Eight Chief Executive Officers would eventually serve IBM spanning twenty economic downturns. Only one of these Chief Executive Officers, though, faced more downturns than all the others combined. Only one Chief Executive Officer hired in one recession’s midst immediately faced four more back-to-back. Only one Chief Executive Officer manhandled the Great Depression. And only one Chief Executive Officer defeated four further recessions; in total, he dealt with ten economic downturns including sixty-seven percent of those lasting more than twelve months.
Thos. J. Watson Sr. was that Chief Executive Officer.
This is the case for Thomas J. Watson Sr., the founder of IBM, first from a stockholder, then an employee and finally a customer perspective.
During this time the number of IBM stockholders would almost double, growing from 3500 in 1930 to over 6,000 at the end of 1933. These new stockholders had strong hearts but were a heartbeat away from homelessness. These stockholders believed in long-term prosperity for their children, but could only see as far as tomorrow’s hunger, with the loss of their single-income family paycheck. These stockholders were the members of society that could least afford to gamble. These stockholders were women. IBM had become a widow-and-orphan stock. Dividends meant survival to these owners. In the 20th century’s greatest economic maelstrom, The IBM had become the storm’s calm eye.
Obligations to Stockholders - IBM has obligations to its stockholders whose capital has created our jobs. These require us to:
• Take care of the property our stockholders have entrusted to us.
• Provide an attractive return on invested capital.
• Exploit opportunities for continuing profitable growth.
What if you had purchased 100 shares of C-T-R when Watson took over in 1914? They would have cost you $2,750. If you had exercised the rights attached to those shares through 1925, you would have in that year owned 153 shares at a total cash cost to you of $6,364. When Watson stepped down in 1956, you would have held 3,990 shares of IBM with a market value of $2,164,000, and you would have enjoyed $209,000 in dividends. Your investment (calculated from 1925) would have increased at a compound annual rate of growth of 21 percent for a period of more than three decades.  (Our emphasis added)
• Invested the same $6,364 in the general stock market at the end of 1925
• Spread your risk and your investment across a representative section of the stock market.
• Reinvested your dividends.
If you want me to come in here and operate this business for the benefit of the business, I’ll do it, but I will not have anything to do with the operation of it from a stock standpoint. 
From Tom Watson Sr.’s perspective there were two ways to manage a corporation; for the benefit of the business or for the benefit of the stock. These goals were fundamentally at odds with each other. If you did what was right for the business, the stockholders, customers and employees would realize the benefit; but as was proven by the pre-Depression’s wildly gyrating stock prices, managing the stock does not necessarily yield the best long-term decisions for business, society or the general economy.
Tom Watson Sr. personalized his stockholders. He personalized the IBM stockholders for his employees. Before his sales team, at the Opening Address of the 1930 One Hundred Percent Club, he impressed on his team the great responsibility that he and they were carrying.
"We have today more than 4,000 stockholders in our company. A matter came to my attention just a few months ago which made me realize more keenly than ever before the great responsibility which rests upon the Hundred Percenters, the officers and directors of The IBM; and that, gentlemen, is the fact that more women than men are stockholders in our business. This would indicate that our stock is looked upon as a safe and profitable investment. I think there are very few companies that can show more women than men on their stockholders’ lists. I mention that as I consider the circumstances an added responsibility. Most of our stockholders are small stockholders, as you can judge by the fact that we have more than 4,000. So that is our great responsibility." (Our emphasis added)
Still speaking to his salesmen, Mr. Watson insisted that The IBM was “willing and anxious” to divide the corporate profits equitably. He communicated a balance. As a true salesman, at every opportunity he set their expectations. He spoke honestly. He spoke simply. He gained their trust.
"What we need and always will need, in this business, is greater intimacy and simple honesty between us. That is what I am trying to get over to you this morning—the plain, honest fact that you are in this business for the purpose of making some money for the stockholders of the company and you know, and you will all agree, that the company is willing and anxious to divide that profit with you men on a fair, honest and reasonable basis." (Our emphasis added)
As we will see in our next article, the employee’s trust and confidence were also well rewarded.
Peter E. Greulich
Author, Speaker and Publisher
MBI Concepts Corporation
Coming Next: IBM’s Greatest CEO - The case for Thomas J. Watson Sr., The Employee’s Perspective
 The Watson Dynasty, The Fiery Reign and Troubled Legacy of IBM's Founding Father and Son, Richard S. Tedlow, 2003
 A Half Century of Returns on Stocks and Bonds, Lawrence Fisher and James H. Lorie, 1977
 The Lengthening Shadow, Belden and Belden, 1962