Heard Here First

They sound familiar because they’ve come to be widely accepted by the travel and technology industries, or they have been proven right overtime.  You heard them here first in any case.

Here are just a few of the predictions, forecasts, and strategic assessments I’ve made over the years in print that gave you early warning of what was going to happen–if you were reading these pages.  Often you would have had five or ten years to plan and make adjustments to your business or technology position.

  • Proprietary operating systems were not the way and would be overtaken by UNIX (1984).
  • Projects for so-called “neutral” reservations systems were not going anywhere then (1984) or hence (1998).
  • The cost of replicating existing CRS functionality vastly exceeded the trivial amounts neutral system backers projected (1994).
  • ETDN initiatives were dead on arrival because customers didn’t want them (1991)
  • Ticketless travel was the future of the industry (1985).
  • Travel Management Companies (TMCs) that built their service profiles around ticket issuance could not survive and desperately needed reengineering (1991).
  • The long-term position of CRS technology in travel distribution should be seriously questioned (1989).
  • Travel technology offerings do nothing to boost productivity–a critical strategic deficiency for TMCs and their customers (1991).
  • Airline “fare simplification” schemes are short-term and will fail within months (1993).
  • The strategic technologies of major TMCs are ill-conceived and unsustainable (1993).
  • PCs do not boost individual worker productivity (1993).
  • Travel distribution will evolve, resulting in the displacement and disintermediation of TMCs unless they take immediate steps to redesign their businesses (1994).
  • The Internet is not the “great equalizer” of agency competitiveness; most agents will be big-time losers on The Internet; only a handful of major, well-funded entities will survive (1995).
  • No electronic travel distributor understands their customer or knows the first thing about what those customers will really buy (1998).
  • Internet travel companies need real customers and real earnings before they can be considered real businesses (1999)
  • The Y2K catastrophes predicted for travel and society in general won’t happen (1998).
  • On-line travel auctions won’t succeed (1999).
  • Without something to sell, techno-gadgets only cost you money (2000).
  • Well-managed travel companies (agents and vendors) would recover quickly from September 11, 2001 (2001).
  • IATA’s New Distribution Capability is a poorly conceived program that goes far beyond data standards–and it probably won’t work (2013).
  • Open Booking, Travel Management 2.0, and similar ideas are unproven, untested, and unreliable theories that pose serious business and operational risks to travel buyers that are not offset by speculative benefits (2013).
  • Travel distribution “ecosystems” have been tried before and don’t benefit the industry (2014).

 

Critiquing the Travel Technology Ecosystem

Aligning business operational models with ecological terms has become a popular pastime, especially in technology. Almost 20 years ago, Harvard academic James F. Moore developed the idea in his business strategy book, The Death of Competition.i

Refinements and corrections continue to the present day, but some of his fundamental premises have become part of the business landscape. The travel industry is no exception–albeit most people espousing the concept deviate significantly from the standard definitions and describe the ecosystem to meet their unique business objectives.

Travel Ecosystem 20140626.GIFEssentially, 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:

  1. 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.
  2. 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.
  3. 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
  4. 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.
  5. 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.
  6. 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.

Notes:

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.

Questions About the GSA’s Travel Data Challenge

On February 19, 2014 the U.S. General Services Administration (GSA) announced whatThe Beat calls a “first of its kind” competition to develop travel data analysis technology. The formal announcement posted by the GSA says:

“In this GSA Travel Data Challenge, the public is asked to develop a technology-driven solution using GSA travel data that allows an agency to identify opportunities to reduce costs.  As such, GSA challenges the public to create a tool using GSA travel data that could be replicated across government to every agency, using their own travel data.”

This exercise is described as “crowdsourcing” in other publications that usually pay little attention to how the GSA administers its travel programs or analyzes travel data–one supposes because the novelty of the approach somehow makes it important.

The Travel Data Challenge raises a number of questions that are equally worthy of some attention. Here are some of the most obvious:

  1. The competition offers $35,000 for a winning submission; lesser amounts to other categories totally $90,000 in all. This is but a fraction of what such a solution would likely earn in the open market, which makes one wonder why any established developer would want to participate.
  2.  

