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November 17, 2011

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IBM’s Forgotten Granddad

By Joe Maglitta

Ever hear of C-T-R? Don’t feel bad. The company, IBM’s direct ancestor, has been forgotten except for business historians. Yet without this early tech powerhouse – maker of commercial scales, industrial time recorders, meat and cheese slicers, and punch cards – Big Blue would not be celebrating its 100th anniversary. In fact, the centennial of IBM is actually that of the Computing-Tabulating-Recording Company (1911-1924).

Like many top companies today, C-T-R was built on several innovative new technologies. These included the computing scale (1885), the dial recorder (1888) and an Electric Tabulating Machine (1889) developed by punch card pioneer Herman Hollerith. On June 16, 1911, these technologies and their maker companies were merged by financier Charles Ranlett Flint into C-T-R Co.

The new powerhouse boasted offices and plants in New York, Ohio, Detroit, Dayton, Toronto and Washington D.C, and a workforce of 1,300. In 1914, Flint hired a hotshot named Thomas J. Watson, Sr., recently dismissed from National Cash Register Company, to revitalize a lagging sales force. Watson arrived with his trademark “THINK” slogan, which soon became C-T-R’s. In less than a year, Watson became company boss.

Over the next four years, C-T-R expanded to Europe, South America, Asia and Australia. A focus on building custom, large-scale tabulating machines for business helped double revenues to $9 million – a giant sum.

In 1917, CTR entered the Canadian market as International Business Machines Co., Limited. On February 14, 1924, the rest of C-T-R was renamed International Business Machines Corporation (IBM), reflecting the company’s worldwide focus. C-R-T was R.I.P. Flint retired in 1930.

Watson, of course, went on to lead IBM’s epic growth into a global business colossus. Hollerith’s punched card data processing equipment, developed in 1886, set the industry standard for data input and tabulation for an astounding 80-plus years.

The story of C-T-R and, ultimately, IBM is one of the necessity of continual change. Over the last century, Big Blue as periodically transformed itself from business machines (calculators, scales, typewriters) to mainframe computers to client-server computing to software and, now, to professional services and cloud computing.

While success is nice, it’s also fleeting. Consider this: Of all the companies on the Fortune 500 in 1950, only nine remain – IBM being among them. The 491 that have fallen off have merged, been acquired or evaporated through stagnation. It’s not enough to have a good product or idea. Sustained success requires continual innovation, as IBM has so aptly demonstrated over the decades.

This year’s centenary festivities, then, owe a tip of the hat to old granddad, C-T-R. Without it, IBM would never have its real 100th, in 2024. But it’s important to note that C-T-R wouldn’t be a footnote if Watson and his successors had innovated and taken IBM to increasingly higher levels.

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