Innovation: Innovation in a crisis

Tourism HR
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Ensuring innovation in the midst of crisis  

No matter how bad the economy, there are always companies that thrive during tough times. These are primarily the companies that offer more value for less investment/less friction. Disruptive innovation usually starts from the low-end of the of markets, so SMEs, while lacking the resources of large multinationals, are well-positioned for tough times and have more built-in flexibility. It is much easier for SMEs to gain business, since both consumers and businesses are actively looking for ways to meet their needs with new, more affordable solutions.

Innovation does not have to involve costly technological innovations. Quite the opposite, in fact as it can very often mean simply achieving more with less. Keep in mind that flexibility is a powerful asset in a crisis!

Offering more for less

Innovation can take many forms but at the most basic level it involves offering more for less. There are many ways to cut down on costs that make sense both in the short and long term. This matrix can help you define what kinds of cost-cutting are best suited or most practical to your business.

Quick wins can serve as the first response or bandaid for your business. These are areas where you can see results immediately. These are usually the obvious things everyone knows are costly and not really delivering results, but that have been kept around as a status quo.

Frivolities are costs that are simply unnecessary, or “nice-to-have” expenses that are not a priority to dispense with during times of abundance. Individually these are not obvious costs, but cumulatively, they can have a major financial impact. Frivolities can be anything from unnecessary executive travel to an extravagant assortment of snacks, or overly expensive company events.

While restructuring is always painful, the sooner you do it, the better off your business will usually be. Even if it is not the best time to sell assets, divesting or dispensing with less profitable products or services in your value chain could be beneficial since this would both save capital going forward and provide an immediate increase in cash reserves.

Productivity improvements help you do more with less, which means that they obviously should be at the heart of every cost-cutting program. Productivity improvements can take time, which means in times of crisis, you might need to take other measures to increase cash reserves in the short term. However, the benefits of productivity improvements are not limited to short-term impact on the bottom line. Their impacts are longer term can even become a clear competitive advantage for the business going forward. In the current crisis, the travel and tourism industry will have to think long-term while tackling the short-term crisis imperatives.

Emergent innovation during the Covid-19 crisis

The economic impact of the pandemic has forced travel and tourism businesses to transform their business models overnight in an attempt to stay afloat amid economic collapse, whether refocusing on domestic tourism or delivering their hallmark experiences while allowing their users to socially distance. Necessity forces companies to innovate. However, waiting to simply react to a crisis is not a workable innovation strategy in itself. Crisis innovation can be triggered in a number of ways:

  1. Challenge orthodoxies: Orthodoxies are assumptions that held true at a certain point in time but are not revisited or challenged as realities change – this can be fatal in a crisis situation but challenging orthodoxies can yield paradigm-shifting innovation even under normal circumstances. Conversely, being blind to orthodoxies puts companies at risk for disruption. Regularly ask yourself: “What orthodoxies might be limiting growth opportunities or putting my business at risk?” 
  2. Embrace constraints: Constraints are beneficial, and can accelerate rather than inhibit innovation. Many businesses are now confronting extreme constraints, which are necessitating significant changes in their operations. Under normal circumstances, businesses should force themselves to consider scenarios that might at first appear extreme or unlikely. Consider how your business would need to operate under different means or circumstances to generate innovations that may not have thought of before.
  3. Move quickly, perfect later: Necessity-driven cases have unique circumstances, of course. A crisis changes the next-best-alternative option. 
  4. Delight customers with costovation: Costovation is innovation that cuts costs while exceeding customer expectations. Some quick wins such as virtual tours have already been pioneered within the travel and tourism industry.
  5. Expand stakeholder collaboration: Collaboration is a vital competitive advantage, particularly in the travel and tourism industry. As value-chains are disrupted, talent more in flux, and the rate of technological innovation accelerating, collaboration with stakeholders is increasingly essential. Personnel shifts are happening on two extremes: companies like Domino’s that provide lockdown-appropriate services are looking to hire 10,000 additional staff to keep up with demand, while airlines and large hotel chains are laying off large segments of their workforce. In China, a group of more than 40 hotels, restaurants, and cinema chains that had all taken a significant economic hit shared a large proportion of their staff with Hema, a supermarket chain owned by Alibaba, that was in need of help to meet demand for deliveries. Connect with tourism operators in your own community to see if there are opportunities to create a strategic alliance; it could be to share staff or purchase supplies together.
  6. Foster consumer loyalty: Keeping customers close is always critical, but it is especially so when competitors are offering convenience, job security is low, and consumers sensitive to costs. Fostering loyalty among your local community is a vital first step while keeping travellers interested via online platforms and innovative and evocative marketing. 
  7. Adjust to new consumer habits: It is hard to stay six feet away from other people in a crowded supermarket, but major chains and SMEs alike are offering curb-side delivery and online shopping options, and countless other companies are investing in or just beginning delivery. These will be major considerations for travel and tourism businesses with traditionally high people traffic such as food & beverage, hospitality, transport, and certain tour operators.
  8. Rethink the traveller experience: The entire concept of the customer experience is changing dramatically. It is not a small undertaking for restaurants, hotels, and other experience-driven businesses to completely rethink service delivery. Creative solutions will differentiate resilient businesses in these turbulent times. Some examples include: restaurants providing cooking classes based on their menus, lodges providing virtual safaris, and Indigenous businesses offering spiritually calming experiences for locals. Even the almost defunct concept of the drive-in movie theatre is making a come-back amid requirements for physical distancing.
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