Essentially, the basic theories say that businesses can best succeed when they consider their business environment, and not just their competition, or even meeting the needs of their customers. Various businesses and their services can contribute not only to delivering products and services that customers find valuable, but also toward making the business environment positive.
These disparate entities are often themselves suppliers and customers of each other, and hence form part of the ecosystem in multiple ways. Moore suggests that enlightened companies will enhance the ecosystem by creating mutually beneficial relationships not only with customers and suppliers but also with their competitors.
The accompanying graphic shows a simplified view of how the major components of the travel management process conceptually work together and reinforce both each other and the business environment.ii
Moore’s book also says that there is something called an “ecosystem leader,” which is a company that creates a shared vision that others can use to, for instance, align their investments. Much of the book is devoted to examples of how this sort of leadership has occurred.
Business Leadership Examined
The travel industry has never been in want of companies anxious to lead the ecosystem–almost always in directions and ways that they created and find beneficial. This is not a new idea, nor did it originate with Moore–much of whose work the travel industry amends so as to be unrecognizable.
Forty years ago a few large airlines with technology assets began projects that became CRS and later GDS. These represented the most tightly integrated ecosystems the industry has ever seen.
They were managed along the business strategies their owners desired to pursue, and they carried the industry to new levels of productivity that would not have been otherwise possible. Collectively, most of the CRS/GDS industry was also part of a larger ecosystem lead by IBM–which provided the tools that made them work.iii
The leadership position of the GDS has collapsed over the last 15 years, which most observers conclude was probably positive. Yet, some of our industry colleagues advocate assembling new ecosystems, of course organized around new leaders, as the best way to ensure innovation and proper attention to customer priorities.
Are they right? What can we learn from prior experiences in an industry organized in this way?
Ideas Aren’t Real
I’ve wondered why business ecosystems are such popular discussion points. Once you understand how they are supposed to work, and put the business school jargon aside, most examples are seriously flawed.
Ideas aren’t real, in that they are abstractions of how people think things should work, not how the do work. A few lessons from experience are in order:
- No one can guarantee that the vision held by the ecosystem leader is correct, or that the leader executes it properly. More often, that vision is deficient and in pursuing it, the ecosystem leader and its followers succeed in repressing competition and innovation.
- Remember, while the early advances of CRS/GDS brought undeniable benefits, innovation quickly became difficult, and usually grudging, especially elsewhere within the ecosystem. It encouraged that type of behavior and it was not until it partly collapsed that the broad product and service industry innovation we see today became practical.
- Most examples of ecosystem leaders and supporting business systems impose costs on the participants that would not otherwise be there. This is particularly true in the travel industry, where suppliers have complained about the costs of the GDS ecosystem for decades.iv
- Not all participants in ecosystems add value In travel, some companies that are assumed participants in fact detract from the value realized by other businesses and consumers.
- It is unnatural for a tightly-controlled business ecosystem to encourage the type of broad, aggressive competition that focuses on meeting customer needs, eliminating unnecessary costs, and by-passing non-contributors. The symbiotic business relationships ecosystems envision tend to perpetuate channels, intermediaries, and processes that competition would discard.
- Ecosystem abuses are frequent. Leaders inhibit or reject inconvenient innovations and competitors in favor of perpetuating the ecosystem they control.
Ecosystems Aren’t the Same As Progress
Despite the fairly infrequent examples of where ecosystems have benefited industries and their participants, the reverse is more common and more compelling: there are almost no commercially successful desktop operating systems apart from Windows because the Microsoft ecosystem is successful, not because Windows is better. Almost all TMCs use a GDS in some form, despite its limitations and costs to suppliers, not because there are no other ways to make reservations (many have been proposed) but because the remnants of the GDS ecosystem are with us still.
Travel management and technology needs more innovation, aggressive competition, and precise focus on real customer needs, not the artifices and limitations imposed by more business ecosystems. There are costs imposed by pursuing all of these things, but leader-based business ecosystems have never proven themselves to be cheaper or faster short-cuts, or effective hedges against inevitable business mistakes.
i The Death of Competition: Leadership and Strategy in the Age of Business Ecosystems, HarperBusiness, 1996, ISBN 0-88730-850-3.
ii This example is simplified to illustrate the concept and is not designed to be comprehensive. Contemporary illustrations of the travel ecosystem would be much more complicated and include lines of business with sometimes dubious contributions.
iii The extent to which IBM influenced the technological direction of the travel industry has never been fully appreciated.
iv There are other industry examples; this is just the most obvious and compelling.