In his excellent book A Business and its Beliefs: The Ideas That Helped Build IBM, Thomas Watson Jr. (the second chief executive of IBM) gives us five great lessons on business success.
From the time of our divisional reorganization we have found that an ingrained understanding of the beliefs of IBM, far more than technical skill, has made it possible for our people to make the company successful.
In looking back on the history of a company, one can’t help but reflect on what the organization has learned from its years in business. In thinking specifically of the period since the war when IBM faced the twin challenges of great technological change and growth, I would say that we’ve come out with five key lessons. They may not be applicable to all companies. All I can do is attest to the great value these five lessons had for us.
- There is simply no substitute for good human relations and for the high moral they bring. It takes good people to do the jobs necessary to reach your profit goals. But good people alone are not enough. No matter how good your people may be, if they don’t really like the business, if they don’t feel totally involved in it, or if they don’t think they’re being treated fairly — it’s awfully hard to get a business off the ground. Good human relations are easy to talk about. The real lesson, I think, is that you must work at them all the time and make sure your managers are working with you.
- There are two things that an organization must increase far out of proportion to its growth rate if that organization is to overcome the problems of change. The first of these is communication, upward and downward. The second is education and retraining.
- Complacency is the most natural and insidious disease of large corporations. It can be overcome if management will set the right tone and pace and it its lines of communication are in working order.
- Everyone — particularly in a company such as IBM — must place company interest above that of a division or department. In an interdependent organization, a community of effort is imperative. Cooperation must outrank self-interest, and an understanding of the company’s particular approach to things is more important than technical ability.
- And the final and most important lesson: Beliefs must always come before policies, practices, and goals. The latter must always be altered if they are seen to violate fundamental beliefs. The only sacred cow in an organization should be its basic philosophy of doing business.
The British economist Walter Bagehot once wrote: “Strong beliefs win strong men and then make them stronger.” To this I would add, “And as men become stronger, so do the organizations to which they belong.”