Chapter 3: Service and Superiority


Years ago we ran an ad that said simply and in bold type, "IBM Means Service." I have often thought it our very best ad. It stated clearly just exactly what we stand for. It also is a succinct expression of our second basic corporate belief. We want to give the best customer service of any company in the world.

We recognize that service is the key element in what I hope is our good reputation. T. J. Watson realized early the great importance of reputation. When he was eighteen he drove a horse and buggy across northern New York State selling pianos and sewing machines. His customers were farmers and, like farmers everywhere at the time, they seldom had much cash. To make a sale he frequently took animals or farm equipment in trade, later selling them off in Painted Post, his home base. He had two years of good training in how to get along with people, how to make a fair trade and leave people happy. As he drove his team through the countryside the second time he saw at once the value of the Golden Rule in business, for many people would buy his goods on the basis of what satisfied customers had to say about his products.

IBM's sales and service forces bear the prime responsibility for our rigid insistence on service. To maintain our reputation for excellent service, we long ago established high standards for the selection of salesmen and customer engineers.

To attract top-quality salesmen, IBM used sales commissions, advances, quotas, and guaranteed territories, at a time when most of those practices were still looked upon as innovations. Schools were set up for salesmen—the training course now runs as long as eighteen months—and we began to visit colleges to recruit our sales trainees.

Equal care was taken in the selection and training of customer engineers. With high-speed electronic equipment and large systems installations, the job requirements have since become so demanding that we interview an average of twenty-five applicants for each one we hire.

In its commitment to customer service IBM learned that the best way to serve a prospect was to provide equipment adapted to his requirements, rather than ask him to alter his business to fit our machines.

We found that good service to the customer requires the cooperation of all parts of the business. I think this was brought home to us years ago when we centered many of our activities on our plant in Endicott. Sales and customer engineering schools were located there, as were our sales conventions in the 1940s. Customer executives and administrative personnel also visited and studied at Endicott. This arrangement brought together all our people, as well as our customers, and made it possible for us to give the latter better service as we learned more about their problems.

In a business like ours, a reputation for service is one of the company's principal assets. Many operations performed by our machines are vital to the customer's business. Lengthy breakdowns could be ruinous. Furthermore, most of what we call "sales" in IBM are really rentals. IBM's contracts have always offered, not machines for rent, but machine services, that is the equipment itself and the continuing advice and counsel of IBM's staff.

In the normal course of business we will do everything possible to maintain our reputation for service. On the rare occasion when a new installation gets into trouble as the result of a changeover in procedures, or when a system is damaged by fire or flood, our customer engineers, sales and systems staffs think nothing of nursing the system through long nights and weekends. More than one branch manager has worked overnight in his shirtsleeves to help get a customer's salary checks out on time.

In time, good service became almost a reflex in IBM, and father loved to show what the company could do. In 1942 an official of the War Production Board gave him a perfect excuse to do it. The WPB man called him late on the afternoon of Good Friday to place an order for 150 machines, challenging him to deliver the equipment by the following Monday in Washington, D. C. Father said he would have the machines there on time. On Saturday morning, he and his staff phoned IBM offices all over the country and instructed them to get some 150 machines on the road that Easter weekend. just to make sure his caller got the point, father instructed his staff to wire the WPB man at his office or home the minute each truck started on its way to Washington, giving the time of departure and expected arrival. He made arrangements with police and Army officials to escort the trucks which were to be driven around the clock. Customer engineers were brought in and a miniature factory set up in Georgetown to handle the reception and installation of the equipment. There were sleepless people in IBM—and in WPB—that weekend.

These are not small things. The relationship between the man and the customer, their mutual trust, the importance of reputation, the idea of putting the customer first—always—all these things, if carried out with real conviction by a company, can make a great deal of difference in its destiny.

The third IBM belief is really the force that makes the other two effective. We believe that an organization should pursue all tasks with the idea that they can be accomplished in a superior fashion. IBM expects and demands superior performance from its people in whatever they do.

I suppose a belief of this kind conjures up a mania for perfection and all the psychological horrors that go with it. Admittedly, a perfectionist is seldom a comfortable personality. An environment which calls for perfection is not likely to be easy. But aiming for it is always a goad to progress.

In addition to this persistent striving for perfection, we believe an organization will stand out only if it is willing to take on seemingly impossible tasks. The men who set out to do what others say cannot be done are the ones who make the discoveries, produce the inventions, and move the world ahead.

T. J. Watson used to tell our people, "It is better to aim, at perfection and miss than it is to aim at imperfection and hit it."

As a result of this insistence on perfection and the way we went at almost impossible tasks, there soon developed within the company what might best be called a tone. It was a blend of optimism, enthusiasm, excitement, and pace. The company was always on the move, constantly changing, always striving for something better. Evidences of it were everywhere—new products, new branch offices, sales contests, slogans. Better to do something—even the wrong thing—than to do nothing at all.

Believing in success can help to make it so. Back in 1924 when things like butcher scales and time clocks were still mainstays of our business we had the temerity to change our name from the Computing-Tabulating-Recording Company to the International Business Machines Corporation. We constantly acted as though we were much bigger, much more sophisticated, much more successful than any current balance sheet might bear out.