    Participants grant the government a perpetual, royalty-free license to any and all intellectual property comprising the winning entry. A good deal for government, but a bad deal for a truly innovative developer. While the terms of the contest go on to say that “All other rights of the winning entrant will be retained by the winner of the competition,” since the rules also say that “The final tool should be in Open Source Code,” we are left to ponder how little those remaining rights might be worth.

  3. The GSA has existing contracts-holders for a variety of travel management and analysis products. Why isn’t the innovation and creativity the agency desires forthcoming from these presumably well-funded and well-compensated sources? Perhaps the agency should be questioning whether its procurement and program management practices are truly adequate to deliver the sustained innovation it seeks, or if that is not the problem, then whether the incumbent vendors are up to the job?
  4. The Organization and operation of the event give the impression that many aspiring participants are unprepared for the task. Travel data analysis and interpretation is a complex and highly specialized field. The agency has provided only the sketch of what it wants to accomplish, and many of the online questions posted on the event site indicate that an understanding of the sources, tools, and objectives of successful travel management are equally barren within the community of interest developers. A much more thorough developer briefing is needed if all sides of the contest are to avoid wasting their time.

 

Why Not The Computer Business?

This analysis appeared February 24, 2014 in Cornerstone Information System’s “Insight & Opinion” section.


Travel and technology are very different businesses. While technology supports and enhances much of the travel and transportation industry, difficulties begin when the two are confused.

You need competent people to help you address technological challenges, but you don’t need to be in the computer business. There are enough products and services on offer now, too many developers who don’t know what they’re doing, and too much imprecision hiding behind innovation.

Because technology is an important part of travel distribution, it’s easy to be overtaken by the sights, sounds, and outright glamour of technology. In recent years it’s become much easier (though by no means simple) to find investors for technology companies.

We’re used to hearing about technology start-ups with modest resources and still more modest ideas, to the point that people start to believe they should be part of the fun.

The Essential Differences

Succeeding as a technology developer is difficult, time-consuming, risky, and costly. While the marketplace makes room for genuinely good ideas, finding them is almost always harder than building them.

I read a recent contribution from a travel technology developer who suggested a few strategies for starting a travel technology venture. Among these were “doing the opposite of what already works,” and “recycling old ideas.” i

There’s a certain logical flaw in basing development projects on practices that, by definition, don’t work. The notion of having a genuinely good and innovative idea is something that entrepreneurs frequently neglect along the way.

Nor is it more than a remote possibility that most technology start-ups will succeed. It’s true that some start-ups pay big rewards to a few early investors and employees, but most simply spend their early capital without delivering more than the most trivial results and products.

There is a significant difference between having what seems to be a good idea and transforming that idea into a commercially practical product or service. Most travel technology products, web sites, and related gadgets accomplish very little and quickly fail the consumer’s “why should I care” test.

Although this may seem to be a heretical view, most travel technology is neither good nor useful–never has been. Apart from the handful of start-ups who are struck by the lightening of unanticipated success, most travel distribution success stories are told by people who had the rare talent of discerning between what works and what doesn’t.

Travel is a service business and successful participants in the industry must never lose sight of their customers and what they really want to buy. Understanding and correctly answering that question usually means the difference between success and failure–and is the essence of delivering customer service.

Travel customers, as an example, want to take vacations, do business in distant cities, visit their families, and a variety of other things. They don’t want someone to give them data, collect their data to give to someone else, or offer them pointless Amazon-like product suggestions because of past purchases that are no longer relevant.

I’ve frequently observed that almost nobody in travel distribution delivers customer service, or is able to do so. ii We’re so obsessed with recycling old ideas and focused on what our customers have bought that we can’t discern what they will buy, and therefore act accordingly.

Suggestions

Here are my own ideas for you to consider as you look for ways to employ technology as a business tool in travel distribution, and profit from it. They may sound simple, but effectively putting them into practice is sufficiently challenging to assure their competitive merit.

1)  Become The Best User Of Other People’s Tools

Skilled travel industry managers decide what their business goals are, how technology can help them reach those goals, and what partners have the requisite expertise to make that happen. They then move forward with those partners and don’t let themselves be distracted by short-term events and new but irrelevant ideas.

I’ve been CIO of multinational travel and transportation companies more than once. It was always a challenge to convince other parts of management that being the best user of tools that other people build can be as much, and often more, of a competitive advantage than was our own technology.

