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INTELLIGENT SYSTEMS

 

Volume VIII, Number 1     March, 2001

 

A quarterly newsletter for clients and friends of Chenault Systems.


The Legend of Legend Airlines
Imagine an airline that caters specifically to the business traveler.  It serves great food, has plenty of leg space, a private terminal away from the traffic and the madding crowd of a public airport terminal, with luggage handlers that really care; and it flies on time to cities on the east and west coasts.  Imagine its pilots and flight attendants having the professionalism to put the customer ahead of a union.  This was Dallas based Legend Airlines.

Over three years ago, the founders of Legend did some marketing surveys and found that many business people disliked fighting the traffic and associated 45 minutes drive to D/FW Airport.  In addition, they found business travelers usually have to take last minute flights at full fare and usually end up cramped in coach, which is bad for the customer but very profitable for the airline – particularly for American Airlines, which owns most of the traffic coming and going from D/FW Airport.

Armed with this knowledge, the founders of Legend came up with a business plan:  create an airline, flying from a private terminal, for the Dallas business travelers willing pay top fares to fly in luxury.  This concept meant competition for American Airlines, who adhered to few of the above amenities; and American wanted to keep it that way.  Funding was raised and the private terminal was planned to reside on Lemmon Avenue next to convenient Love Field.

It seems the business plan had one flaw, and it proved terminal:  This was a direct threat to American Airlines because it struck at the heart of its customer base.  A quote by Donald J. Carey, American’s chairman and chief executive, sheds light on just how big this threat was:

There is a number of our best customers that live closer to Love Field than to D/FW and these customers are what makes our business and our relationship at D/FW profitable.

Indeed, American claims that the top 2 percent of its customers account for 25 percent of total revenue for the carrier.  Last minute business trips, at premium prices, are the heart of any long haul airline.

American faced a new competitor.  And, competition is inevitably good for the consumer – pricing becomes more competitive and service improves.  Well … that is just too “old school”.  American took a different tack that is, unfortunately, too familiar in today’s business world:  It hid behind lawyers, compromised local judges, and a long expired statute, the Wright Amendment, which was designed to give a government monopoly to a then fledgling D/FW Airport.  American attempted to use government to take care of them, instead of fighting on the open field of free enterprise with better service.

One would like to believe the courtroom is the field of battle taken as a last recourse, and only when the law and principle are at issue.  While American was arguing in the courts, claiming Legend was in violation of the Wright Amendment, it was also attempting to force its way into Love Field – again using the courts as a tool.  Why?  American planned to compete head-to-head with Legend, running the same “illegal” service.  Obviously, principle was hardly the issue.

American’s legal assault – one might note by way of Tarrant County, not Dallas County where Love Field is located – against Legend was successful in the early going.  However, the battle eventually escalated beyond the local judges, many of whom were seemingly motivated more by special interest than law.  In that arena – federal judges, Congress, and the U.S. Department of Transportation – Legend wins at once.

It was a hollow victory for Legend.  Three years of lost time and its revenue, combined with legal expenses, had taken its toll.  Legend was drained, much of it’s original $62 million start-up capital gone.  Legend has filed Chapter 11 bankruptcy.

Seemingly, American may have lost the battle, but won the war.  And, now that there is no need to launch an arduous price war against Legend, one can only wonder how long it will take American to move out of Love Field and continue with business as usual from only D/FW Airport.

But, maybe the war is not over.  Legend won the public relations mêlée.  Everywhere you went, such as chamber of commerce functions, business network meetings, the barbershop, and the grocery store, people were pulling for Legend Airlines; and they were openly against American Airlines.  In addition, a legal battle was won, clearing the way for another Legend concept and long haul services from Love Field.  If it is any consolation, the founders of Legend have planted a seed they should be proud of.

An airline, flying from a private terminal, for the Dallas business travelers willing to pay top fares to fly in luxury … the dreams on which a Legend is formed.

The Systems Consulting Process

By Tom Chenault and Wes Gardner

In time, most business organizations wander from their original charter.  Few companies can stay with the exact idea they started with.  Mission statements and vision statements are sometimes rewritten to reflect the changes.  Some go so far as to rewrite the business plan, which we believe is a good exercise in maintaining the business vision.  With respect to wandering, Chenault Systems is part of the herd.

Chenault Systems was primarily a systems development firm five years ago.  Organizations would out-source software development to us simply because they did not have the expertise in-house or they did not have time to do it themselves.

After working with several organizations over the years, we began to realize that they needed up-front process analysis (consulting advice) before software development.  Otherwise, the result could be a fully supported and enhanced process that was thoroughly flawed from the outset.  In other words, we could “make the mess go faster.”

We have now evolved into an independent, objective, management consulting firm, specializing in information technology, with projects that entail the following procedure:

1.    Understand the business objectives the client has for changing or enhancing the system processes.  Determine up front if the client knows there will be a return on investment for system enhancement and is willing to spend the time and capital to get this return.

2.   No proposal or accurate estimates can be made unless there is a detailed study of the process design.  This involves all the plans and alternatives for meeting the business objectives and processes.  The end result is a document with specifications that could be used to get several bids from other consulting firms.  We have found that clients are willing to commit to the cost of a 1-3 week study to achieve a good design and a good estimate.  Without the up-front design, the estimates would only be a sales pitch and nothing more.  This is not wasted effort from a cost point of view because a design must to be done anyway – provided the client is truly serious about the project.  The process design involves members of the client organization and the consulting firm to make sure the business objectives are met.  Once the design is completed, both organizations have experience in working together.  In addition, if the time estimates turn out to be inaccurate, then both parties understand why.  Process design is something that is both planned and evolutionary.

3.   Once the process design is complete, the tools or applications to accomplish the process are evaluated.  Make-or-buy decisions take place.  This may result in the evaluation of software packages that can be purchased, the necessity to custom build a system, or a combination of both.  Sometimes existing systems are enhanced or re-written.

4.   The infrastructure must be reevaluated to match the above applications.  The infrastructure consists of the supporting computer hardware, operating systems, networks, storage capacity, backup, and external communications, such as Internet connections.

The above the four steps encompass what Chenault Systems projects have evolved to for major projects.  Major projects are defined as those projects that cause a high impact to the client organization in terms of cost savings (i.e. high impact projects).  Smaller projects can use subsets of the above four steps.

High impact projects demand “high impact consulting”.  High impact consulting is defining the project in terms of what the client is truly ready to do, instead of the traditional consulting approach where the project is defined in terms of the subject to be studied.  High impact consulting also means achieving rapid, return-on-investment successes without relatively large costs to the clients in terms of large studies, reports, or over-done systems development.  Automation and streamlining is done in select areas one at a time, keeping the overall goals in mind and providing relevant decision making information through technology.  This is consulting philosophy to which Chenault Systems subscribes.

Quotes Worth Noting

“Assemble the right team, set the big-picture direction, communicate that, and then get out of the way.  If employees have a problem or if something is bothering them, you help them with that.  That is what bosses are for.  A boss’s job - a leader's job - is to facilitate, not to control.  You have to trust people do to their jobs.  That is the strongest leadership there is.” -- Gordon Bethune  CEO, Continental Airlines

“What information consumes is rather obvious: It consumes the attention of its recipients.  Hence a wealth of information creates a poverty of attention.” -- Herbert Simon

“There may be said to be two classes of people in the world: those who constantly divide the people of the world into two classes, and those who do not.” -- Robert Charles Benchley

“Outside of a dog, a book is your best friend, and inside of a dog, it's too dark to read.” -- Groucho Marx

 

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 Contact Chenault Systems for your consulting needs!

 

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