Digital Transformation for Travel – your how to guide.
Every business that started before the Internet now faces the same challenge: How to transform to compete in a digital economy? And most travel brands started a long time ago – especially airlines!
OpenJaw asked author and professor, David Rogers, the globally-recognised leader on digital business strategy, known for his work on digital transformation, to speak about Digital Transformation at the recent OpenJaw Travel Summit.
David did a fascinating presentation (for 45 minutes!) explaining how digital transformation is not about technology—it’s about upgrading your strategic thinking. He drew on case studies from AirBnB to British Airlines to show how traditional businesses need to rethink their approach to strategy in five domains—customers, competition, data, innovation, and value.
Many speakers offer advice for Silicon Valley start-ups, but David is one of the few speakers to show how legacy travel businesses can transform to thrive in the digital age.
Watch the 15 minutes highlights here:
I’m very happy to be here in Dublin with you all today. To talk about this challenge that so many of us are facing in our industries, of how do we transform our businesses to take advantage of all the kinds of technologies that you started hearing about this morning, you’re already working with OpenJaw and other, then we’ll be hearing about more moving ahead in the rest of the conference. I’m coming to you here from New York city, where I teach at Columbia University in New York, and I teach in our graduate school of business, specifically in our executive education division.
I was having a conversation about this last night at a cocktail party. Education today, I think we’re all learning very much is something that does not stop when you go to work. I think we all have to be, where a MBA, not too many years ago, was sort you go to a university and get your core knowledge that you need to go be a business leader. Today I would argue that core knowledge changes every five years. We all have to be continuously educating ourselves, and MBA is a great foundation for that ongoing, lifelong education as a business person.
That’s really what we’ll focus on, executive education, it’s those more senior executives later in career, throughout your career programs. I have the opportunity to teach programs specifically focused on digital marketing, as well as digital business strategy, innovation and organizational change. We have a partnership with Google in New York, where we co-teach a program, we call it the CMO academy. I also have a conference that I started 10 years ago, we just had our anniversary at Columbia, called the bright conference, that brings together global brands, like American Express to Coca Cola to Loreal, with technology companies like Google, IBM, SAP, Facebook.
Media companies, being in New York City. From the New York Times, to Buzzfeed to Netflix. Really look at this changing intersection of brands, innovation and technology. I also get to spend time writing books. This is my fourth book actually, that you guys all have a copy of. Doing research on a variety of topic related to the impact of technology, change and adoption on businesses. Topics recently on measuring marketing ROI in the era of big data. Research on show rooming and how customers are using their mobile devices in a retail space. A recent study, actually sponsored by [inaudible 00:02:43], called What Is The Future Of Data Sharing. Looking at six different markets globally, consumer behaviors and attitudes around when are you willing and comfortable to share data voluntarily with company that you do business with.
One of those key drivers around brand trust, around industry difference that people are more comfortable with, around value exchange, a sense that by giving you my data as a customer, I perceive that you give me a different kind of experience, which I value more. Trying to understand what are those things that make customers more comfortable sharing their data with you, which as we’ve heard, is so critical to businesses today. Through all of this, through the teaching and writing and research. Also, through my own advising and consulting the companies, I get a chance to work with very different industries, from really all over the world. That’s really what interests me, is to look at very different kinds of companies and see what do they have in common.
What are the common challenges we’re seeing across very different types of businesses in different parts of the world. Ideally, are there certain frameworks or methods we can develop that are useful to answer questions whether you are Google or China Eastern airlines? Or a Swiss watch maker like Movado. What are the frameworks to think about strategy today, that can apply on these very different circumstances? What I found increasingly, is across all these different kinds of businesses, a focus on these questions of digital transformation, right? How do we transform in order to thrive and exist, and continue to exist frankly, as a business in the digital era.
That’s really the focus of my latest book, which I want to talk to you about today. I will say, my publisher is really happy because as the book came out, the interest in the concept of digital transformation has really taken off. But it’s almost become a buzzword I have to say. There’s so many conferences, everyone is talking about digital transformation, digital transformation. I’m not sure we all know exactly what we’re agreeing on, what we’re talking about. I always like to start with a definition of key concepts that I talk about with executives. For me, digital transformation is actually a pretty straightforward definition to me, it’s actually a question.
The question of digital transformation is this. How does a business that started before the internet need to adapt and change in order to grow and reach its next stage of profitability in the digital era. In an economy that is so transformed by these successive ways of new technologies, right? Let me just stress, this is a very different question than how do you create a new startup. How did two people in a garage look at the world around them, all these emerging opportunities and trends and behavior and then say, “Aha, I have an idea for the next Uber, right?” Uber for pizza, Uber for toiler paper, whatever it’s gonna be. You get these crazy pitches.
It’s a very different question than how do you take a business that was started decades ago, maybe a century or centuries ago, and how does it transform? How does that business that has certain advantages, right, it has resources, it has human capital, it has lots of talented people working there, it has customers, or you wouldn’t be in business. Therefore it must have customer intimacy and knowledge of its market. It has a lot of things, and an advantage over a startup, but there are also certain different challenges, right? That established business has ways of operating, has an organizational chart, has a design, has a mindset and ways of thinking that are based on its prior history.