We want to believe that access to proprietary technology in itself creates an advantage, while we overlook the expense and risk creating that technology imposes and assume that we can succeed at maintaining and enhancing it.

In most instances using technology and what it provides well is more important than proprietary tools. Your competitors are usually not good technology managers, and you can exploit opportunities when they assume technology risks that you don’t have to.

2)  The Best Tool Is No Tool

Technology is attractive and we are conditioned to believe that the solutions it delivers work better, last longer, and are more efficient than answers we find elsewhere.

The secret here that takes experience and insight to understand is that many problems “solved” through technology were really unresolved management problems that could have been cured more efficiently in other ways–or the problems never existed in the first place.

Look for business opportunities and solutions that don’t depend upon new technology developments and you’re ahead of your more development-inclined competitors.

3)  Seek Scarcity, Then Exploit It

Forget recycling old ideas. If you’re looking for technology-driven opportunities, you’ll find them where people have demonstrable business needs that are not addressed in other ways.

These are difficult to find and still harder to develop, but unless you’re counting on that bolt of lightning, they are the only reliable path to successful products.

There’s plenty of scarcity, in ideas, management, products, and customer service throughout travel distribution to provide more than enough profitable opportunities that don’t depend upon starting a technology venture for entrepreneurs with the foresight and skill to pursue them.

Not Quite That Special

Here are a few final questions for you to consider:

  • When was the last time you heard a law firm say that the “LexisNexis” user interface isn’t what it should be, so it’s time to build our own legal database search engine?
  • Do you know of an accounting firm that is developing software because Oracle, Microsoft, Best, or SAP have nothing to offer and don’t understand the company’s unique business objectives?

Travel distribution has always been and remains a unique business but it’s essential to separate qualities that make business better from the costly specialization that it’s tempting to ask technology to make for us.

 

[i]     Alex Bainbridge, EUREKA! Where Could Your Travel Startup Ideas Come From?, (Tnooz, February 3, 2014).

[ii]    As many times as I’ve made that observation over the last 20 years, I’ve frequently been told what a shocking thing it is to say. I’ve almost never had anyone question whether or not it was true.

The Open Booking Question–What We Know and What We Wish We Knew

The world of Open Booking is a confusing one. No one seems to understand how it’s supposed to work in sufficient detail. Beyond some broad statements about how much travelers want it and how you can apply the concept to suit your situation, those devilish details are left to look after themselves.

Its business case has never been fully or adequately developed. No one has ever successfully demonstrated, using adequately supported data and research, that Open Booking (to the degree it is described and understood) even works, financially or operationally.

Some of our colleagues also claim too much for Open Booking. There is a tendency to believe that Open Booking is inevitable because there are serious flaws and failings with how travel management is conducted. Open Booking is not the sole alternative–there are equally, if not more valid management techniques that can be employed.

It’s one choice among many, and based upon the answers that are available it isn’t a very good choice. It would be great if more solid information were forthcoming, but even asking questions carries its own challenges.

Here’s an experiment for you to consider.

While the setting is intended to be light-hearted, the issues discussed are quite real and the responses are all based upon incidents in my own experience with the Open Booking Question.

Pick any of the national, regional, or larger local travel management companies that specializes in business travel, or an on line travel agency with the same specialty. Call someone from the sales department, introduce yourself and your company, and tell them that you’d like a few questions answered.

Begin by asking for a detailed explanation of how the would propose to handle your business. Respond to their questions directly and intelligently, and listen to their explanation. You may not like what you hear, but you’ll be told in sometimes painful detail how their operation works and where you fit in.

Ask all the difficult questions you want that reflect your real concerns, possible issues and contingencies you may have heard about, and criticisms of their process that you may have heard from competitors or read in the trade press. Typically, answers will be immediately forthcoming or a quick follow-up call will offer clarification.

Then, pointedly ask how they will “prove” to you that their service is any good, how it is cost-effective compared to their competitors, what evidence they will provide as to their ongoing purchasing efficiency, and how they can project and measure your savings. Remember to ask where their data come from and why these are accurate.

Without much hesitation, you’ll probably be told about benchmarking, reporting tools, econometric models, and various gadgets and systems that the person on the phone is convinced are just what you want.

