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Terry Jones, Former President and CEO of Travelocity.com
Friday, May 26, 2006 Innovation, Leadership and Success in the Wired World
Summary from The Front End of Innovation Conference, May 2006.
Terry Jones put the scope of online travel into perspective as being larger than the next 4 categories, representing $3.3 billion in bookings with 34 million participants. The acceptance of online bookings was neither fast nor painless. He cited the “Dopeler Effect,” defined as: Stupid ideas seem smarter when they come rapidly. In the early days of Web-based interactions, trial and error created more errors than successes.
Innovation is the introduction of something new…not necessarily something successful. Jones provided some perspective: The average age of newspaper readers is 54. Today, 20% of college students began computing between ages 5 and 8. Younger people get news from TV, cell phones and other online sources. In a mashup of experiences, we purchase food at gas stations, we bank at grocery stores, we take photos with phones and can shop for almost everything in our PJs.
Speed and convenience define the consumer expectation. Web-enabled sales solve time-starved lifestyles. Pricing is transparent. Consumers are smart. Their choice is instantaneous. Their experiences are shared through networked recommendations.
So, why is innovation critical?
From direct experience, Jones shared how American Airlines had no customer loyalty and no real differentiation. AA Advantage was created to correct both faults.
Lessons learned: The innovation required both a top-down and bottom-up culture to make it happen. In a bureaucratic environment with no VCs to offer ideas or challenge thinking, the change was not easy. It required a separate organization, free from rules and the diverse loyalties of committees and multiple agendas.
The location of the new organization was located off campus where independent thinking was easier to achieve. The goal was to create zeal, circumvent the inertia of historic expertise. Funding and support has to come from high up in the organization.
By replicating the “chain of pain” experienced in real world travel transactions, the new Web-based solution had to take advantage of, or invent new online functionality to provide broad customer vision. The team had to innovate page by page to display all flights, all fares, all alternate options to let customers decide and purchase with reassurances that the transaction was real and confirmed.
The process was a continuous cycle of experimentation, measurement, failure and response. In the end, you innovate around what people are already doing. (This theme was echoed in a number of presentations from this event.)
In a wired world, IT, Marketing and Retail all have to play together to create a successful experience. The experience is not isolated, but should be bundled into a “dynamic package” where the information is organized around the need.
Jones cited the REI Website. Instead of searching for individual items for ice climbing gear, you select a pull down for “ice climbing” to see all related products. Jones advises that all channels have to work together. “Open all the doors all the time and make all work together.”
He predicts that immersive worlds, extremely popular in gaming, will become the next generation experience where customer browse a three dimensional store online.
Innovation is the way to remain competitive. The way to avoid being marginalized is to create your own margins.
Agree? Disagree? Please add your comment below.
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Reader Comments (4)
Ilove “stupid ideas seem smarter when they come rapidly” – there is something about people thinking that if they put together smart people in the room and tell them they have x min/hours to work on something, the results will be brilliant and then we can just wrap up and go home. I’ve seen this approach many times. Even when trying to support innovation. Let’s do Idea Days or other get-together and generate innovation on the spot... I don’t think so. I believe it may happen, but what is more probable, is that people will start sharing (learning what they didn’t know, new perspectives, new connections…) and they may go home, sleep, jog, work on something totally unrelated and all of the sudden the dots connect and they’ll come up with something really great. Or somewhat great and then they would like to go back to that environment for another round of brainstorming, but may realize that people moved on, the dynamic is gone… Any idea how to make this better?
Trial/error – I don’t even like it when people tend to call something relater to innovation ”error” or even worse “failure” – it’s all evolution. If I didn’t have any of those 50 ideas that brought me from the first glimps of an idea to something useful, I would never get there. People need a safe place to fail.
Need of both top-down and bottom-up culture to make it happen. If this goes with another thought in the article ”you innovate around what people are already doing” it feels like people are pushing for something that seems natural to them and they need support from management. But management needs business results and they may be not connected easily to the proposal from the bottom – what do you propose needs to happen in the organization?
Oh, also this “you innovate around what people are already doing” – it’s so true. Most of the great innovations are just about connecting several things that were already there (social networks, join ventures, reacting to demand… we just need to listen). But some innovations are truly new and therefore create breakthroughs – like for me it was iPod user interface.