Is there any real innovation in the travel sector these days?
Increasingly it feels like there is a lack of innovation and differentiation, with seemingly every site doing flash sales, social travel and travel inspiration etc.
Sometimes it seems like watching a kids’ soccer game. As soon as one company introduces a new feature or service, everyone else rushes toward the ball to give it a kick and copy it.
I’m not saying that keeping up with trends and competitors shouldn’t be done, but it generally doesn’t create any differentiation that drives preference with your customers.
What I mean is that innovative initiatives are few and farther between.
The stuff I’ve seen from Hopper looks great; TomTom’s integration of TripAdvisor content is very smart; everyone raves about Everbread’s technology; Hipmunk has used UI visualizations to great effect; and while less sexy, Concur’s mobile app has made expense reporting dramatically better (IMHO).
But let’s face it: Getting to innovation, let alone achieving it, is hard. We should acknowledge that. There is a tension in every product development organization: how do I effectively split my resources between:
- Fixing yesterday’s problems (fixing bugs);
- Adapting to environmental factors (e.g. updates to code for regulatory changes);
- Finishing what you started (features that didn’t get into the current release); and
- Introducing honest-to-goodness innovations
The cost of "keeping the lights on" (the first three bullets), according to a number of different research sources, can take in excess of 80-90% of R&D budgets. That’s a terribly inefficient use of resources (especially in this economic environment).
An idea doesn’t have to be technically innovative to be innovative, but increasingly technology is the engine behind a company’s ability to drive revenue and optimize operations. Many innovations may be new to the travel sector, but not inherently new. Many companies are simply applying technologies and concepts from the outside to travel (e.g. mobile, cloud, e-commerce/merchandising strategies).
While not an exhaustive list, these are three factors holding back innovation today:
Organizational Baggage
This is clearly not endemic to the travel industry, just epidemic to all industries. There are many types of organizations challenges that larger companies face which inhibit innovation:
- Lack of structured processes to evaluate and incubate ideas. Many companies don’t have a good innovation management process. This is the probably the single biggest reason for failure to deliver impactful innovations and the most underrated aspects from an organizational perspective. If you don’t have a working funnel to evaluate new ideas and winnow them down to the few that get prototyped and implemented, you are left with a situation where you are hoping that the best ideas (or any ideas of merit) actually make it to your customers. Worse yet, you lose the ability to track the value of ideas generated and implemented, calculate an iROI (Innovation Return on Investment), or build institutional knowledge of what works and what doesn’t to inform future investment decisions.
- Unwillingness to make a sustained commitment to the innovation process. Don Dodge wrote a great post this week about the importance of not giving up on an idea. You can learn a lot from your failures, and the final result is a much better product and perhaps a runaway success. But even when you have a good idea, do you often have people lying around to test those concepts and build prototypes? Some organizations have decided to fund an Innovation Lab. This video about Nordstrom’s Innovation Lab really illustrates the benefits of having such a team in place.
Imitation is the Sincerest form of Laziness
This is what one might call the “Keeping up with the Jones’” approach to innovation. Some might term this the fast follower approach and it certainly has merit. You don’t have to be first to be best. But it goes wrong when it becomes a crutch. Teams no longer focus on creative solutions to customer problems, but become comfortable implementing others’ solutions. It is activity without creativity and that does not bode well for a company’s long-term future.
Surely we have higher goals for ourselves than not losing ground.
A secondary problem ensues when we rally around adopting a trend, but the implementation is more akin to “window dressing” versus the holistic implementation that really allows you to change the customer experience or respond with a materially better solution to your customer’s problem.
That’s why some companies fail at being “social” by thinking that adding a Facebook “like” button is enough.
On the other hand, I think that TripAdvisor’s deeper integration of the Facebook Connect API delivers a better and more relevant result to the customer and allows the company to really differentiate its product.
Relying on Acquisition for Innovation
In the travel industry, we have seen a lot of companies being acquired. This is great for founders and VCs and healthy for the industry in general. In many circles if you ask whether it’s better to build or buy a solution, many times the answer is buy.
In both the travel and the tech world it is a ready answer as attested to by Oracle’s acquisition of Endaca and RightNow last week – for a combined $2.6 billion. So acquisitions aren’t necessarily cheap, but almost become a necessity when you’ve fallen so far behind that the time to market issues outweigh the financial costs.
Priceline's acquisition of Bookings B.V. for $133 million in 2005 may have been the best $133 million ever spent, while Travelocity, anxious to widen its European footprint, spent years integrating LastMinute.com after paying an exhorbitant $1.2 billion for it in 2005.
The trick becomes determining the stage when you acquire the company. I would guess that Google is much happier with its acquisition of Android at $50M in 2005 than the acquisition of Motorola Mobility at $12.5B in 2011.
But for sure Google is happiest that Groupon didn’t accept its offer of $6 billion last year.
Do these issues resonate with you? How has your company encouraged innovation? Please feel free to share your stories and opinions in the comments.