Some of the answers you will receive will be interesting, others quite inventive, and still others less so–but the point is that you will get answers. These are legitimate inquiries and the business development area within travel distribution is happy (even anxious) to address them.

Try the same process on someone who is anxious to talk about the inevitability of Open Booking (or Managed Travel 2.0) and the benefits that idea provides.

You’ll be challenged to get a comprehensive description of how Open Booking works, largely because no one has adequately defined the operational details and how they apply in the real world. People have their own ideas but there is no shared view–and the experts create explanations as they need them.

Even though Open Booking has been a popular topic for some time, difficulties continue to pop-up that no one has thought through (see here for example). The list of questions that should have been considered and have not is long and tedious.

You’re likely to learn that Open Booking is a concept that you must apply in ways that suit your own situation. Patiently remind the person that, if this is true, Open Booking has descended to the level of how you’ve been handling your travel for the last 40 years, and suggest that the proverb “there is nothing new under the sun” may also be true.

Remind them that the apostles of the Open Booking doctrine want the industry to adopt it as a premise for doing business, as an overriding concept that reshapes how managed travel is understood in the current century, and as an inevitability brought about as a result of how traveler attitudes and expectations have been reshaped in the Internet age.

In such a toplofty setting, some comprehensive definition, description, and attention to detail is not too much to ask.

Next, take a deep breath and ask your contact to prove to you that the operational system they have described to you (to the degree this has happened) can and will work, that they have considered all relevant details, and that sustainable savings (offset by any costs and business risks that you might incur) have resulted in other settings and will result for you.

Remember to insist on clarity as to where the data come from, how reports were developed, and why they are accurate. Don’t be content with unsourced figures pulled at random or comments from published materials with an equal lack of transparency.

Your spokesperson will likely be affronted at your having the temerity to ask such questions. You may be informed that “proof” is unreasonable and impolite, and that countless satisfied travelers are enjoying excessive (but unspecified) savings and satisfaction through Open Booking, so it is up to you to join their happy throng.

Such requests for “proof” will likely be dismissed by comments such as “that’s what the marketplace is doing.”

As you politely close the conversation, a gentle reminder that it is the “marketplace” that just asked the question may be in order. When the call is over, you might also reflect upon how long a TMC that gave a similar answer would remain in business.

What Have We Learned?

I’m not sure why many observers are prepared to give Open Booking “a pass” in settings where other parts of the travel distribution system are held to a much higher standard.

This may be because Open Booking sounds technological or scientific, that they are beguiled by its promises that amount to the benefits of managed travel without much of the work, or that it’s simply (at least for many) an attractive and new idea.

Open Booking is none of these things. It is essentially the same complaints and objections to managed travel that have been wandering about for decades, now in a new suit of technological clothes, with the promises that gadgets, web sites, and reporting methods have succeeded in changing human nature.

Travel buyers should rightly expect better answers to how Open Booking works, how real-world problems can be affordably addressed, and the financial benefits it delivers (in all instances using better data and analysis than has been forthcoming thus far).

Advocates of Open Booking should consider it their obligation to provide nothing less.

Open Booking, lacking better evidence, simply doesn’t make sense. Because many people believe Open Booking to be a good idea, I’d have thought that an adequate, specific, detailed business case would not only be easy to produce but would have been forthcoming long ago.

I’m anxious to see it.

What Would A Proof of Open Booking Look Like?

One can spend considerable time and energy developing specific and detailed reviews of flawed theories and business proposals. Although appreciative comments and note are often the result, it’s important to recognize that this isn’t how business strategies should be developed.

The burden of proof rests with the proponents of new strategies and theories to use adequate and appropriate reasoning, and specific proofs to show that these are valid–not with everyone else to show why they are not.

Open Booking, as presently announced, is an ill-conceived business strategy that rests upon faulty logic, inadequate data, poor research, and a suspension of belief in how the real world operates. Its proponents have, or should have, certain obligations to correct these errors and show how Open Booking then remains a valid business premise.

Absent a much improved business case, the travel community is justified in rejecting Open Booking’s imaginary benefits without further argument. The disinclination of others to spend time refuting unsupported theories gives them no credence whatever.

Here’s a concise outline of how Open Booking must be proven. It’s not unrealistic and doesn’t assume more that a correct application of available evidence.

