My last article The Road To The Real Future For The Tours and Activities Industry seems to have raised more questions than answers looking at my inbox and also from several discussions with clever folks over the last few days.
This is not surprising as I was attempting to predict the future for a whole industry. As most are aware of predicting anything with accuracy even 3-6 months out is increasingly difficult. Therefore, predicting five years plus could be classed as a fool's errand but letting others shape your future is probably more foolish.
Predicting the future is always going to raise more questions than answers and that is good as it is how we learn and have an impact on the future. However, what has struck me this last week from many discussions is there is a misunderstanding among many activities and tour operators and those that serve them from marketing, technology and distribution about what disruption actually is.
I want Tour and Activity Operators to understand disruption at the same level they understand customer service and guiding. This may seem daft to some but I believe it is critical if they are going to be able to shape their own future rather than have it shaped for them.
I refer back again to my previous article The Road To The Real Future For The Tours And Activities Industry.
Those in the industry that will thrive in the future will stop responding to the market as virtually all of us do now. They will thrive by changing how the market works. They will make the competition look like dinosaurs by changing the market from one market to millions of markets on-demand providing personalization at scale.
Disruption has happened constantly throughout history what is different this time is that it is digital and happening at a speed that people cannot contemplate and struggle to understand. The ripples of this digital era of disruption are going to be never-ending!
Tour and Activity operators are great at improving their businesses. They can grow local market share by really focusing on what they do and by delivering the best possible service to their customers. This is the basics and those doing it well tend to stay within their current categories of operations and target a similar set of customers. They help the customer experience develop. Improvement, however, is not Disruption!
Those that innovate are special businesses led by passionate individuals backed up by great teams. They are constantly focused on improving their business as above but also on innovation. Innovators can grow not just a segment or category but a whole industry. They can also capture not just grow market share but drive it. Our industry at present has a lot of innovators doing a fantastic job. I would argue that the operators who are innovators with a few exceptions are not thinking big enough with their innovation. Those that are are digital-first companies on the retail side. I get excited when I see companies executing on great innovations. They drastically improve the customer experience. Innovation, however, is not Disruption!
Disruption creates entirely new categories and new markets at scale and critically also changes customer behaviour patterns. I am struggling to see many true disruptors in Tours and Activities at present. Airbnb can be classed as one who is trying to be.
Tour and Activity Operators and all sectors of our industry can, of course, operate across all three dimensions of Improvement, Innovation and Disruption The reality is though that most will focus on Improvement, a lesser amount on both Improvement and Innovation and only a tiny amount on Disruption. I am predicting that most Disruption to our sector will be driven by companies and individuals who are currently not in the sector.
For a Tour or Activity Operator or any other company in the industry who wants to truly disrupt the industry they need to think about four things to disrupt they must focus on four areas:
- The Market: See above paragraph in italics. Organisations who want to disrupt do not see the market on how it is but on how it can be shaped and changed in a way that customers love. I believe this will be driven by the thoughts of not one Market but millions of Markets. Each customer will be a market of one that will be personalized.
- Customer designed from start to finish. All focus on being customer-centric and meeting not just their current needs but their future needs as well. The customers may not even know what their future needs are!
- Customer experiences at every single touchpoint both digitally and face to face that delivers and exceeds expectations and is authentic enough to make the customer feel emotions.
- Speed is essential to disruptors they are changing the World and they are in a hurry. They have to make big moves and some will fail or at the least cost serious money without short term return. This requires a very rare modern leadership ability not just in an individual but in a team off people
The Tours and Activities Industry has not seen that many disruptions to date just an increasingly fast-moving commercial landscape that is Improving and Innovating at speed. That will, of course, carry on but true Disruption will follow. No matter whether you are intending to Improve, Innovate or Disrupt you are reacting to Global shifts that none of us can control.
The Drivers Of Change
People are the drivers of change and we are all on a daily basis contributing to rapid change. The levers of economic power are shifting around the World combined with rapid population growth in many destinations where economic power is moving to. The younger generations have different values from previous generations and all of this is being delivered and speeded up by technology of multiple types.
The Resulting Trends
I could ramble on here wth about twenty-plus trends that the drivers of change are creating however I want to focus on a few that I think will impact us in the Tours and Activities Industry the most.
a. Always connected customer living life via a mobile phone and other technology
b. Market boundaries shifting.
c. The increasing value people will place on time. After all, you cannot buy more of it!
d. The experience led customers will grow rapidly and products will continue to be devalued versus having experiences
Disruptors will identify the drivers of change and the trends that are caused by them and then create services for the customers that deliver in the way the customer wants, personalised to them at the right time. They will do this digitally and at scale.
