Today in 1911, the Computing-Tabulating-Recording Company was incorporated. It changed its name to IBM in 1924. Many commentators on IBM’s centenary attribute its longevity to the power of idea or ideas. In “Ideas make IBM 100 years young,” IBM’s Bernard Meyerson says: “…if you really think about what keeps a company going, it’s that you have to keep reinventing yourself. You cannot reinvent yourself in the absence of great ideas. You have to have the great ideas, and you have to follow them through.” Meyerson equates the great ideas that sustain the life of a company with great innovations but The Economist quotes Forrester Research’s George Colony: “IBM is not a technology company, but a company solving business problems using technology” and concludes: “Over time [the close relationships between IBM and its customers] became IBM’s most important platform—and the main reason for its longevity. Customers were happy to buy electric ‘calculating machines’, as Thomas Watson senior insisted on calling them, from the same firm that had sold them their electromechanical predecessors. They hoped that their trusted supplier would survive in the early 1990s. And they are now willing to let IBM’s services division tell them how to organise their businesses better.”
In a thoughtful essay, Kevin Maney lists five lessons he drew from his close study of IBM’s history, the first one being “At the start, convince the troops you’re a company of destiny, even if that seems crazy.” Thomas Watson Sr. did this and more. In a 1917 speech he said: “My duty is not the building of this business; it is rather, the building of the organization. … I [know] only one definition of good management; that is, good organization. So, as I see it, my work consists in trying to build a bigger and better organization. The organization, in its turn, will take care of the building of the business.”
So what was the Big IBM Idea? A trusted supplier? A focus on destiny and longevity? Building a bigger and better organization? All of the above?
In a 1994 HBR article titled “The theory of the business,” Peter Drucker advanced the argument that great businesses revolve around a certain idea or “a theory of the business,” articulating the company’s assumptions about its environment, its mission, and its core competencies. In response, I discussed in a letter-to-the-editor the similarities and dissimilarities between scientists and managers: “Managers [like scientists] must articulate their theories and how they can be refuted and then seek data that prove their theories wrong. That will prevent them from falling into the trap of discarding successful theories… the theory of the business may not just explain reality or past business success; it may also define it by communicating and convincing employees and customers that the company is unique. A business theory, then, unlike a scientific theory, can be true and false at the same time. That is how, as Drucker has illustrated, IBM and General Motors could both succeed and fail when they applied the same business theory to two different businesses.”
In short, an idea or a set of ideas may explain past business success. But, all business school education and management gurus notwithstanding, one cannot extract from history “management lessons,” prescriptions, and predictions about the future of this or any other business. Sorry, even if we had a perfect understanding of the reasons for IBM’s longevity, that would not tell us anything about the future of Apple or Cisco or Google or Facebook. There is no one explanation or theory of business success and the same reasons for success in one case can be the very same reasons for failure in another.
I didn’t know it in 1994, but it turns out I was channeling Thomas Watson Sr. who said in another speech, this one in January 1915, shortly after he joined C-T-R: “We all know there have been numerous books written on scientific factory management, scientific sales management, the psychology of selling goods, etc. Many of us have read some of those books. Some of them are good; but we can’t accept any of them as a basis for us to work on. Neither can you afford to accept my ideas as whole and attempt to carry them out, because I do not believe in a fixed method–in any fixed way of selling goods, or of running a business.”