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.
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.