For this second “business story“, and following Boeing’s misadventures (Boeing: a culture and a slogan can kill a business), we’re going to leave the skies behind and head out to sea to talk not about a business, but about a ship that you all know: the Titanic.
There is much to say about this tragedy from a technical point of view, but also from a managerial perspective, with questionable leadership and a series of decisions that, from before the cruise even began until the ship’s demise, led to the outcome we all know. However, I would like to focus here on a less frequently mentioned aspect. It could be said that, in a way, it was an obsession with customer service and inappropriate incentives that led to the collision with the iceberg and the fact that help arrived far too late.
In short:
- The story highlights a fundamental organizational principle: individual behaviors reflect the implicit rules of the system, and what is valued guides priorities, sometimes to the detriment of essential objectives.
- The sinking of the Titanic illustrates a misalignment between the ship’s safety mission and the economic incentives given to radio operators, who prioritized paid messages from passengers over navigation alerts.
- Warnings about the presence of icebergs were ignored or poorly relayed because operators were focused on sending personal telegrams, which generated additional revenue through tips.
- The lack of clear protocols for prioritizing critical messages led to a disconnect between commercial activities on board and safety imperatives.
- The tragedy reveals a systemic managerial failure: the available technology was not accompanied by appropriate governance or consideration of the consequences of the incentives put in place.
On the evening of April 14, 1912, in the North Atlantic, the Titanic struck an iceberg and sank a few hours later, with more than 1,500 passengers and crew members losing their lives. This tragedy has become a universal symbol of technological hubris, but beyond the ice and the ship’s design, the sinking of the Titanic was also the sinking of a model of organization. A chain of decisions, poorly defined priorities, and inappropriate incentives set the stage for disaster. Among them, one element rarely mentioned in the many reviews of this tragedy encapsulates all the symptoms of managerial failure: the management of radio communications and the compensation of operators!
The promise of an exceptional experience
The Titanic, the pride of the White Star Line, was at that time the largest ocean liner ever built. Designed to combine luxury and cutting-edge technology, it was set to redefine the standards of transatlantic travel. On board, two radio operators from the Marconi company, Jack Phillips and Harold Bride, managed wireless communications, a device that was still new and reserved for prestigious ships. This innovation not only allowed maritime service messages to be relayed, but also offered passengers an exclusive service: the sending of personal messages to the mainland, a privilege highly prized by the wealthiest travelers.
This service was, of course, subject to a fee: 12 shillings and 6 pence for the first 10 words, then 9 pence per additional word. However, the operators were paid not only a fixed salary by Marconi, but also tips, sometimes very generous, given by passengers for the priority sending of their messages. These gratuities could reach $2 or $3 per message, a significant sum in 1912, and were shared at the end of the crossing. It was a form of unofficial extra income, but one that was in fact important to the staff (the Titanic radio station and Private and professional messages).
Human behavior being what it is, the radio team was therefore implicitly encouraged to give priority to private communications over maritime service messages or distress signals. On the eve of the tragedy, Jack Phillips was faced with a large backlog of messages to send, he was overwhelmed with work, and so, quite logically, he reversed his priorities, favoring commercial service to customers over service messages.
Ultimately, this was only logical, in accordance with age-old management principles (Tell me how you measure me, and I will tell you how I will behave), and it was this logical approach that contributed to the disaster.
Ignored warnings and reversed priorities
Let’s go back to April 14. The Titanic received several warnings from nearby ships reporting ice fields. One of them, issued by the Californian, a ship located a few dozen kilometers away, warned: “We are stopped, surrounded by ice”. Phillips, who was busy sending passenger messages to Cape Race (Newfoundland), replied curtly: “Keep out! Shut up! I am busy working Cape Race“. (Testimony of Cyril F. Evans). He was keen to send as many messages as possible while he was within range of the station, and one can imagine the sound of cash registers ringing in his head with each message sent, so it was ”logical” that he sent the other operator packing.
