Coles joined the company straight out of Florida State in 1966 with a dream of one day becoming IBM's controller, and like everyone else who aspired to the top management at IBM, went into sales. After the yearlong training program in Tallahassee (yes, he even sang songs from the IBM songbook), Coles won "rookie of the year" honors in his first year as a salesman, qualified for the Hundred Percent Club (which recognized salespeople who sold at least 100% of their annual quota) five times, and earned one coveted Golden Circle recognition, which sent him and his wife on a paid trip to Bermuda.
IBM's values took root for Coles, who left in 1980 out of disillusionment over the company's flagging performance. He went on to form and sell two companies before launching Timecorp, in 1988. Timecorp sells software systems that enable large retailers like Wal-Mart and Chi-Chi's to standardize rules and regulations or scheduling practices. Coles made sure building a sales-driven culture was his company's first priority. "You are not going to build a company without crack salespeople," he says.
Timecorp's training resembles IBM's down to everything but songs from the company songbook. Rather than hiring one employee at a time, Coles signs on at least three or four sales staffers at once, so he can train them in Timecorp University's four-week symposium. At that intense cultural and product indoctrination, Timecorp veterans teach newcomers about the company's products and how to sell them. After that the rookies do an obligatory apprenticeship with the pros. Once they complete training and become salespeople, they fight for corporate prizes.
Timecorp has also cloned IBM's practice of giving trips and recognition to excellent performers. Last year 16 of the company's 45 employees were rewarded for their efforts: each of the 16 winners was invited to bring a guest along on a cruise to the French West Indies aboard a windjammer. Drawing from the time when "you could not go into an IBM branch office without seeing a new-account bell or horn," Coles has mounted a huge brass bell in the Timecorp lobby for employees to ring to celebrate when they land a new account or debug a key product.
Coles also writes annual "quota letters" to his salespeople, detailing such goals as how much business he expects them to do in the coming year. He took that tradition directly -- and unconsciously -- from IBM. "I do that without even thinking about it," he says.
Well-motivated teams with a cultlike commitment to the company aren't limited to businesses like Timecorp. In fact, many companies founded by former IBMers extend the rewards and company-culture building beyond sales. At Bottomline Technologies, whose 150 employees include 30 IBM alums, all are treated to rewards, recognition, and corporate-culture building as extensive as the computer giant's. Bottomline started this year with a company "Kickoff Meeting," in which about 100 employees gathered at a local movie theater for a daylong event. At the meeting promotions were publicly recognized, divisions summed up their goals, and a dozen top performers were honored with $400 leadership awards. In March the high-performing salespeople attended a "winterfest" in Las Vegas. "It's important," says president Dan McGurl, "to have a regular system for rewarding excellence."
Motivational perks aren't the only cultural common bond among "Baby Blue" companies. The most re-created aspect of IBM is another outgrowth of Tom Watson Sr.'s primary dictum: generous human-resources practices. Those include, for instance, "open door" policies (a direct homage to Watson's practice of making it known that any employee with an unresolved problem with his or her supervisor could bring it directly to the company chief) and the development, even at small companies, of clear review processes and career paths.
When Mike James, an eight-year IBM veteran, took over his father's law-publishing start-up, Barclay's Law Publishers, in 1989, his first step was to establish performance objectives, coupled with regular performance reviews, for almost every employee in the organization. "I think the most important component of the IBM training was management of personnel," he explains, adding, "the biggest issue in a small business is the fair treatment of employees and the hiring of the right people." Since then the company's revenues have nearly doubled, to $11 million, and it now employs 100.
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In his new book, The Discipline of Market Leaders, Michael Treacy posits that leading companies excel by choosing to offer their customers the lowest-priced product, the superior product, or the product that best solves their problem. Until recent years IBM's success had always been undeniably based on products in the last category. "At IBM it wasn't necessary to have the best product line, but you had to solve the customer's needs," says 14-year IBM veteran Art Durham, current CEO of Opto Generic Devices, a manufacturer of motion-sensing products in Van Hornsville, N.Y.
The religion of providing solutions first and foremost is founded in another of Watson's basic beliefs: that you must listen to the customer. That notion is the gospel of scores of entrepreneurs who used to be with IBM. "One of the things we take from IBM is that we are a solution-oriented company, which is what IBM was in the old days, when it sold punch cards for companies to tabulate records or do payrolls," says McGurl of Bottomline. "It was a solution-oriented sell rather than a product, a box."
McGurl's Exeter, N.H., company sells automated check-printing systems to companies that write more than 50 checks a week. It has grown into a $15-million company since its founding, in 1989. Building a company from scratch has enabled McGurl to instill in it the notion of total customer service, which he saw drift away at his alma mater. He says that in his last years at IBM he "essentially became an order taker for each product and lost focus on how to add value for the customer."
That way of doing business contradicted the approach to selling he'd learned 32 years ago at Big Blue. "My training as a young IBM salesman was very much application oriented: we learned about inventory control; we learned about accounts receivable and the aging of accounts receivable and how even the early punch-card equipment prior to the introduction of early computers was all sold just on an application justification," says McGurl, who left IBM in 1984, when he was offered a generous severance package.
