Admit it – true innovation in travel is a bit of myth

NB: This is a viewpoint from Dmitry Bagrov, managing director at DataArt.

Different sources give slightly various definitions for “innovation”, but all of them agree that it is something new that is being introduced to our life, whether it is a new idea, method, or device.

I have often found it really amusing to read through the many definitions. They remind me of people trying to define what “democracy” is and agreeing that it is derived from the Greek demos “the people” + kratia “power, rule”, and all of them having a different idea who are those “people” exactly and what is included in the “power” thing.

Same about innovation, really. When is an idea or device are new? Is the Samsung Galaxy S4 an innovative device? Is the iPhone5?

They are obviously new, but hardly innovative. The first Blackberry hit the spot, however, because it opened up a whole world of opportunities for everybody else. Same for the first iPhone.

Perhaps this would be my definition of an innovation: something new, whether it is a truly new thing or a new combination of things that have been around for a while, but necessarily something that opens up entirely new opportunities for the rest of the market, at the same time killing off a section of the market that becomes outdated.

The subject came up when I was as a panelist recently at a Question Time event DataArt hosted in London. I suggested innovation per se was a bit of a myth in the travel industry.

Online travel – the ability for the general public to book holidays, flights and other related products without leaving their homes – was an innovation.

It took the elements already there (web, payment gateways, etc.) and combined them in a slightly new way, thus creating a world of opportunities for the market and effectively killing, or severely injuring, traditional high street travel agents.

Everything that has happened in travel since then has been a process of honing and refining things to make the process more convenient and natural for a user and provider, but it does not bring totally new opportunities. Well, not yet.

  • Mobile? Effectively, it is merely a way for a computer (and therefore all the merchants selling stuff online) to leave the desk and follow you everywhere.
  • Cloud? Well the computer now has to be packed down to the size of a smartphone, and can’t have everything on it, so let’s have access to everything instead with the said everything being stored somewhere else.
  • Big Data? Well there has always been is A LOT of data kicking about.

Are these innovative?

There have been plenty of technological advances – and some exciting ones, too, but I did not throw away my desktop computer because I have a smartphone, and my music collection is still sitting snugly on its hard drive (although, admittedly, the rarely listened to parts have been moved to the iTunes cloud), and Big Data methods are certainly providing me with tools to support my decision-making and thinking process, but they are not replacing it.

So, imagine though that suddenly small aircraft become as widely and – most importantly – easily used as cars.

That will be a true innovation: imagine what kind of possibilities for travel it will create, and what will happen to car rental and short haul airlines!

Or if we finally get rid of the image of the burning Hindenburg crashing down from our collective subconsciousness and faster airships will come back to roam the skies?

That will be a true innovation – air travel made comfortable for the masses again – and will also put pressure on traditional airlines (there seem to be many things that can ruin them these days, indeed).

My belief is that everything currently paraded as innovative in travel is in fact upgrading and updating what is already there, introducing new features at best.

True innovation is yet to arrive, but I can bet that when it does hit us it will come from an unexpected direction. And, then, it will be really exciting and worthy of the “innovation” monicker.

NB: This is a viewpoint from Dmitry Bagrov, managing director at DataArt.

NB2: Photos from the Question Time event on the Tnooz Facebook page.

NB3: Myth vs reality image via Shutterstock.

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Viewpoints

About the Writer :: Viewpoints

A founding principle of tnooz was a diversity of viewpoints from across the spectrum. Viewpoints are articles by guest contributors from around the travel and hospitality industries. The views expressed are those of the author. and do not necessarily reflect those of the author's employer, or tnooz and its partners.

 

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  1. Paul Zwarts

    There was an interesting BBC interview (Im thinking around 2005 or 6) where the years Nobel Laureates did a round table discussion. Obviously it was dominated by rather loudmouth American and UK boffins from the pharmaceutical industry.

    The host then moved to the Chinese Laureate who was silent the whole time and asked him to explain something he mentioned prior to the broadcast.

    “Tell me about your concept about the originality of science and art….”

    “It’s quite simple. Science is merely a plant growing in the ground which is relevant to the time and scene. Man simply notices the plant and harvests it. If one man misses it, another will come along and harvest it at some point. Therefore science is not a true aspect of mankind and there is no originality. ”

    “Art on the other hand is. Noone in a million years would have created one of Mozart’s sonatas unless Mozart himself did”

    The pharmaceutical guys had quite the freakout to this statement and became very blowhard about it. “How dare you suggest that my medical patent is not mine and mine alone”… something arrogant like that.

    The point here is that there really isnt any truly original ideas because we innovate ideas from a scenery of thinking which already exists and we adjust something slightly. Whether innovation has occured recently in the travel industry is probably a hallmark that it will happen soon. The quiet before the storm, if you will.

