The world recently commemorated the 100th anniversary of the sinking of the Titanic, one of the worst and certainly the most familiar maritime disasters of all time. The conclusions of the investigation into the sinking provide a valuable lesson for professional services leaders.
The sinking of the RMS Titanic is one of the most infamous tragedies in modern history, not only because the ship was considered in its day to be “unsinkable”, but more importantly because most experts today believe that its sinking was completely avoidable. The Senate investigation into the Titanic1 concluded that one of the primary causes of the sinking and resultant loss of life was excessive speed. The ship was going too fast, considering the iceberg warnings that had been issued in the area.
But why was the ship going so fast? The 1997 blockbuster movie “Titanic” (currently re-released in 3D) includes a dialog between J. Bruce Ismay, the chair of the White Star Line to which the Titanic belonged and ship’s captain, Captain Edward John Smith2:
Ismay: So you’ve not yet lit the last four boilers?
Smith: No, I don’t see the need. We are making excellent time.
Ismay: The press knows the size of Titanic. Now I want them to marvel at her speed. We must give them something new to print! This maiden voyage of Titanic must make headlines!
Smith: Mr. Ismay, I would prefer not to push the engines until they’ve been properly run in.
Ismay: Of course, I’m just a passenger. I leave it to your good offices to decide what’s best. But what a glorious end to your final crossing if we were to get to New York on Tuesday night and surprise them all! Make the morning papers. Retire with a bang, eh E.J.?
Ismay: [Smith nods reluctantly] Good man.
There is no historic evidence that this conversation ever took place, but the question remains…why was Captain Smith pushing the Titanic so hard? Perhaps he had been pressured to hasten the ship’s arrival into the port of New York, as the dialog above suggests. Perhaps the iceberg warnings were ignored from overconfidence, because the ship was considered to be unsinkable. Or perhaps it was out of sheer negligence. Whatever the reason, I believe that he would never have been moving at such speed had he understood the purpose of the Titanic and used that purpose to guide his decisions.
According to RMS Titanic, Inc., curators of the relics retrieved from the Titanic, one of the stated purposes of the Titanic was “To carry first-class passengers in great luxury, second-class passengers in great comfort and third-class passengers with great economy.” The purpose was to provide an adventure in luxury for the passengers (in particular those in first class) far beyond anything they would have experienced on any other sailing vessel of their time. The purpose was to be found in the journey, not in reaching the destination. Any other trans-Atlantic steamer could have gotten them there — but none like the Titanic. If Captain Smith had understood this, he likely would have gone slower, not faster!3
Charting Your Course as a Professional Services Organization
In the article “Who Do You Think You Are?”, I stress that service organizations within product-based companies must define their purpose in light of the objectives of that larger product-based business. In “Defining the PS Charter”, professional services veteran Thomas Lah advocates the creation of a charter graph4 to help document this purpose.
To properly create a charter graph, agreement must be reached among key stakeholders on the importance of the following services objectives in helping to achieve corporate goals (somewhat paraphrased from Lah’s article):
- Services revenue
- Margin from services
- Customer satisfaction
- Driving company market share
I have found that the best way to gain consensus is to host a focus session. The session should include the CEO (or GM/division VP, depending on the scope of the services organization) and leaders from various departments within the company such as sales, marketing, and product management. The outcome of the session should be a forced ranking of these objectives according their importance in driving corporate performance.
Once this ranking has been done, a charter graph can be created. The charter graph to the right is the work product from an actual session that I championed a few years back. While our focus group insisted on a slightly different rating system than Lah advocates (hence a scale from 0-5 instead of 1-4), the net effect is essentially the same. The graph shows that the most important objective of our services organization was overall customer satisfaction, followed by driving market share. Services revenue came in a distant third and margin from services ranked lowest.
This ranking is quite typical of a solution provider, that is, a services organization whose services are primarily offered in support of the underlying product (in our case enterprise software). I would say this is typical of most services organizations within a product business. Some notable exceptions are companies like IBM, whose services organizations (e.g., IBM Life Sciences, for instance) offer services to any prospective customer regardless of whether or not they are using IBM products. IBM Life Sciences would in this context function more as a pure services business.5
So while it may be interesting to understand who we are as a services organization within a product-based company, what do we do with this new revelation? The purpose of the charter graph is to help us to make better decisions. Based on the charter graph above, we may decide to sacrifice some revenue (i.e., give away services) if we believe this would result in a referenceable customer for the product. During annual planning, we may choose to set lower margin targets for services to give room for strategic use of services to help grow market share. In a pure services business, these decisions would be made differently.
So the charter has been defined and documented through the charter graph, and decisions may now be made based on this charter. The next step is to use it. David Maister points out in his book “Strategy and the Fat Smoker” what he calls the “Knowing-Doing Gap”. There is a gap between what we know we need to do and what we actually do. We may even know why we should do it and how to do it, yet we still struggle to do what we know we should do. The “Knowing-Doing Gap” is a real danger for the charter graph as well. We cannot create a charter graph, feel good that we’ve created it, and then file it away. What is critical at this point is that we integrate the charter graph into everyday decision-making.
To aid in this, we developed a charter statement — an elevator pitch, if you will — that was consistent with what our charter graph told us. Ours went as follows:
“The charter for the services organization is to ensure that our existing customers are satisfied with our products (software, support, services) and to introduce new and existing customers to the capabilities of our product portfolio by offering solutions that meet their needs. The services function will be profitable, but not at the expense of customer satisfaction.”
We then created laminated wallet-sized cards that had the charter graph on one side and the charter statement on the other. These were distributed not only to professional services staff and leadership, but also to the key stakeholders who were involved in the creation of the charter graph, and to other people within the company who were involved in making decisions regarding services. These cards then served as a reference when critical decisions were being made. It was used to validate decisions made that were consistent with the charter, and to defend against decisions made that were not aligned with the charter.
A Charter Graph Card for Captain Smith
Let’s return to our case study from 1912. I can imagine a similar focus group being assembled at White Star Line to discuss and agree to the charter of the Titanic. Maybe instead of revenue, margin, customer satisfaction and market share, the objectives to be ranked would have included passenger experience and time to destination (speed), among others. I’m nearly certain that the charter graph would have listed heavily towards passenger experience. Perhaps had Captain Smith pulled that charter graph card out of his pocket and reflected on it a moment, he would not have made the decision to move full steam ahead. Rather, he would have cut back the engines to let his passengers savor the cold salty air of that serene, starlit night.
If you are part of an embedded services organization within a product-based company, does your organization have a charter? If so, are you more a solution provider or pure services business? What are your priorities and how do they guide your daily decision making? Leave a reply and join in the discussion!
- “Titanic Disaster Hearings: The Official Transcripts of the 1912 Senate Investigation” ↩
- Internet Movie Database (IMDb) ↩
- Some of its other stated purposes may have benefited from speed; still, traversing the Atlantic quickly was not a primary goal. In fact, the ship was an Olympic class vessel that was built for size over speed. ↩
- Also discussed in his 2005 book, “Mastering Professional Services” ↩
- Of course, IBM Life Sciences offers solutions to their customers. The point is that their purpose is not solely to offer solutions around IBM’s own products. ↩