IBM Turns 100: The Company That Reinvented Itself

Koji Nakamura, who works in the Environment Ministry, says he thinks he could have been fired for wearing such a shirt last year. This year, he has become the ministry's poster boy for the Super Cool Biz energy-saving campaign because of his flamboyant style.

June 16, 2011 - STEVE INSKEEP, host: One hundred years ago today a Wall Street financier named Charles Flint merged three small firms to form what he called the Computing Tabulating Recording Company. In 1924 that company was renamed IBM.

Over the years it's been the source of some of the most important advances in information technology.

NPR's Jim Zarroli has this look at the company's history.

JIM ZARROLI: A lot of companies try to instill loyalty in their employees. But it's safe to say few took it as far as IBM.

(Soundbite of song, "Ever Onward")

Unidentified Chorus: (Singing) For the Ever Onward IBM!

Unidentified Woman: Second Stanza!

Unidentified Chorus: (Singing) Ever onward, ever onward...

ZARROLI: For years IBM employees had to learn company songs, like this one, recorded in the 1930s. Journalist Kevin Maney, who was commissioned by IBM to co-author a history of the company, says it was part of the effort to build a corporate culture. That was something IBM founder Thomas Watson Sr. took very seriously.

Mr. KEVIN MANEY (Journalist): He also kind of realized that if a company is really based on its own set of values, based on what it is rather than what it makes, it allows the company to change with the times.

ZARROLI: Under Watson's leadership, IBM employees went through lengthy training. They prided themselves on being obsessively focused on their customers' needs. To blend in with their clients they wore plain white shirts and blue suits. IBM was something more than a company. It was a mission. Here was Watson at the New York World's Fair.

Mr. THOMAS WATSON, SR. (Founder, IBM): You know, we do not consider or think of the IBM as a business, as a corporation, but the IBM as a great world institution that has a work to do.

ZARROLI: IBM's first big break came with the formation of the Social Security system in 1936. Suddenly companies had to keep track of large amounts of payroll data, and only IBM's electromechanical punch card systems were really up to the task.

IBM poured a lot of the money it made into research and development, and for years its labs churned out a dazzling array of new products.

IBM Vice President of Innovation, Bernie Meyerson.

Mr. BERNIE MEYERSON (IBM Vice President of Innovation): We've done this over and over and over again. The magnetic strip on your credit card, guess where that came from? It was us. The bar code on everything you buy, that was one of our ideas.

ZARROLI: But it was computer technology that really turned IBM into a corporate powerhouse. Under Thomas Watson Jr., who succeeded his father, IBM developed the first computer disk drive, the DRAM chip and computer languages like Fortran.

In the 1960s came the mainframe computer called the System/360, which was a staple of the corporate world for decades. When MIT management professor William Aulet went to work at IBM in the early 80s, there was no better place to work.

Mr. WILLIAM AULET (MIT Management Professor): You had to come out of a top-flight university. You had to know someone at IBM, and then you went through an extremely rigorous interviewing process. Then, when you were hired it was like an incredible day. You were welcomed into the Mafia.

ZARROLI: But the seeds of trouble had been planted. Because it made so much money from mainframes, IBM failed to anticipate the personal computer revolution. And Kevin Maney says challengers like Microsoft and Apple were nipping at its heels.

Mr. MANEY: The IBM-ers were still showing up in their suits and white shirts, thinking that was part of being an IBM-er. Where the hot guns from the Silicon Valley companies were showing up in their, you know, Birkenstocks and jeans and T-shirts.

ZARROLI: By the early 1990s, IBM was losing billions a year, and for the first time it had to lay off many thousands of people.

Today IBM has redefined itself as a kind of giant consulting firm. Companies and governments come to IBM with problems, and it uses technology to solve them. IBM still pours billions of dollars into research, and this year it made headlines when its computer named Watson beat two human contestants on Jeopardy.

Mr. ALEX TREBEK (Host, Jeopardy): While Maltese borrows many words from Italian, it developed from a dialect of this Semitic language. Watson.

WATSON: What is Arabic.

Mr. TREBEK: You are right.

WATSON: 1,000, same category.

ZARROLI: Today IBM is the 18th-largest U.S. corporation, employing more than 400,000 people worldwide. But it has to share the mantle of leadership with younger companies ranging from Microsoft to Google.

Jim Zarroli, NPR News, New York.
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