    I think the social media revolution has created a framework for some very interesting things to happen, just noone has done it just yet. But it’s coming….

    My half cent.

     
    • John Pope

      Fantastic comment, anecdote and insight, Mr. Zwarts.

      Tnooz needs more good men (and women) like you to stand up and be heard more often.

      The “quiet before the storm”, indeed, and, even more prophetic, “the social revolution has created a framework for some interesting things to happen, just no-one has done it yet.” are both excellent observations.

      I believe the general assumption in this thread and site – but for occasional exceptions – is that “innovation” needs to happen via some kind of technological change or development (big or small). Although, that may also be a conventional wisdom theme heard throughout the broader tech media – or some other Silicon-Valley-inspired media 2.0 derivative.

      Whereas, to me, that just seems WAY TOO OBVIOUS, and has, by de facto standard, become the boring status quo way of thinking to produce innovation. Rarely do observers – at least on my travels – recognize an opportunity to create revolutionary change through other means – like Social Revolution (minus the “media” as you eluded to).

      Revolutionary innovation, radical disruption, Blue Ocean Thinking or whatever other name you want to attach to it, is indeed right around the corner – the “perfect storm” is approaching, because the conditions are ripe.

      Please return to your seat and buckle your seat belts, ladies and gentlemen, we may be experiencing some strong industry turbulence in the weeks, months and years ahead.

      “All the forces in the world are not so powerful as an idea whose time has come.” Victor Hugo

      Innovation is alive and well in travel. Make no mistake about it.

      Shhhhhush, you can hear the silence and calm (before the storm), if you listen closely enough.

      “The Internet is not a technology, it’s a philosophy. It’s a philosophy of innovating without asking permission.” Joichi (Joi) Ito – Activist, Entrepreneur, Venture Capitalist (early Twitter investor) and Director of the MIT Media Lab (and all-round brilliant guy)

      Believe that. 😀

       
  2. Dan G.

    Thanks for the thought-provoking post, Dimitry. But I think you under-value the importance of incremental change.

    If your benchmark is The Invention of e-Commerce, then it’s not surprising that we haven’t seen many innovations of comparable significance. Indeed, on your own terms, online travel doesn’t qualify since travel was just one of many segments that shifted online at around about the same time. As Timothy points out above, the oldest profession – or at least a spin-off thereof – probably beat travel to the punch.

    Too much of a focus on Massive, Industry-Crushing Transformations distracts from the actual process of innovation. It relies on the fallacy of innovation being driven by lone entrepreneurs jumping excitedly out of baths and into the garage to solve major social or industrial problems single-handedly. I’d like to call it The Rambo Fallacy. Most innovations aren’t driven by one dislocated innovator solving the world’s problems. Most innovations are arrived at through an incremental, iterative process. They are a collection of upgrades and updates until one day someone puts the pieces together. The first movable type printing press was built in China in the 11th Century but it wasn’t until after a lot of upgrades and updates that Gutenberg was able to take it to the (relatively) mass-market 500 years later.

    The good news is, if Industry-Changing Significance is a necessary factor for innovation, then you can only identify very significant innovations with the benefit of hindsight. Which, for the optimists among us, means that we may already have seen some innovations which will change the way we travel in the future – they just haven’t yet. My candidates would be airbnb and the zipcar concept.

    Just musing a bit further, one innovation I’d like to see is low-cost lie-flat beds. In air travel, personalised service is the cherry. The real cup-cake is being able to sleep through the whole flight. I reckon if you had a kind of mezzanine-level of seats which reclined to 180 degrees you’d be able to configure a jumbo to have a few rows of premium economy bunkbeds.

    So, on this sunny Monday afternoon, I’d like to raise a toast to all those incremental updates and upgrades which make small improvements to the way we do things and together add up to very large changes in the way we live. (and to cheap lie-flat beds.)

     
  3. Peter Syme

    What is often dressed up as innovation in travel is often innovation in information, data, payments etc that is not innovation in travel as the same can be applied to other industrial sectors. Real travel innovation is what impacts on a traveler when in the act of actual travel. Online experiences impact on a traveler for sure but at a much lower level than the impact of experience when actually traveling.

    However, because of the challenges of scale and quality the vast majority of innovation focus is applied to the pre travel period. I would argue if they same talent, drive and money was applied to the actual travellers experience we would all have happier customers and indeed be happier ourselves when traveling.