Why do I believe more operators could Disrupt?
Operators are really good at a lot of things that disruption requires. They constantly build and deliver new and different products and services. These products and services are personalised, have great values, offer fantastic customer engagement and have pricing models and formats that can be adapted to suit a range of customers.
Where we often struggle is actually matching these great attributes above to routes to market which increasingly get more complex. Direct, Trade, OTA, Membership Based, Customer to Customer via Social, and critically one that we all struggle with On Demand!
If Operators can think about disruption and apply what they are already great at to the complex routes to market then they may well come up with true Disruption strategies. At worst you will improve and innovate on what you are currently doing.
Why do I believe our Industry will face Disruption from outside the industry?
Our industry will be disrupted from unexpected directions and organisations because of the following reasons.
The barriers to entry in this market are minimal and no organisations or groups of organisations have built a moat big enough that a smart new well-resourced insurgent could not cross.
We have no Brands in the sector that the average consumer would recognise. I would argue that Tripadvisor is the one closest to a consumer brand but they are recognised for travel reviews not necessarily for Tours and Activities.
An attitude of we are doing okay because we are growing so not that worried about all the changes that are happening abounds in many sectors of our industry. This is dumb thinking but because we are human we are prone to it.
We are customer-centric when we have customers in front of us face to face but we are not customer-centric digitally where the customers want to interact with us.
Finally, money always plays a part. Big money is always interested in sectors that can be disrupted as the returns can be huge so investment eyes are watching and planing.
Local Disruption Versus Global Disruption
Both are going to happen and all the focus, discussion and money will be focused on Global Disruption Organisations in our sector. Local Disruption will be much slower but this is where small operators can make a difference. The reality is not many local Operators want to be Global companies never mind Global Industry Disruptors however do not wait to be disrupted you have strategic advantages that Global organisations and those that intend to be Global do not have and if you want to secure your future and thrive you have to be prepared to disrupt at a local level. Remember, Operators are the engine room of this industry ship no other part of the industry can exist without corporation of the hundreds of thousands of small operators. Our very fragmentation is what attracts Disruptors but it is also a strength if we want it to be.
So What Should Local Operators Do To Disrupt Locally?
Play to local strengths as they are aligned with what many of the customer's trends are that I discussed above.
- Get connected locally to not just those in the sector but all those businesses in the tourism. You already are but this needs to move from connecting offline to online. Big Hint! Ignore this and you will not control your future.
- Double down on personalization and customization. Remember not one market but millions of markets of one. Operators can do this with services but again need to think about how they do it digitally.
- Do not adapt to the values of the market create your own market and values as it will be aligned with what the trends of customers want.
- Patriotism, not the daft flag-waving crazy ranting kind. The kind that puts local first. Be devoted and rigorous in creating and developing local tourism eco-systems that reinvest locally and be very wary of commercial partnership that extracts more value than they deliver.
- You are different and unique and that is a huge strength as it is difficult to replicate at scale so play on it and keep developing and innovating on it as again it fits the trends above.
Global Disruptors have advantages with regards to digital understanding, reach and obsessional focus on the customer digital experience but I want to focus more on their disadvantages. They think Global fist and hence have to adapt to local environments at multiple levels this is difficult and means they make a lot of mistakes and resulting customer service can be weak. They are always going to be outsiders to local as they will focus on digital and not have boots on the ground at scale. Although some will decide to cherry-pick destinations and compete with you in actual delivery as well as digitally. They have to take the time to learn a lot about many different destinations and time is valuable as speed is critically for large scale disruption. They tend to end up looking same same big corporate beasts which goes against the trends I discussed earlier. Most of them will fail in their quest for Disruption at scale but some will emerge as winners.
Improvement and Innovation is not disruption. Understand the difference and then design strategies that suit your businesses and desires. If you do not want to rule the World design and implement local disruption strategies that will benefit all the tourism organisations taking part but please adopt the same obsessional customer service focus you have face to face with guests and apply it digitally as well. Do not be scared of Disruption and certainly do not spend any time complaining about it which is equivalent to complaining about the tide coming in. As an industry, we have the social drivers and trends in our favour so we have an opportunity to thrive like never before. It is only a case of getting out of our comfort zones and doing something about it.
So who is up for some Disruption?
Again if you got this far many thanks for reading my ramblings I really do appreciate it. Please contribute with comments as we all need to learn and keep learning.
If anyone wants to discuss my points in more detail I am always happy to have phone/video call or a coffee if we are in the same destination.