Today as we face a challenging economy and ever increasing belt-tightening, there is an unfortunate consequence on our industry.
Innovation is being quashed.
No one planned for this to happen. But happen, it has.
The innovations over the last few years have been incremental at best.
The GDS firms, once the innovation leaders of our industry, are now owned by private equity [and highly leveraged as a result]. They have hunkered down, outsourced, laid off and for the most part are sticking to their core business – milking the cash cow. That is not to say that they do not have bright people working on solutions for the future, but their focus by the very nature of their reliance on the airline traveler for the bulk of their revenues, is on surviving the airline cutbacks and the potential decline of booking activity that could result. They have actually done a masterful job of cost cutting and preserving their margins for their shareholders. But most would agree that it is tough to innovate when you have cut not only into the muscle, but into the bone of your organization.
The online players and GDS New Entrants (GNEs to their friends), who have also been significant contributors on the innovation front since the advent of the Internet, are also facing some uncertainty, which tends to stifle or at least redirect investment. And the more these companies rely on airline bookings for their revenues, the greater the uncertainty.
You can’t blame any of them.
Like their private counterparts, these companies have to serve their public and venture shareholders and do their best to eke out a profit by cutting costs until we see some signs of recovery.
But whether large or small, public, private or venture backed, we can’t save our way to prosperity, as true prosperity relies heavily on innovation.
Somehow during times like these, spending on R&D, internal think tanks and even acquisition of smaller, more agile innovators has slowed down considerably for the larger firms in the industry. Again, no real surprise there. It is easier to stay with the status quo and wait for better times to return to innovation spending.
There is an age old saying from the book of Proverbs that says “Where there is no vision, people perish”. I would take this further and say that where there is no vision and no innovation-led risk and investment, companies and entire industries perish.
Leaders of the large, well-funded companies deal every day with the natural tension between stepping out and taking investment risk versus maintaining the status quo. Innovation requires risk and investment at the outset and it requires positive energy and excitement to thrive.
The entrepreneurs in our industry have been charging full force toward the creation of the next generation of technology and customer experience. But funding these ventures is tough and generally, their pockets aren’t deep and bootstrapping is the norm versus the exception.
Angel investors can deepen those pockets somewhat, but there is still often a gap in getting a dream to market and the “no man’s land” between needing $1-3m to get your dream over the line and the $10m deals that most venture firms consider their minimum, is vast.
Once you get the technology built, you still have to build out the infrastructure to support the business and oh yeah, you have to attract customers. Often, the venture community won’t fund a business without a solid revenue stream and getting there is hard when you have been operating on a shoestring during the build process. Finding a “white knight” to help you get over the finish line is every entrepreneur’s dream.
But it takes a very special investor or strategic partner to believe in true innovation and to see industry changing technology for what it is.
This spring, I will be coming out with a new book, titled Bootstrap Business. Actually, I’m one of many contributors to the book. The book will be released in the spring of 2009 and features best-selling authors Tom Hopkins (How to Master the Art of Selling), Jack Canfield (One Minute Manager), and John Christensen (FISH!).
In it, I talk about how it doesn’t really take a fortune to get true innovation to market. In fact, most entrepreneurs would kill for just a 10 person team and a $100k marketing budget to get their dream to the next level.
Most of the big firms in the industry waste more resources than that annually just in unproductive meetings and conference calls alone – planning the next meeting to plan the next planning session. Say it isn’t so! I lived it for nearly 20 years as a member of corporate America and in my 12 years as a consultant have seen “meeting inertia” paralyze organizations.
Amongst entrepreneurs risk is not a dirty word and fortunately we don’t have to spin our days from meeting to conference call to meeting, never truly finding time to get work done.
Most of us have actually put our life savings on the line, more than once have paid payroll with Master Card or Visa and have had to make the tough choice of balancing the need to travel to sell your wares or raise money, with keeping needed talent on payroll.
My signature line is that I’m an extreme entrepreneur. For those that don’t know, this is actually code for “I’ve been working 2 years without a paycheck”. To do that you’ve gotta believe in what you are doing.
Entrepreneurial innovation is one part risk, one part irrepressible drive, one part altruism, two parts passion and some would say, one part lunacy. And that innovation doesn’t usually focus on small, incremental steps forward, but instead, giant leaps of not only faith, but of monumental change. Sometimes it is change in the status quo, change in consumer or business behavior and sometimes it is a wholesale change in approach or technology.
I’ve led this kind of change from within major companies as a salaried employee, from outside as a consultant and now as an entrepreneur. I have to tell you from personal experience that no matter the cost, and whether you are a person responsible for product innovation within a corporation, an online player, a supplier, a venture backed firm or you are still going it alone as an entrepreneur, there is nothing like innovation to spark growth.
And it feels awfully good when you can see the top of the mountain ahead and when you hear cheers from behind. It gives you the spark needed to take that next step that is needed to get your idea implemented.
I am envisioning right now what it feels to BE on top of the mountain.
Imagine if you will what would happen if we marry entrepreneurial spirit with corporate discipline and a focus on execution and fund innovation properly. Whew. That would be powerful.
Innovation. It will be the difference between success and failure as we move forward.
If you’re a believer, call me. Let’s make it happen together.
Chicke Fitzgerald
813-925-0789
Founder and CEO of the Solutionz Group – 12 years of growth and innovation consulting, as well as business incubation of the following ventures:
LeisureLogix – Industry changing technology marrying trip planning, location based content, mapping and navigation (www.roadescapes.com)
Executive Girlfriend’s Group – Connecting the executive women of our industry
HotelsbyHospitals.com – Helping patients and their families and friends in times of need
KidsforHumanity – A charity for kids to participate in – because helping hands come in all sizes