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IBM at the time was in a calculator business that was built on punch cards, machine-readable card stock about the size of a dollar bill. Engineers were sheet-metal and gear-train people in a small town in New York state. IBM's founder and then-current chairman was Tom Watson, Sr. His son, Tom Watson, Jr., knew that IBM had to get into electronic machines but no one would listen. Sales and Engineering distrusted magnetic tape, the "new technology," and would have nothing to do with it. "Dad distrusted magnetic tape," Watson, Jr., said. "On a punch card you have a piece of information that is permanent. You can see it and hold it in your hand." Yet the CEO of Metropolitan Life told Watson, Jr., "You're going to lose our business because we already have three floors of rooms in this building filled with punched cards and it's getting worse." The CEO of Time said, "We're going to have to start moving some other way." Despite these smoking-gun customer problems, Watson, Jr., still said of his father, "He'd have thrown me out of his office if I said punch cards were dying." Watson, Jr.'s problem was finding a way to lift the entire company out of a wrong-way groove. He persisted. He noticed that IBM was under investing in R&D, 2.25% of sales compared to GE's and RCA's 3%. He used that to mobilize the hiring of electronics engineers. In the midst of the Korean War the US defense department invited two IBM engineers to travel through Korea to look at war problems. When they returned they wanted to build a general-purpose scientific computer to work in all of the defense applications they studied. They thought they could find customers "for as many as 30." Their idea was radical for two reasons. One, there were then only a dozen computers in existence. Two, they wanted IBM rather than the US Government to fund development so that IBM would own the rights. The design and prototype would cost $3 million and the whole program $12 million. It would be the most expensive program in IBM's history. It was ten times more than IBM spent to develop Watson Sr.'s popular calculator. It was as much as IBM's entire R&D budget two years before. After a meeting with a roomful of enthusiastic engineers Watson, Jr., said to the two product champions, "Let's go ahead. But I'd like you to do me a favor. Take these plans, clean them up, and you and Hurd go out and see if you can get some orders for this machine. To ward off skeptics in Sales we'll give it a patriotic name: the Defense Calculator." The team estimated costs, set price, and went on the road visiting all defense contractors. "Customers jumped at the idea; in less than two months we found eleven takers and ten more prospective ones. I presented the idea to Dad. He approved it without a single question," Watson, Jr. said. At an early public event an engineer proclaimed that IBM's "future belonged to electronic computing." Watson, Jr. had orchestrated a pivot that lifted IBM out of a comfortable but dead-end groove and pivoted it in a new direction that would last nearly 50 years. The moral of this story is line up the right customers for your idea and the required change and funding will come. Derived from: Father , Son & Co.: My Life at IBM and Beyond, Thomas Watson, Jr.