Innovation is key to long-term success. But how can travel firms keep their ‘cool’ and maintain a competitive edge? Tricia Holly Davis reports
Innovate or die” is a popular catchphrase favoured by Ivy League university professors and corporate consultants who write books with titles like How to be a billionaire in five days. As self-help category as it might sound, the fundamental concept that a company that fails to innovate will ultimately fall by the wayside applies to every industry, from energy and pharmaceuticals to automotive and, naturally, technology.
In the world of travel technology, the pace of innovation needs to be lightning speed, as does the pace at which new products and services are brought to market. “The travel technology industry operates in dog years,” muses Yahoo! Travel Europe general manager Tim Frankcom. “One year in a travel tech company is equivalent to seven years in another business, so speed to market is one of the most important keys to success.”
A company that is full of good ideas but cannot deliver them to its customers is as doomed as the company that has lost its ability to innovate. It is little wonder then the creative brains behind companies such as Yahoo! and Google are obsessively focused on not only thinking up the next big thing, but also on how to get that idea to the market before their competitors do.
The ability of companies such as Yahoo! and Google to act quickly, free from bureaucratic processes, is what has historically differentiated technology companies from more traditional industries.
The gurus of the commune-like environment that was Silicon Valley during the dot-com bubble made anti-establishment their company mantra.
One need only to look at Google’s tagline, ‘Don’t be evil’, to understand that the ruthless, Gordon Gekko philosophy driving the corporate powerhouses of the 1980s stood in stark opposition to the ethos behind the corporate kings in the late 1990s.
Of course, this is not to say that the technology world just hopes its latest project will be a success is without ruthlessness. Companies such as Google pour millions into research before going to market with a new product, and you would be hard pressed to find examples of more ruthless feuding than Apple versus Microsoft and Yahoo! versus Google.
What is different, though, is that these companies are nimble by nature, and have a genuine distaste for the old corporate way of doing things. The big question is whether they can stay that way. Can the entrepreneurial spirit that has helped make companies such as Google, Yahoo! and Lastminute.com a success to begin with be sustained as these companies continue to expand, cut deals with the corporate establishment and more closely resemble traditional businesses?
The short answer: maybe. Google’s growth journey has been a bumpy one, made rockier still by expansion into countries such as China, which disenfranchised Google disciples called “evil”. Still, so far, Google has not lost its edge. The main reason, explains Daniel Robb, Google UK head of travel, is that staff are always reminded of the importance of sustaining entrepreneurial spirit. “We are always reminded to innovate as if we were a small company,” says Robb.
Yahoo! takes a similar approach. “When you’re a small company you can make decisions very quickly and have the freedom to act fast. This is not necessarily the case with larger firms, where there are more processes involved and the speed to market is not as quick,” says Frankcom, who ran Kelkoo’s travel division before it was snapped up by Yahoo! in 2003.
“In the old days at Kelkoo, we were a very small team but even though we have grown substantially as part of Yahoo!, I always say we need to keep the small team mentality.”
One way Yahoo! ensures it keeps its fresh, innovate approach that made it a success from the start is to hold ‘Hack Days’, where creative teams literally drop whatever they are doing for one day and come up with something new and cool. One of the most recent inventions was a widget with multiple search boxes that had a Flickr feature, where the number one photo was of former French footballer Zinedine Zidane’s famous head-butt.
This may not be the Internet’s next big breakthrough, but the point is it keeps staff thinking and motivated. “Employees of large companies can sometimes feel like they don’t own anything and so they are not as willing to be creative or share information,” says Frankcom. At a time when there is a shortage of real talent, empowering employees is critical, says Frankcom.
Jean-Pierre Remy, head of Expedia Corporate Travel in Europe, which purchased Remy’s former company, Agencia, in 2004, agrees that keeping hold of that entrepreneurial spirit is crucial to companies’ success. “Our first reaction when we were acquired was to fight bureaucracy,” says Remy. “Companies must hold on to that spirit and be willing to take risks.”
This might be easy enough for those companies that were founded on the new business model, but what about firms with more bureaucratic roots?
David Soskin, head of Cheapflights, points to companies such as MySpace, which after being taken over by News Corp, is still 2006’s website to name-drop, alongside YouTube. “It’s still early days, but MySpace is one example of a start-up that was purchased by a huge corporation and is doing well,” he says.
Ryanair is another example of a company that has successfully sustained its entrepreneurial spirit in spite of massive growth. Whether that would continue if Michael O’Leary was out of the picture is another story.
Texas-based Sabre is part of the old corporate establishment and stands in blinding contrast to Lastminute.com, its £577 million acquisition of 2005. Lastminute.com was founded and made successful by a duo with a strong entrepreneurial spirit. Now that Brent Hoberman and Martha Lane Fox have stepped aside, the company is in unchartered territory. The good news is that the firm’s new head, Ian McCaig, knows what he is up against. “Brent is part of that entrepreneurial breed that is innovative to their core, so when someone like that is removed from the day-to-day running it raises some questions about the future,” says McCaig.
Admittedly, McCaig says, “I’m not the same creative genius that Brent is, but my job now is to make sure new ideas keep coming and then to make sure they come to light.”
One way McCaig intends to do this is by creating a ‘lab environment’, or dedicated creative teams whose job is to think about the future. “The deal is they get to do what they want and do not have to operate within the traditional corporate structure, but they come up with ideas that will keep Lastminute.com ahead of the competition,” says McCaig.
“The next few years will see this industry polarise and a lot of companies in the middle will get squeezed. Lastminute.com had a great start but we must ensure we maintain that same ethos that made us a success from the start.”
Warning signs you’re losing your cool
- Slow to bring new products to market
- Your most creative people quit and go to work for the competition
- You start focusing too much on the process and not enough on the people
- Operate in a 9-to-5 culture
- Think in the short-term
Sites and companies the leading tech players admire
Tablethotels.com: good niche site to find unique and boutique hotels.
Turnhere.com: early days but ability to see videos of local venues before you get there is useful especially for cities such as New York.
Sony Ericsson: mobile phones were bland until Sony gave them a slick, silver panel, cameras and music.
Apple: the iPod. Need we say more?
Dell: direct-sell computer giant knows how to recognise and admit a mistake.