     
  4. Stuart

    or a hoverboard

     
  5. Stuart

    I want a jetpack

     
    • Kevin May

      Kevin May

      @stuart – you mean you don’t have one? Luddite 😉

       
      • Stuart

        Ha. Timothy is right that. Don’t understimate the innovation that has gone before. Not sure it is all just updating. The fact that you can book a hotel and flight on a held held 3 inch computer in 5 mins, and that a lot of folks can afford, would have been pure Q branch of James Bond in the 1970s. Actually the 1990s too.

        I suspect something like this is the real innovation revolution though. Mobile cash payments in Africa. Proper brilliant.

        http://www.theglobeandmail.com/news/world/how-mobile-phones-are-making-cash-obsolete-in-africa/article12756675/

        He ho. Meanwhile, Id still like an eco friendly jetpack that has autopilot that could take me back from the pub…

         
        • Dmitry Bagrov

          System like that was used in Russia in the 90s very widely – you could pay for virtually anything cia text message to a short number. It was short-lived as it was replaced by credit cards.
          Admittedly Russia is a bit ahead of Africa in terms of development, but still this is hardly innovation as it was implemented before.

           
          • Stuart

            Point being that it is still pretty had to get a credit card in Africa, so a reworking and massive expansion of an existing innovation (mobile payments) filled the gap. Still an innovation that has affected millions for the better. But let’s agree to disagree without being disagreeable.
            Tis a fine morning 🙂

             
  6. Chris Thurston

    Excellent piece Dmitry. I think the real innovation in travel will come from marketplace solutions replacing agencies. Technology often brings transparency which eliminates the need for middle-men who use information as leverage over customers. Often this is what sites promoting local travel are (whether they’re aware of it or not) looking to do.

     
  7. Marianna Koos

    Dear All,
    The million-dollar question is: what is innovation? Why is it the focus of many corporations? And finally how red and blue ocean companies’ innovation strategies differ?

    What is Innovation?
    Primarily, there is a distinction that needs to be made between invention and innovation. The essential difference in definition has been debated and these terms are often used interchangeably.

    When mentioning invention, often something new, fresh, revived or different, that did not exist before or what was previously unfamiliar, comes to mind associated with the people of such creation. These developments, designs or formations, however habitually also referred to as new discoveries or innovations. There are hundreds of definitions for invention, yet most have one thing in common and refers to the creation of something original. Maital and Seshadri (2007:29) define Invention as ‘the creation of novel services, products and production techniques’ that is in line with the definition proposed by Philbin (2003:vii), labelling invention ‘an act of pure creation’. Philbin (2003:vii) also makes a clear distinction between invention and discovery and claims that discovery is not an invention but rather an outcome of an observation. In other words, invention is something new, created from scratch i.e. radio, however discovery is extracting something new from an existing creation i.e. penicillin.

    Innovation, on the other hand, by most definitions, refers to the process that brings an invention or discovery into valuable use. Tidd and Bessant (2009:19) define it as ‘the process of turning ideas into reality and capturing value from them’. Maital and Seshadri (2007:29) have similar classification and define innovation as ‘the practical refinement and development of an original invention’. The story of Elias Howe certainly supports these definitions to be accurate. Howe produced the first sewing machine in 1846, yet its stolen patent eventually made Isaac Singer the famous innovator instead of Howe, because Singer created value out of the invention. Unless the C Vitamin was put into valuable use, Albert Szentgyorgyi’s discovery to extract it from the Hungarian pepper would have remained a discovery. The same is true for Alexander Fleming’s penicillin.

    These definitions suggest that there is no innovation without an invention or discovery. In other words, an invention without being innovated offers no value.

    In today’s world, there is also a misleading notion of innovation being equal with new technology. It is more accurate to state that technology in general terms, either new or older, enables innovation. Amazon excellent supplier chain process, from the customer ordering online to shipping the goods from the warehouse, is a process innovation that is clearly enabled by the appropriate technology. Haagen Dazs changed its product positioning, not at all linked to technology, by switching their target market from children to adults. Tidd and Bessant (2009:21) define this as a position innovation.

    To conclude, there is no innovation without an invention, or a discovery, however there is without technology. Invention is a new product of a creative idea and it has no value without the innovation process that extracts the benefits from it.

    Why Innovate?
    Secondly, it is vital to understand the importance of innovation and its purpose. In a nutshell, the main reason for innovation was well summarized by Thomas Edison’s famous quotation: ‘There is a way to do it better – find it’.
    The innovation of the telephone, the rifle, the chronometer, the film, the battery, and many others fundamentally had changed, and improved the way human society live and operate in the world. Innovation has an impact not only on individuals, corporations and governments but according to Tidd and Bessant (2009:5) it has a strong effect on ‘economic growth’. The most recent and substantial innovation is the Internet itself. Its underscored characteristics have physical, economic, and societal significance without any substitution today. It has radically transformed the world by creating new jobs, businesses, business models, marketing strategies, communication channels, globalization and social clubs, just to name a few. Overall the innovation of Internet has impacted all areas of the environment. Without the Internet today there would be no Facebook, Amazon, Google and Expedia, nor that would be Hollywood without the film.

