December 15, 1966 at the age of 65 from complications associated with lung cancer.

The Bottom Line

During his life, his was bestowed numerous awards for his service as a leader.  Many of these awards were in areas that demonstrated the fact that business leaders do not have to focus only on the bottom line.  Two months before his death he received the American Forestry Association award for “outstanding service in conservation of American resources”.  It might seem ironic that this award came to a man who was developing 43 square miles of land for a theme park, but he found a way to do this while preserving the natural resources.  Walt Disney was a shrewd and sometimes ruthless businessman, yet he was awarded the lifetime membership award by the Guild of Variety Artists for his “increasing efforts to discover new ways to keep the greatest number of people in the field of show business gainfully employed.”   This was because he saw that the health of a business and an industry was far more than just the financials.  He saw that the industry was the people.  Walt Disney moved with a sense of urgency, yet was willing to take the long view throughout his career.  The patience required for the planning and building of Disney World in Orlando was, I’m sure, difficult at times, but it was this level of patience and planning that made it the epitome of a well run organization that it is to this day. He also held to his vision even when others told him it would never happen.  Finally, the fact that Disney is still thriving decades after his death is a testament to his ability to communicate a purpose that was much bigger than Walt Disney.

What they Accomplished

It is difficult to measure the magnitude of their accomplishments, but there is no doubt Thomas J. Watson, Sr. and Walter Elias Disney had a profound impact on the 20th Century.  Whether measured by the hundreds of thousands of people employed, the billions of dollars of commerce conducted throughout the world or the untold hours and billions of dollars in charitable work undertaken, these two leaders had an impact on the world in which we live.

Without the strong leadership characteristics of Tom, Walt and many great leaders like them from the post WWII era, we would not enjoy many of the technological innovations, advancements in health-care and medicine and overall affluence we experience today.  We owe these leaders a debt of gratitude.

What Motivated Them

So as not to paint too rosy of a picture of these noted leaders of old, let me hasten to mention that I believe these people were very human, and therefore, motivated by greed, power and status.  Since the beginning of time, the human condition is one that is easily seduced by wealth, power and status.  Take for example the very first leaders in humanity – Adam and Eve.  There was a couple that was given reign over God’s entire creation.  They had it all, until they started to believe they could have even more.  They got word from a “headhunter” that they could get their Boss’s job if they were to just gain access to some very important and secret information that their Boss was allegedly keeping from them, by not allowing them to eat from the tree of knowledge.  In short this “headhunter” convinced them that they could instantly enhance their wealth, power and position with a mere nibble from the fruit of that tree.  Well, I think you know the rest of the story, but to put it in today’s vernacular, you might say they aligned their loyalties with the wrong guy, or that they ticked off the wrong “person”.  It is not my place to judge other’s motives, but I find it unlikely that the leaders described as part of the industrial era carried loftier moral character than those of many of the great leaders that came before them.

© Mark P. Loschiavo


[1] A Business and Its Beliefs : The Ideas That Helped Build IBM by Thomas J. Watson, Copyrightã 2003 McGraw Hill

[2] Wikipedia: Walt Disney, http://en.wikipedia.org/wiki/Walt_Disney

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