Arnie Weissmann
In New York last week at Millennial 20/20, a business event promising "to showcase the future of commerce," Leonard Brody took the stage. In the not too distant future, he predicted, changes in the environment of commerce will include "the single largest economic event in human history:" a billion more people will be on the web in the next 24 months, joining the 3 billion already online.
Although most of them will be from the developing world, this stimulation of economic activity will have consequences that will impact everyone.
(Two years is as far out as Brody thinks predictions can be even marginally reliable. Beyond that, he said, "it's science fiction.")
As a result of this and other trends -- increased migration to cities, the willingness of capital markets to bet against their current customers, trusting the virtual world more than the physical world, an increasing number of people living solo, a preference for the ownership experience over true ownership -- we are seeing, Brody believes, "a reset of the planet's operating system."
Brody is a business-book author and cofounder of Growlab Ventures, a San Francisco- and Vancouver-based accelerator. He has been involved in helping fund several startups.
He is a fan of "parallelism," a belief that large corporations do a terrible job of innovating, and that a logical path for them is to fund a separate company whose goal is to come up with a parallel model so superior that it will put its parent company out of business.
He cited InterActive Corp. (IAC) chairman Barry Diller's Hatch Labs. It was discontinued in 2013 but was the birthplace of Tinder. (While Tinder isn't threatening IAC businesses, Diller has suggested it succeeded because IAC resisted getting actively involved as Tinder gained traction, and let it develop independent of IAC expertise.)
All of which raises many interesting questions, not least of all: If you were to fund the competitor who would put you out of business, what would that business look like?
It's a bit of a trick question because the underlying assumption of parallelism is that you can't possibly know. That's why you fund an incubator at arm's length.
But parallelism is a paradigm based on the behavior of large corporations, and most Travel Weekly readers run small businesses. And they have, in fact, demonstrated an ongoing entrepreneurial resilience that defied the commonly held belief that small-scale, independent travel retailing wasn't sustainable in the face of global OTAs like Expedia (chairman: Barry Diller).
What successful large corporations and successful small enterprises have in common is that when times are good, they are unlikely to revamp their model. Which seems strikingly reasonable, even though it's common to hear stories from companies large and small about how a crisis forced their businesses to become better.
By all accounts, 2017 is starting out strong for the U.S. travel industry, and it's human nature to ride upward momentum and avoid risk.
But it could also be argued that now is a great time to summon your entrepreneurial self and ponder the inefficiencies, the friction and the limits of your model, to think about the weaknesses that today's rising tide enables you to ignore. How might a competitor probe your model for flaws and come up with an alternative that would make your two core services -- travel planning and transacting -- more enjoyable for your clients?
Go ahead and do that, but there is another takeaway from the recent history of travel retailing, one that could also be dubbed parallelism, that might help guide you through the exercise.
In observing commonalities among travel retailers large and small, I used to believe that we were headed toward a convergence of models. Small retailers were saved by embracing technology, and OTAs were enhanced by employing thousands of live travel agents in call centers. I thought that as time went on, the tools and skill sets of both OTAs and travel's sole proprietors would appear increasingly similar and that scale and specialization would be the prime differentiators.
But as my thinking evolved, I now believe that what separates OTAs and small retailers are profound differences in the way they tap into the same underlying motivations that consumers bring to the trip-planning process.
For both, it comes down to whether travel planning is seen as a chore or enjoyable, and how any drudgery might be reduced and happiness maximized. OTAs and travel advisers alike can each make the argument that they make travel planning faster and easier, and both can also appeal to those who truly enjoy the travel-planning process, either from a do-it-yourself (OTA) or collaborative (adviser) perspective.
I don't think that will change because an additional billion people go online nor because more people are moving into cities or increasingly living alone. OTAs and tech-savvy travel agents will both benefit -- or not -- proportionately as a result of these trends.
The parallelism that is perhaps most important when it comes to travel retailing is that the two dominant models -- one primarily online but with a human element, the other primarily human interaction but with strong technology support -- will coexist, not in parallel universes, but like binary stars locked in a gravitational dance, orbiting together and apart for, well, at least two more years.