While markets continue to explode globally, so do the dangers. Companies looking for international partners should pick their friends carefully.
IBM’s experience in this regard should put a chill in many a global negotiation. Local companies including Talisman (in Sudan) and Nexen (in Yemen), among many others, should consider how IBM is now paying for its relationship with Hitler’s government in Germany.
A year ago, IBM was facing lawsuits from Holocaust victims, and pressure to return profits it gained from its Nazi affiliation.
Apart from these actions, the cost to IBM’s reputation alone is considerable.
When a business’s potential partner is a government, that government’s attitude towards democracy and press freedoms should override any short-term consideration for shareholders. Such considerations would have saved IBM much headache and heartache. Refusing to do business with Hitler might even have saved lives lost to the “final solution.”
In the 1930s, IBM was a fast-growing, global, business-machine company. It was ahead of its time, embodying so-called globalization before it was even a word. IBM was the first company to automate information sorting to any great extent.
It was a good fit for Hitler, who wanted to develop ways to sort and tabulate the huge amounts of data that he had collected in the 1933 census, which specifically queried Germans on their blood lines, including their degree of “Jewishness.”
Hitler’s goals might have taken years, or even decades, to realize if not for IBM, which furnished the Führer with lists and totals and addresses that would have been prohibitively time-consuming, prone to error, and expensive to tabulate otherwise.
IBM’s system was later incorporated into the efficient running of concentration camps and extermination facilities.
IBM’s technology used automated sorting machines, which instantly read coded holes in special punch cards, stacking them accordingly. In brief, what IBM developed was the world’s first significant database program.
Business leaders today understand as never before the power that database management can provide. Receivables can be instantly sorted by due date, or amount due, or any other category – in descending or ascending order. That’s just one simple example. In fact, the list of real-world applications is immense, limited only by human imagination.
My point is that many of us understand the implications of IBM’s assistance to Hitler better than we would have even a few years ago, when talk of “databases” made most people’s eyes glaze over.
IBM, or more properly, its German subsidiary Dehomag, did not simply sell the Nazis a generic tool; it helped them develop a machine – a machine that was later to be used for killing with unprecedented efficiency. IBM serviced Germany’s machines, especially providing the Nazi’s with the necessary cards, and trained the day-to-day operators.
There is some controversy about when the relationship between IBM U.S.A. and Dehomag actually ceased, but it lasted at least until 1940, when the U.S. government banned American companies from doing business in Germany.
IBM has many excuses, ignorance being one of them. How was IBM to know the nefarious extent to which Hitler’s program would go? You can’t blame the sword maker when it’s used by a pirate, some might say.
But the fact is, IBM knew (in a situation analogous to many companies today) that its partner was a dictator – notwithstanding that he was democratically elected, he adhered to no democratic principles. Hitler’s treatise, Mein Kampf, his blueprint of terror, was published many years before he came to power in 1933 and sold millions of copies.
Hitler also abused freedoms of the press, by leading a “boycott” of all Jewish-owned publications, releasing purposefully false press reports, and creating an atmosphere of intimidation. These measures seriously undermined press freedoms in Germany. And Hitler’s M.O. was plain to the world long before the Holocaust’s full extent was understood.
This experience shows that you cannot always know the specific nefarious intents of your partner, but you can certainly gauge a partner’s character. And, I believe, a government’s character is best demonstrated by its attitudes towards the press and democracy. Does it manipulate the press? Does it suppress debate? Or, alternatively, is openness and input encouraged?
This principle applies in countries including Sudan and Yemen – each to a different degree. Doing business with these dictatorial regimes is asking for trouble, in my view.
While I recognize the difficulties civil wars create for freedom at the best of times, each of these countries would have to demonstrate (not just speak) a fresh attitude towards open debate before I would let a partnership happen – the consequences could be dire in this nuclear age.
Lastly, I have to address another common excuse of companies that partner with harsh, dictatorial regimes: We are making the world a safer place. Better us than someone else. While this is fine in theory, the historical record is bleak.
U.S. President Franklin D. Roosevelt wrote a letter to Thomas Watson Sr., IBM’s CEO, in 1938, praising Watson for doing his part in helping to build Germany’s economy, so that the prospects of war might decrease.
Well, it didn’t work then. And I don’t think it works today. The old adage about the tiger and his spots still holds true.
And if you were a victim in a concentration camp, would it make any difference if it was IBM’s logo on that tabulating machine or the name of another company?
