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American Tycoons

Tycoon. The word comes from Japan, where it means the equivalent of shogun. But long ago America confiscated the title. It was in the U.S. that tycoons became paragons of power and influence. American tycoons swung deals, not swords, and changed the
From the Print Edition:
J.P. Morgan, Mar/Apr 00

(continued from page 5)

Never a good student, it took Watson six years and three schools to graduate from high school. Growing up in the shadow of his father's success often left him feeling inadequate and lost. Watson went to Brown University where he excelled in drinking and carousing. He joined IBM as a salesman, but was less than enthusiastic. Watson Jr.'s playboy behavior was at odds with his father's puritanical rules. A devotion to flying also distracted young Watson. By his early 20s, he had logged more than 1,000 hours of flying time. A stint in the Second World War as a pilot changed Watson.

Suddenly in a position of authority, he found himself using his father's management techniques. He returned mature and focused. Watson Sr. had built IBM to be the leader in punch-card tabulators. He also built an intensely loyal workforce of dark-suited men. Under Watson Sr., IBM men sang IBM pride songs and worshipped their CEO--who challenged them to think. Things would be different under Watson Jr. He saw the future of the company in electronic computers and for 10 years, battled his father to make the move from punch cards to circuit boards.

Watson Jr. was a tougher boss than his father and executives worked under high stress. During Watson's two decades at the helm, IBM saw revenue grow from $900 million to $7.5 billion and the number of employees rise from 72,500 to 270,000. He introduced the idea of unbundling the technology package, breaking sales down to each aspect of a computer's hardware and software.

At 57, Watson retired. After having a heart attack Watson decided that "I wanted to live more than I wanted to run IBM." But Watson was always more than his corporate persona. While battling antitrust lawsuits, Watson regularly referred to a list he kept in his desk drawer of adventures he had yet to take, such as flying a helicopter and sailing the Arctic. In retirement he served as President Carter's diplomat to the Soviet Union for two years. When he died, at 79, Time called him the "oldest living jet pilot."--Stacey C. Rivera

SAM WALTON (1918-1992) DIMESTORE COWBOY

When Sam Walton finished a peripatetic hitch in the Army at the end of the Second World War, he had a college degree, some experience working at J.C. Penney's, and a hankering to go into retail for himself. He was considering a deparment store in St. Louis when his wife, Helen, spoke up: "Sam, we've been married two years and we've moved 16 times. Now, I'll go with you anyplace you want so long as you don't ask me to live in a big city."

Mrs. Walton's dictum would aptly define the Wal-Mart retailing empire to come: a chain of discount stores set up in small towns with little competition and low overhead. By following it, Mr. Sam would come from nowhere to be the richest man in America by 1985. But Walton's was a long day's journey into overnight success. It was two decades before he would fully roll out the Wal-Mart concept. The young Missourian made his bones as owner-manager of a number of Ben Franklin variety stores throughout Arkansas.

As he added stores he stuck to small towns and always undercut the competition, feeling he could make up in volume what he lost in margin. As he worked, the gregarious Walton learned--from his own experience and by watching others in the burgeoning world of discount. By 1962, he was ready to start a chain of his own design. When Ben Franklin wouldn't back him, he went out on his own. Hands-on attentiveness, imaginative promotions, relentless expansion, strong customer service and gung-ho employees were the secrets to the Wal-Mart formula. Walton became the cheerleader for the chain.

He once cajoled workers by promising to do the hula on Wall Street if they surpassed projections. Sam danced that jig. After taking Wal-Mart public in 1970, he focused on paying back "associates," or employees, instituting profit-sharing and stock-option programs that left many longtime workers millionaires. He entertained every employee's idea and was willing to try anything on a small basis until it failed. The chain led the industry in using computers for inventory and distribution. Soon Walton was able to circumvent manufacturer's reps and buy directly from the maker getting lower prices and faster delivery.

From this stemmed Walton's Buy American program. Yes, it was flag waving, but Mr. Sam also helped U.S. suppliers compete. Innovation draws detractors. They said he was destroying the character of downtown America, he was killing the small businessman, he was antilabor. But to defend himself Walton pointed to his low prices, the number of retailers who had thrived in his wake, and the employees he had made wealthy. "The whole thing is driven by customers, who are free to choose where to shop."--JB


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