I was overwhelmed by the reactions to my last blog, What if AA meant Apple Airlines. In summary, it said that any industry can put the customer in the center of carefully designed value-generating processes that are delivered by highly empowered employees and supported by deeply integrated technological service innovation enablers.
Unfortunately, most airlines (and hotel groups) are still offering services for the customer of the year 2000 rather than designing complete ecosystems of solutions desired by the traveller of 2012.
In parallel, legacy IT systems continue to drag down many good initiatives to create new products and upsell opportunities as information often remains unintegrated across the operational silos. To make things worse, external service providers, such as handling agents, airports or migration control, are rarely integral parts of an actively designed, seamless customer experience journey.
In their responses to my blog, some readers labeled the airline and travel industry as innovation laggards. I would not simplify things that much. There are some highly innovative airlines such as Ryanair, Vueling, Gol, Virgin America, Air New Zealand or Singapore Airlines, to just name a few.
But, has our industry developed in some way, somewhere a global cluster of expertise, innovation and long term vision, strong enough to shake up the whole industry? In other words: where is the travel industry’s Silicon Valley?
Industry associations like IATA have tried hard to improve coordination with airports and to eliminate regulatory hurdles. That’s important. Byzantine fare rules, exasperating security checkpoints, absurd airport passenger flows and archaic migration rules are turning off millions of passengers every year, costing the industry billions. Their business is about removing external obstacles.
However, the real innovation will not come from big organizations or committees but from creative startups and dynamic intrapreneurial experiences within airlines and other travel related companies.
Apple, Amazon, Google, Facebook and many other “Silicon Valley” companies (an yes, I know where Amazon is based, that’s not the point) knew what customers wanted without knowing themselves. They learnt to design value propositions around customers’ hidden wishes, developing methods to cope with uncertainty and the possibility of failure. In this case, the sheer mass of customer-centric innovation created an inertia that overran the telecom, entertainment, publishing and retail industries, forcing them to adopt completely new business models.
This has also created customers with a completely new set of expectations: Post “Internet 2.0” passengers expect to be vitally engaged by their brand, to get the opportunity to co-create the product and to live and leverage their connected lifestyle during their trips. In consequence, what we need is a higher density of “holistic” innovations responding to the new types of customer expectation. Once this reaches a critical mass, it will constitute a movement (the airline spring?) that no airline, airport or regulator can afford to ignore.
This time, I don’t want to go into practical ideas of how the airline of the future could look like. But as companies like Satisfly (helping you to get the right seat neighbor is a really smart idea) are evolving from fragmented inventors to becoming a mainstream movement of large scale innovators, governments, airports, ground handlers or airlines will no longer be able to defend their outdated and self-complacent structures. Music labels tried hard to ignore change, but ultimately they could not resist the sheer power and customer focus of Napster, Kazaa and then iTunes.
Technological excellence is not enough. Customers are not only functional solution-consumers; we are human beings with emotional, social, cultural and spiritual needs, values and preferences. Apple understood that and was able to create products and an engaging ecosystem of solutions around the different dimensions of its customers. We also need innovations from the process and organizational side and interweave them with the supporting IT solutions. The “new generation Customer Experience” will be the result of a highly integrated process, deeply enrooted in a new people-centric strategy and culture.
Interestingly, many of the latest strategic management theories and tools are finally putting the customer (I would say, the human being) back in the driving seat of value creation. In the light of the recent financial turmoil, this only makes sense, also from the perspective of the ethical mandate to re-humanize the economy. You may want to have a look at some of these very fresh yet practical new approaches such as the Alexander Osterwalder’s Business Modell Generation Canvas, Steven Blank’s parallel product-customer development methodology the Lean Startup techniques of his discipule Eric Ries. They are all transferrable to business innovation processes in different industries.
So, where is the Silicon Valley of the travel industry?
I could say that there are critical masses and extraordinary accumulation of travel industry expertise in places like Spain and, more recently, the Middle East; that Indian IT firms know everything about the airline business after being their back office for decades.
But I am not referring to a geographical location. It’s all about accumulating a collective inertia that is able to sweep away the current obstacles to treat a traveller as a multi-dimensional human being. Taking Customer Experience Management(CEM) seriously as a strategic management method is perhaps still the most realistic method to inject the will to innovate in our organizations.
But we have to be careful. With the proliferation of “Vice President CEM” positions, CEM, the discipline that was created to de-commoditize our industry through strategic service design innovations, is quickly becoming a commodity itself.
Please feel free to contact me with your opinions and proposals, as well as requests for collaborations, speaking engagements or workshops.
Easy — the Silicon Valley of travel is in Silicon Valley (and Silicon Alley, Route 128, etc.). In other words, the current technology start-up infrastructure is disrupting the travel sector just like it has disrupted other industries and daily activities (retailing, media, banking/payments, etc.) as evidenced by companies like Kayak, Hipmunk, AirBnB, Zipcar, etc.
As the only airline based in Silicon Valley, Virgin America (and its alumni launching new companies, like me) would seem to have an advantage if they can keep their heads up and remain open to seizing opportunities that arise every day.
Actually, the comparison does not work. Apple has a central office from which designs, sales plans and other company decisions are made. Because of the rich environment, other companies like HP and Google have settled in the same area to use leverage the resources that the area draws. Each of these firms may have other functions done elsewhere, but each is also a consumer of a similar geographic culture.
The same is not true of aviation. Airlines reside in vastly different geographies and cultures and they each face different challenges in their home and international markets. Furthermore, the “aviation product” is rendered at thousands of disparate locations where stakeholder in the process have different resources and regulations. Delta operates between Atlanta and Paris and Atlanta and Lagos and the way in which the total product is offered and delivered is not just different, but probably impossible to standardize.
I agree that service can be improved irrespective of location, but there are too many variables to allow for the kind of standardization that make Silicon Valley entrepreneurs successful