As I have already pointed out, part of this tone was optimism, of course, and in this my father excelled. One day during the Depression of the thirties, my father met one of his major competitors in an art gallery. IBM was not doing particularly well but was managing to equal its previous year's income. The other fellow was having more difficulty.

He said to my father: "Tom, I hear you're still hiring salesmen in spite of the Depression, and I just can't see how that's a prudent thing for your business."

My father said: "Well, Bill, you know when a man gets about my age, he always does something foolish. Some men play too much poker, and others bet on horse races, and one thing and another. My hobby is hiring salesmen."

This optimism, which may have been little more than an enlightened guess, paid off. When business turned up the next year and then started to boom during and after the war, IBM was awfully glad my father had hired those salesmen.

We had an IBM day at the World's Fair of 1939, and next year brought 10,000 of our people to the Fair at company expense. People realized they were working for an unusual individual and an unusual company that was capable of doing unusual things.

By the 1930s our sales conventions had become spectacular affairs. Salesmen, on awakening, would find newspapers under their doors carrying a complete account of the previous day's events. Our overseas salesmen attended our conventions at that time, and when they got to their seats, they found small headphones with which they could hear the speeches in their native tongues.

When General Eisenhower, then president of Columbia University, went to Endicott to address a Hundred Percent Club meeting in July, 1948, T. J. Watson persuaded him to spend an extra hour and talk to the plant people. Within that same hour the people were let off from their jobs and a platform was constructed in the street outside the main plant. As the General and my father climbed the steps, the carpenters hammered in the last nails. "My gosh," one worker was heard to say, "what a business."

In a way, no one knew quite what to expect next. It may not have been management according to the book, but it seemed to keep us on our toes. Things were always being done in a highly vigorous fashion, with little regard for how much energy was being expended, but with a great regard for the quality of the result and for the impression it would make on people.

In 1934 we told the sales force that as soon as the company's profits were doubled the annual convention would be held in Europe. All salesmen making their quotas would qualify for the trip. The year of doubled profits came in 1941, but Hitler had other plans for Europe, and the idea of the trip was swallowed up by the war. Then in 1961 one of our old-timers, a salesman who had qualified for that trip, wrote to remind me that the pledge had never been fulfilled. I knew that I had to make good on the promise and was glad of the opportunity. So in the summer of 1962, 187 salesmen who had qualified for that trip traveled to Europe with their wives to keep the date that had been interrupted.

The trip provided an interchange between American and European salesmen with, we hope, mutual benefits. In addition, it proved to be a great moralebooster on both sides of the ocean.

Looking back on it now, I can see that many of the things we did in the formative years were anything but scientific. But what we learned, I believe, is that there are times in an organization when an instinct for leadership and drama are many times more important than following the book on good management procedure.

What T. J. Watson did, probably more than anything else, was to set the tone for IBM. This was created in large part by the beliefs he brought to the company, for with them he brought vigor and great excitement. But it was also colored by his own good sense of what would be the most appropriate for the time and the situation. When things were difficult and the sledding was uphill, he could be very optimistic. But when things looked good and our future began to clear up, he was forever cautioning us against getting complacent about it. I suspect this is a necessity for any leader-to be a balance wheel, a leavener.

Certainly no one can argue with the results. From 1914 to 1946 our company's profits grew thirty-eight times. By the end of World War II, IBM's management had developed a deep belief in the policies upon which we had built our business: respect for the individual, major attention to service, drive for superiority in all things.

Undoubtedly the principal reason these beliefs have worked well is that they fit together and support one another. If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then, if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its success, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and stockholders.

I know some people believe our approach to business is a luxury that can be indulged in only because of the nature of our operation and the excellent profit it makes. We certainly would not have been as successful in a less promising field. But I believe very deeply that whatever business we might have been in, given the same beliefs and the same early leadership, we still would have been out in front.

It is interesting to note that we didn't have quite the clear sailing that some people seem to think we had in our industry. When Dr. Herman Hollerith was developing the original electrically sensed punched card, there was another engineer with him in the Census Bureau by the name of James Powers. Powers took out patents on a mechanically sensed punched card that gave about the same results as ours.

The Powers patents have been in the hands of reputable companies for as long as the Hollerith patents have been in ours. In fact holders of those patents have produced a number of firsts in our industry—including the first printing tabulating machine and the first alphabetic printer. Each time we are second-best in a new machine announcement, we take it as a personal affront and redouble our efforts to be more responsive to customers' needs.

Occasionally we have failed to respond with vigor, and when this has happened we have always lost ground. When we lost ground to others in those areas in which we have competence, we did so because we forgot to strive for superiority. This is easy to do when you are generally successful. "Well, you can't win them all," you just say, "and the overall picture is good." This is the first step towards failure. We've taken it once or twice, but fortunately we've never failed to correct our mistakes before they became a habit.




A Business and Its Beliefs  .The Ideas That Helped Build IBM
A Business and Its Beliefs .The Ideas That Helped Build IBM
ISBN: 71418598
EAN: N/A
Year: 2003
Pages: 13

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