In fact, I would argue, if I was gonna boil the entire book down into a single slide, this would be that slide. Digital transformation is fundamentally not about technology. It’s not about technology. Of course you’re gonna use technology, but that is not the key to the transformation, that is not the hardest part for these businesses, these preexisting businesses, making this transition. They key is really changing the way that you think as an organization. Because organizations are like people. We are born as human with a great deal of what’s called neuroplasticity. Our brains are very fluid and able to adapt. As we are growing up, our brains are literally rewiring themselves and the neurons are reconnecting and developing new pathways based on our experiences and interactions.
As we grow, those pathways get put in place and they get set. You reach a certain age, like myself, and your brain has developed certain ways of thinking. That’s advantageous, it allows you to have intuition, that expert knowledge and wisdom, and ability to recognize patterns and immediately size up a situation. But at the same time, it also means that you have certain assumptions, certain ways of looking at the world, that are based on your past experience. Certain lenses through which you look at new situations.
Organizations are exactly the same. A business that grew up in a completely different environment, in a pre-internet, pre-web era, has developed not just an organizational chart and a business model, and a revenue model, and claw structures, but even ways of thinking, ways of identifying opportunity, ways of defining your competition, of defining what business you are in, that we’re all based on that environment. Now that company finds itself in a completely different environment. It’s critical that we learn to identify those unconscious assumptions we are making as a business. Learn to question some of them, set aside some of them and start to think about our strategy in a different way.
I find it useful to make this transformation by thinking about changes and how we approach strategy in five core demands. These are demands we’re all really familiar with. They’ve always been a part of business. But there are five areas of strategy that we need to learn to think differently about in the digital era. We need to learn to think differently about customers, and our relationship of our business to our customers. We need to learn to think differently about competition, who is our competition? What are the dynamics of competition today? About data, and the role that data plays within the organization, which is quite different in the digital era.
We need to learn to think differently about innovation and how we manage innovation, and specifically the risks of innovation. Lastly, we need to learn to think differently about value. Our value as a business. What is our value proposition, why do we exist? What I want to do now is talk a little bit about each of these five domains and what is shifting in the strategy playbook. I’ll give one or two stories in each one cases to illustrate this kind of transformation happening.
The first domain of digital transformation is customers. Rethinking our relationship to our customers as a business. This has really undergone a fundamental transformation in the last decade. We have moved, as I’ve written in my previous book, from a world where marketing and customer strategy was best understood through a mass market model, right? In the 20th century, this is really how you grew businesses. Focusing on economies of scale from the firm side, using mass production of a few products and services that met as many needs of as many people as possible. Mass communication with the rise of mass media.
It was all about figuring out what’s the most compelling message and using integrated marketing communications to say the exact same thing every time to everyone. Always be consistent, that was our mantra. The customer was completely passive, they just sat there, their only job was to be persuaded or not. This was how firms from consumer, packaged goods, to B2B, professional services, this is how they grew, it was based on this mass market model of the customer relationship.
But today we’re in a very different environment and it’s one that’s much better understood. I would argue thinking of customers as a network. Not just an aggregate of individuals, but a dynamic network, where the customers are the nodes, and every customer has access just like you do, at any moment, to so many digital platforms and tools that are connecting them to each other, as well as connecting them back to your business. They have access to transparency of information, of communication. From search engines to social media. They can be influencing your reputation, they can be creating new opportunities for you at any moment, and they are looking to interact and hear from you and be served by you, across an incredible myriad of touchpoints.
What are the business that I see has been making this transition, very well actually is Domino’s. Anybody growing up with this brand, remember Domino’s from some time back. Right? A few of us. I grew up with Domino’s back in the 1980’s. Those of you who did raise your hand, does anybody remember, what would you say back when Domino’s started, what was the value proposition of Domino’s, what did they promise to you as a business? Delivery, that was their offering, but more specifically, what did they promise about that delivery? 30 minutes, I heard, yeah, or, exactly. 30 minutes or it’s free. It was a very clear, very simple value proposition. “We’ll get you your pizza in 30 minutes, or it’s free.”
I remember in high school, going out, this was amazing. We’d go out on lunch break, and we’d go to. Okay, for the young people in the room, that is a telephone. It’s this thing you held to your head, and there’s this rotary dial and I’d spin that, and I’d order my pizza, and I’d check my watch and I’d say, “I hope they’re late. If they’re late, I get a free pizza.” That was very successful for its era, and the company grew. But Domino’s has been saying, “Okay, how do we rethink that value proposition for today’s customers who are so connected in so many ways?” They’ve been doing some great work doing so, they have so many ways you can order your pizza. So many ways to make it more accessible, instant, and this incredible delivery experience.
You can order it through their app, and it’s a very well designed app. You can even speak into the app, it has a very good AI engine to understand your natural language and figure out what your order was. You can also order your Domino’s through Alexa, Amazon Alexa. You can order it through Twitter or by sending a text message. You can literally send an emoji of a slice of pizza to Domino’s, and they will send you back an actual pizza. Customers love it. My son’s in high school now, and he’s crazy about the brand.
They’ve really tapped into what today’s consumers are looking for and the kind of delivery experience that they want. Their CEO Patrick Doyle has said, “We are actually as much a technology company as we are a pizza company today. We’re really in the delivery business and how we bring that to life is as much about the technology as it is about the toppings on the pie.”