I’ve also attached a “conclusion” as to how likely we are to ever see any of these points addressed.

1)    Assume the Burden of Proof

Advocates of any theory, business or otherwise, carry the burden of proof which requires them to adequate demonstrate why their ideas are valid.

Statements about Open Booking such as “travelers are booking directly with suppliers and often times spending less money than if they go through a managed program,” or “there have been studies that have validated this but unfortunately, the status quo has swept them under the rug” are irrelevant commentary and establish nothing.
When you make such claims, it’s your job to substantiate them. Produce your evidence or abandon your claims.

Conclusion: The Burden of Proof is troublesome and inconvenient. It’s much more fun to make random, unsupported claims and suggest that people who disbelieve you should know better. The logical basis for Open Booking is so shaky that were unlikely to see a rush to defend it with more that opinion and speculation.

2)    Clearly and Comprehensively State the Proposition

Any business theory requires a detailed, comprehensive statement of what it is and how its proponents expect it to work. For Open Booking, that means more than the vague statements about how everyone is doing it so the result is therefore inevitable. The business proposition needs to be positively defended in order to be valid. Simply because flaws can be identified in the travel management process does nothing to advance the cause of Open Booking–there are other equally choices available.

The case for Open Booking also needs to consider business operations in the real world in detail and discuss how Open Booking affects each of them. A few short PowerPoint presentations do little to advance this discussion.

Conclusion: Building a correct business case is a lot of work, and Open Booking is a moving target that seems to evolve along a new line as soon as someone points out its shortcomings. It’s unlikely that anyone will expend the effort to improve this picture.

3)    Define Specific, Unambiguous Proofs That Your Assertions Are Correct

Once you’ve explained the business case for Open Booking, show us the clear proof-points that demonstrate the theory is valid and worth the effort. Not travelers are booking directly with suppliers and often times spending less money than if they go through a managed program” but how much, how often, under what conditions, and to what degree does this have to be so to offset costs and business risks?

Conclusion: If Open Booking could be substantiated in this way, someone would have tried to do so by now. The fact that proofs and evidence are abandoned in favor of opinion and anecdote is itself a demonstration of Open Booking’s failure.

4)    Use Objective, Comprehensive, Accurate, and Scientifically Correct Data

Forget self-selected surveys, tiny samples, biased questions, and the general lack of controls that infests almost all travel industry research. Produce data that can be defended, use it to establish your proofs, and then your Open Booking business proposition might have some validity.

Conclusion: Almost all travel research is useless and contrived to establish the preconceptions its authors want to perpetuate. This is unlikely to change anytime soon. As best (and this is conceding a great deal) the data in support of Open Booking are ambiguous.

Open Booking’s proofs and research should be straightforward and, if correct, should silence critics when accompanies by a comprehensive business proposition. It’s time this evidence is forthcoming.

5)    Comprehensively Describe How You Did Your Research

What precisely was your sampling methodology? How are your conclusions sustained by the raw data? What is an alternate interpretation of the data and how do you answer that interpretation? What would researchers have to do to replicate your research? Who sponsored your research and what are their and your predispositions?

Conclusion: Real research is transparent, fully explained and disclosed, and replicable. Spurious research sustains one-time conclusions or hides behind a proprietary cloak. This type of transparency and disclosure is very rare in the travel industry and non-existent as concerns Open Booking.

6)    State What You Cannot Yet Prove and How This Affects Your Conclusions

Scientific research acknowledges its shortcomings and identifies what cannot yet be proven as well as what can. It also admits areas where future evidence might disprove the theory. The quality of your interpretation of the evidence in support of your claims is as important as what that evidence specifically shows.

Open Booking lacks a real statement of its comprehensive business case, real proof-points that are offered to establish its validity, scientific evidence sufficient to establish the vague claims made in behalf of it, and a rational analysis of its very real deficiencies.

Conclusion: Open Booking’s proponents are no more likely to improve their process or develop their evidence in this area than they are in any other. Remember, if you are an advocate of Open Booking, you have the responsibility to develop and present your adequate evidence before anyone is obliged to give your ideas credence.

It’s not up to me or anyone else to disprove Open Booking–the burden rests with you. The six areas discussed here should be a minimum expectation.