A deep dive into digital transformation and innovation
By cameron in Uncategorized
Digital transformation and innovation are buzzwords bandied around frequently at travel conferences, but hip-hop and Domino’s Pizzas are very much at the long-tail.
At the OpenJaw Summit in Dublin last week, attendees listened to Dr David Rogers from Columbia University share his take on the theory and practice of digital transformation, which is based on the premise that “it is not about tech, it is about a mindset.”
And one way to change the mindset is “to identify the unconscious assumptions” which define how a business sees itself – not only independently but also in relation to its peers and the wider world.
He identified unconscious assumptions in five areas of business and used examples from outside of travel to illustrate his points. Specific applications to travel are possible by cross-referencing other speakers at the event.
He began with customers – very often overlooked – and said they need to be seen not as “passive targets but as dynamic networks”. His example is Domino’s Pizza and the quotation from its CEO that Domino’s “is as much a tech company as it is a pizza company.”
Domino’s is thinking “dynamically” by exploiting Alexa, Twitter and even emojis as a means to order a pizza rather than just waiting passively for the orders to come in. But this only came about by the business challenging its own perceptions.
In a travel context, most firms have moved beyond seeing customers as passive targets, and the familiar idea of the funnel/customer journey/path to purchase reflects the idea that travellers are dynamic, requiring businesses to adopt different means to interact at different stages.
Meg Elzea, one of Google’s global travel industry managers for airlines, offered what other delegates on the sidelines agreed was a fresh segmentation of customers. So goodbye micro-moments, hello intent clusters.
Customers, she argued, need to be “at the centre [of marketing campaigns], not the content or the channel.” Four intent clusters are identified – see, think, do, care. At one end, “see” is close to the old-school idea of raising brand awareness in a generic way without trying to convert or seal the deal. At the other end “care” is the intent cluster where your existing customers can be maintained or reconverted.
The example she offered was the Nike Run Club, an example of a “network within a network”, or in a travel context, a loyalty scheme.
Loyalty schemes were represented at the event by Remi Lafrance, general manager for product transformation at Toronto-listed Aimia, which works with 300 loyalty programmes with some 300 million members in total. Evidently this gives it access to a fair bit of data, with Lafrance saying that its approach is to “identify the required data assets and get them.”
Data is another area Rogers identified as being plagued by assumptions, agreeing with Lafrance that data should not be seen as a silo but as a “strategic asset”. And while there is a monetary value to data, it is operationally where the true value lies.
Having said that, the example given was a slightly awkward one around Caesers Entertainment rethinking its use of data. Traditionally casinos have been able to identify high rollers and give them upgrades and a VIP experience. But what data can now do, he said, is “shape the experience of the guest in real-time, on property.”
Caesers can now use data to identify a loyal customer, gauge his or her performance at the tables and offer a real-time benefit such as a free dinner to help ease the pain of monetary losses and help retain that customer.
“Data” has been doing the rounds at travel conferences for some time, but rarely do the moral or privacy considerations of data sharing get a mention. Following a presentation by Declan Hoare, chief technology officer at Ludex, a question from the floor brought “GDPR” to the fore, albeit briefly.
Ludex is working with OpenJaw on a number of initiatives around artificial intelligence and machine learning, and is an IBM Watson Ecosystem Partner.
GDPR is the acronym for the European Union’s updated data privacy regulations, which come into force on 25 May 2018 “at which time those organizations in non-compliance will face heavy fines”.
For reference, here is the summary paragraph on consent:
“The conditions for consent have been strengthened, and companies will no longer be able to use long illegible terms and conditions full of legalese, as the request for consent must be given in an intelligible and easily accessible form, with the purpose for data processing attached to that consent.”
The implications of GDPR will become clear, possibly, over time, but it is an elephant in the room when it comes to many data-based initiatives in travel. Did the Pope realise when he (or one of his people) agreed to Twitter’s terms and conditions that he was allowing IBM Watson to generate a publicly available personality profile based on its interpretation of the tone and content of his tweets?
As well as data, innovation is a travel conference regular. Scott Morrison from ThinkSprint, “a kick ass platform of future thinkers”, defined innovation as “finding ways to join the dots that other people miss, at speed” with the aim of “creating new revenue streams through rapid innovation”.
Innovation is another component of the digital transformation identified by Rogers as being shackled by unconscious assumptions – in this case the idea that it needs to be planned from the top down. Instead, innovation needs to be seen as rapid experimentation.
The travel context of this is very much on message for OpenJaw, which has adopted Google Ventures Sprint Process for its Project X initiative. The sprint process is a five-day timeline for which is intended to get something to the testing stage within five working days.
Project X is overseen by OpenJaw’s co-founder Sean Mac Roibeaird. He talked about aiming for 10X not 10% improvement, avoiding group think, getting in external experts and generally seeing “innovation” as a way to get better at experimentation and develop frameworks which can be applied elsewhere in the business, rather than seeing a direct line between innovation and success.
He said that this “sprint” approach has paved the way for some of the new t-Retail Cloud features, particularly in terms of its supplier, marketing and social components.
The competitive landscape has changed in most verticals over the past twenty years or so, and travel is one of the most exposed to digital and socio-economic shifts. Rogers talked about competition generally being “asymmetric” – the need for firms to partner with their rivals. The example he gave was Google paying Apple $1 billion so that it would be the default search engine on iPhones.
In travel, there are many examples of this asymmetry. Expedia is a competitor to travel agents but is also making its inventory available to them via its affiliate network; booking.com competes with hotels for bookings but has a whole bunch of B2B products for hotels to make them better at selling on the platform; metas and Google take advertising dollars from suppliers but are looking increasingly at a more direct relationship via facilitated bookings, the list goes on.
Competition, data, innovation and customers are relatively concrete concepts in terms of digital transformation, but Rogers’ final piece of the puzzle is a little more esoteric, and that is “value”. He said businesses need to “adapt” their value proposition rather than “defend” its existing position.
His example was the Metropolitan Museum of Art’s “Digital Met” project, which helped it “fight for relevance” by using multimedia to create gaming experiences for teenagers, telling the stories behind its acquisitions, running hacks and getting hip-hop artists to curate virtual tours of its digital archive.
Many travel brands have adapted their value proposition rather than defend it. Europe’s biggest travel firm TUI is an example of a business which pre-dates digital, was force to adapt and which continues to be successful and grow. It could be argued that its rival Thomas Cook spent too long defending and is now playing catch-up.
Rogers rounded off by highlighting the Encyclopedia Brittanica as perhaps the best example of a business which can manage a digital transformation, surviving Encarta and Wikipedia by becoming a B2B edu-tech provider. “If it can manage a digital transformation, anyone can,” he said.
DISCLOSURE – Author’s attendance at the event supported by OpenJaw.