Fact vs Fiction: The truth, or lack thereof, behind famous business anecdotes.

The Truth of Famous Business Anecdotes: Fact vs Fiction

I’ve heard so many interesting stories about famous figures in the business world. I would love to believe they’re all true, but of course, I can’t. As I’m sure happens to a lot of people, I’m inclined to believe them when I hear them. But after stepping back and examining them, I often find a lot of fiction as opposed to truth. So, I’ve decided to examine a few of them more critically and determine which are fact and which are not.

IBM’s $10M Mistake

IBM. Truth, fact and fiction.

There’s a pretty well known anecdote involving Thomas Watsons Jr., IBM’s second CEO. It very much defies conventional thinking and expectations. It’s easy to read into for some sort of lesson or profound nugget of wisdom. You know, the kind of thing “thought leaders” hawk on LinkedIn regularly. For these reasons, it also strains credulity. So, let’s examine the truth of this story.

Supposedly, an executive, a VP, or whatever, made some drastic mistake, costing the company $10M. When exactly this happened isn’t known, but given the fact that Thomas Watson Jr. ran the company generations ago, that’s a much more costly mistake in today’s dollars. In any event, the VP/executive/whatever, went into Watson’s office expecting to be fired. Instead, Watson allegedly said “You are certainly not leaving after we just gave you a $10 million education.” Or something to that effect. The wording changes a bit based on where you read the story.

The Truth of the Matter: Fact or Fiction?

There are quite a few things that make me call the truth of this story into question. The first is that the only consistent details that aren’t completely nebulous are Thomas Watson Jr. and his sentiment. No one seems to know who this employee was. Additionally, no one knows what the mistake was. Or, for that matter any details pertaining to it. What was the nature of the mistake? How did they know it cost $10M? Doesn’t $10M seem like a nice round number? Like the kind of number someone might just make up as opposed to say, $9.476M? And, as I pointed out, we don’t know when this happened. There isn’t even a more precise guess other than “sometime when Thomas Watson Jr. was the CEO of IBM.”

Let’s be honest with ourselves; when have CEOs been that magnanimous? Part of the appeal of this story, as I’ve pointed out, is that it defies expectations. In this case, the expectation is that the employee would have been fired. And, if we’re taking off the blinders and put aside our need for whatever fantastical stories satisfy within us, we can pretty easily conclude that if this ever happened, that employee would have been fired.

Today’s leadership philosophies certainly have more room for forgiveness nowadays than in Watson’s time. Employees are encouraged to experiment, because learning and improving is worth the cost of making mistakes, most of which are fixable. But, that’s today’s thinking, not old school management’s style. I don’t know a whole lot about Watson, but I get the feeling he, like most of his contemporaries, would not be so understanding.


But even today’s leadership has its limits. At some point, experimental mistake making or “breaking things” as you often hear it put, ends and incompetence begins. A good executive does realize that costly enough mistakes are more likely a sign the employee in question is inept at his/her job than anything else.

Not to mention, it sends a bad message. Would you want the entire company thinking it can break things irreparably? $10M mistakes add up to an unaffordable cost if everyone’s going around making them constantly. You would be right to worry the employee who made the mistake might do something similarly stupid, as past behavior is one of the best indicators of future behavior and competence. But if you shown leniency towards fuck-ups of epic proportion, you make encourage excessive risk taking.

Even if you disagree with the above, the point is really that Watson was unlikely to feel otherwise. For all of its airs of erudition and enlightenment, there’s one timeless truth about management in the workplace; they care about one thing above all else. The bottom line. When that’s in jeopardy, they get spooked. And anyone who’s spent any amount of time in corporate America knows they’re not afraid of letting people go.

So, in conclusion, I rate this story to be fiction.

Steve Jobs: Man, Myth, Fact, Fiction

Steve Jobs. A lot to sort out when determining fact vs fiction.

Steve Jobs is credited with a quote that is often repeated, praised, denigrated, and probably misunderstood. Jobs said “Some people say, ‘Give customers what they want.’ But that’s not my approach. Our job is to figure out what they’re going to want before they do. I think Henry Ford once said, ‘If I’d asked customers what they wanted, they would have told me, “A faster horse!”‘ People don’t know what they want until you show it to them. That’s why I never rely on market research. Our task is to read things that are not yet on the page.”

This quote has been dissected over and over again by numerous people. The consensus is that he certainly did say this, but it’s been wildly misinterpreted. I agree with this, and personally rate it to be true, for whatever that’s worth. Across the sources I’ve seen, the quote remains completely or mostly intact. If you look at the link provided, there’s additional context, such as the conversation it was a part of, and the time and location when and where it was uttered. The Macintosh engineer is unnamed, but I find that to be a trivial detail in light of the abundance of other details.

But What Did Jobs Really Mean?

This is where confusion sets in. It’s easy to take what Jobs meant at face value and come away with a belief that Jobs literally thought he could just show customers a really cool new gizmo and make them buy it. When you look at Apple’s success, it’s not unfathomable.

But Jobs, like any successful maven, did not really believe that. He knew you don’t just tell people what they want. Rather, you tell them how it’s accomplished. In the Henry Ford quote Jobs mentioned (which I’ll touch on later) you’ll see the hypothetical customer is saying what he/she wants, but that they have no vision of what form that is supposed to take. In other words, it’s up to the businessperson to tell them how. The customer clearly wants faster transportation, and not because Ford told them they do. Ford’s responsibility is to present them with a car and say “here’s how you’ll get from point A to point B much faster.”

Steve Jobs certainly realized the same thing. He learned from his customers they wanted greater connectivity amongst each other (and a whole lot else), and created not only a device to foster that, but also a powerful brand that when adopted, gave people a sense of belonging to a greater community, which is what Apple is as much as anything else. So, no, Steve Jobs did not simply intuit his way to making the ubiquitous devices and brand he’s known for. He learned from his customers, and was really good at doing so. The truth, as we should all know, is rarely a cut and dry affair.

Henry Ford: The Difficult Task of Separating Fact and Fiction

Henry Ford. The truth of his most memorable quote is highly questionable.

Henry Ford is often credited with the above quote about faster horses. It’s always been one of my favorite quotes. It so well encapsulates not just what’s so hard about entrepreneurialism, but also the importance of entrepreneurialism. As the car is to the horse rider, so too are entrepreneurs to the world. They provide new ways of thinking and doing things that enable progress. So, as you can probably fathom, I was disappointed to learn the truth of the matter is Ford most likely never uttered these words.

As the linked article points out, the quote cannot be found in anything Ford wrote. Like the IBM anecdote, any supporting details aren’t available. No one knows when this was said, to whom, and in what context. The only way to determine nonexistence is to find a total lack of evidence for something. After all, things that don’t exist always lack evidence of their existence. It’s inevitable.

It’s easy to believe Ford said this when business authorities like Steve Jobs are convinced he did. But Jobs was just that, a businessman, not a historian. One thing we can be certain Ford said is “Any customer can have a car painted any color that he wants so long as it is black“, which is attested to in his autobiography, My Life and Work. This echoes a sentiment more close in meaning to what people misinterpret the Jobs quote to mean. Ford seems to go beyond merely prescribing solutions, to outright telling the customer what they want. While a brilliant businessman, Ford encountered some struggles because of his rigidity, as documented in the first link in this section, but that’s a story for another time.

Up Next

There are a few more famous anecdotes I feel like researching and discussing the truth of. I’ll do that in a companion piece so this one doesn’t run too long.

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