The Californian operator took it rather badly to have been treated this way when he was only trying to be helpful, and stopped all communication with the rude man. When the Titanic sank a few hours later, he was no longer listening to hear the SOS messages, and the ship that could have provided assistance most quickly remained deaf to the calls for help.
There was no technical problem here, just a critical service overwhelmed by a secondary activity that had been given priority due to incentives.
And this was not an isolated case. In concrete terms, several distress messages received that day were never transmitted to the bridge, while others were transmitted but too late. The radio team’s focus on commercial messages created a kind of operational disconnect from navigation issues. The promise of customer service took precedence over the mission of safety. If the Titanic was lacking anything, it was not technology but governance.
The collapse of an incentive system
The tragedy of the Titanic was therefore not solely due to human error, but above all to a discrepancy between the stated objectives (safety, reliability, navigation) and the actual incentives (speed, prestige, customer satisfaction). Remuneration linked to private messages introduced a commercial logic into a critical operational position. No internal rules or priority sorting protocols had been put in place to address this conflict between technical mission and commercial service.
All this is all the more “remarkable” given that the Titanic had advanced technology for its time and competent personnel. But the organization had not thought about what this technology required in terms of rules, role definitions, and aligning incentives with vital tasks. Image, prestige, and the desire to set new standards and break records implicitly made safety secondary, even among those for whom it was theoretically the primary responsibility.
What this story shows us is that in any organization, individual behaviors are a direct reflection of the incentive systems in place. What is not remunerated, valued, or recognized is unlikely to be prioritized, and what is encouraged, even implicitly, becomes the compass for everyone’s activity.
It should be noted that the lesson was learned and that regulations were immediately adapted to prevent this from happening again. This is worth emphasizing because in business, the same causes continue to produce the same effects without anyone realizing that this is a major problem.
Bottom Line
The Titanic also sank because of an organization where priorities were not aligned with its mission. You can build the most beautiful ship in the world and offer the most advanced technologies, but at the end of the day, it is always human choices that determine what happens.
The radio operators simply followed the implicit rules of the system: to satisfy paying passengers rather than relay warnings, and it was these small, almost insignificant deviations that ultimately had a major impact.
The sinking of the Titanic reminds us that major disasters are not the result of a single accident but more often than not of a poorly thought-out detail, a rule that was never written or poorly written, or a communication failure. Sometimes all it takes is a small flaw in the routine to sink an unsinkable ship.
I’ll leave you to draw the parallel with the business world by quoting Deming: “Every system is perfectly designed to achieve the results it achieves“. QED.
To answer your questions
The Titanic did not sink solely because of the iceberg. Internal organization, where radio operators prioritized paying passengers over alerts, amplified the risk. When a system’s priorities are not aligned with its mission, small mistakes can have serious consequences. In business, this reminds us of the importance of clear rules that are consistent with the overall objective.
Minor deviations may seem insignificant, but they accumulate until they weaken an entire system. On board the Titanic, these routine choices made it impossible to respond appropriately to the danger. In business, tolerating small deviations weakens performance and increases risks in the event of a crisis.
The shipwreck shows that disasters rarely result from a single accident, but rather from a series of organizational and communication failures. In business, this highlights the importance of precise procedures that are verified and understood by everyone in order to limit the impact of human error.
On the Titanic, vital warnings were not communicated properly because operators gave priority to passengers. Poor communication can turn an ordinary weakness into a catastrophe. In business, reliable and transparent channels are essential to prevent serious mistakes.
For Deming, a system always produces the results for which it is designed. The Titanic, designed with misaligned priorities, was doomed to fail in the event of a crisis. In business, if results are not up to par, it is the system that needs to be reviewed, not just the individuals.
Image credit: Image generated by artificial intelligence via ChatGPT (OpenAI)
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[Quote] “Tell me how you measure me, and I will tell you how I will behave”
