100+ Years Ago, IBM Started Just Like Any Other Business

Of the many technology companies in the public eye, IBM is one of the oldest and perhaps the most recognizable--but do you know the story behind Big Blue? It’s a history of innovation and revolution in computing that stretches back over 100 years, to when it was created by uniting three existing companies.

In 1911, a man named Charles Runlet Flint merged two of his existing companies, International Time Recording Company and Computing Scale Company of America with a critical third company that he had just acquired: Tabulating Machine Company. This new company was known as the Computing-Tabulating-Recording Company (or CTR).

The machines made by CTR were capable of sorting, analyzing, and eventually running calculations based on punch cards that were input into the machine. While this development had clear business applications in hindsight, it wasn’t until the controversial Thomas Watson was brought in as company president (after deftly avoiding lasting consequences from a conviction of violating the Sherman Antitrust Act--the act that bans monopolies) that the value of the tabulating division was focused upon.

Not only did Watson know his target audience well enough to know that the business-oriented tabulating machines would be in high demand as the United States became increasingly business-oriented itself, but he also understood the value of presenting CTR’s offerings as a service, rather than a product. This arrangement proved to be mutually successful for both CTR and its clients, as the sales team was able to inform the company of what their clients wanted to see from them next, thereby allowing the needs of their clients to be met.

By 1924, CTR had been renamed to International Business Machines to reflect the consolidation of the business and echo the timeless feel of other large brands of the day. 1925 saw Watson take up responsibilities as both the chief executive officer and the chief operating officer. In the following years, IBM would thrive in the face of the Great Depression, only receiving a boost from the federal bureaucracies’ need for computing devices after President Roosevelt’s New Deal mandates. Demand for the tabulation machines continued to increase during wartime, and by the time Thomas Watson, Jr. was brought on as his father’s successor in 1952, computers were slowly becoming more and more common in the office environment. Many companies had a simple transition, as they were simply trading their IBM tabulators for computers.

IBM truly went global in 1949, offering sales worldwide in a total of 58 countries. IBM World Trade Corporation dominated the global market everywhere but Japan and the United Kingdom, achieving a market share of (only) 33 percent in those countries.

However, in 1952, IBM was again hit by an antitrust lawsuit from the US government, and more critically, another from a niche computer pioneer called Control Data Corporation. IBM powered through these challenges, as well as shifts in leadership until the 1980s. At this point, Big Blue began to falter under pressure from other niche competitors. As a result, the company changed their management strategy, and weathered through business fluctuations until 2004, when they again stabilized their success rate.

IBM’s story of one of success, and there are lessons to be learned here for your own business. By forming the right partnerships and providing a product or service that’s in growing demand, your company can grow exponentially. IBM also shows business owners how to overcome challenges, like diversifying what you do in order to weather the inevitable changes in the marketplace, as well the importance of strong leadership. By learning from the successes of companies like IBM, who knows, maybe your SMB can do what it takes to rise to the top!