    Innovation is essential because it creates growth and advancement, and it transforms the society and creates social, economical, environmental, geographical and physical benefits.

    Innovate to Compete
    Thirdly, in the business world innovation plays a critical role. The number one reason for this is competition. Competitive pressures in all industries are accelerating. The technology, the Internet, the downturn in the world’s economy, the growth of international businesses, influenced by the general cultural and business factors, have created intense competition. The Chinese government, for example, has been encouraging free enterprise since 1997 resulting in many new startups in the country competing with well-established global firms (The World Bank, 2011:1) previously enjoying monopolies.
    According to Pearlson and Saunders, competition comes from two directions: cost reduction to perform activities or adding value to product offerings (2010:58). In other words, creating competitive advantages, by either do things more economically or creating something new or better, is a must to sustain growth. Maital and Seshadri (2007:29) also put an importance on innovation to ‘build growth and profit’ and declare that ‘the ultimate goal of innovation is sustained competitive advantage’. Tidd and Bessant (2009:5), based on the Labour Force Survey released by Canada Statistics, also affirm that innovative companies grow faster and generate higher profits.

    For the survival and growth of corporations the value of innovation is a constant priority matter to differentiate and be ahead of the competition.

    The Red or Blue Ocean Innovation Strategies
    Fourthly, would all innovation be successful and result in the desired growth and profit? The fact remains that not all innovation produces the preferred results and that is why the know-how what innovation strategy to apply becomes the first question that needs a well-thought answer.

    In the profit-driven business world the ultimate goal of an organization is to provide value to shareholders and the challenge is how to continuously achieve it. Kim and Mauborgne (2005:18) state that there are two streams of innovation strategy: one is the Blue Ocean that creates ‘uncontested market space’, makes ‘competition irrelevant’, creates and captures ‘new demand’ and breaks ‘the traditional value/cost trade-off’; two is the Red Ocean that competes ‘in existing market space’, aims to ‘beat the competition’ and fights ‘for existing markets and customers’. In other words, blue ocean companies are not concerned about competition but rather aim to create new business models, different values at a more economical cost compared to red ocean companies that are more geared towards competing in the existing environment. These innovation strategies provide different results. Maital and Seshadri (2007:54) refer to a study by Kim and Mauborgne, which revealed that ‘62%’ of the innovations are launched by red ocean companies (‘incremental improvements within existing industries’) generating ‘only 38% of the total launch profits’ and ‘38%’ by blue ocean companies (creating new industries) capturing ‘62%’ of the total profits.

    By making an assumption that generally speaking blue ocean innovation strategy results in higher profits, then why not all companies have the same approach? There are dependencies with risks in selecting the appropriate innovation strategy. The industry, and the company’s objectives, age, resources, size, and capabilities, mainly determine the most suited approach. As previously established, innovation is a process to create value from an invention or discovery, therefore the basis for failures are potentially anywhere in the innovation process. This also includes the selection or omission of the right invention or discovery. In the view of Maital and Seshadri (2007:38) innovations fail for many reasons, which include unaligned objectives within a corporation, the scale of the innovation, the economies of scale and the lack of adaption.

    Innovation strategies differ and choosing the appropriate one is primarily dependent on the capabilities and objectives of the corporation and the industry.

    In addition to this:
    The first variable that impacts revenues and profits is the product. Higher profits require higher revenues, and in order to generate more, the product (or service) for sale has to appeal to the buyer. This means that the product must be valued higher by the customer than any of the available alternatives. As Pine states, commodities are ‘undifferentiated products where competition is solely based’ on price, opposed to products that offer unique experiences and satisfy higher level of needs (cited in Maital & Seshadri, 2007:64). In other words, differentiation is the straight path to higher profits.
    How is this value created? The core method, recommended by the Blue Ocean Strategy is to ‘eliminate-reduce-raise-create’, called the four-action framework of product value innovation (Kim & Mauborgne, 2005:29-30), to achieve such distinction. There is a similar approach developed by Jacob Goldenberg, the Systematic Inventive Thinking (SIT), which states that ‘winning innovations’, have at least one of the four basic arithmetic operations (subtraction, addition, division, and multiplication), to the product (cited in Maital & Seshadri, 2007:88). Both theories suggest that by using basic math when reviewing a product, ‘winning’ values can be created while underutilized or undervalued features or functions can be reduced or removed to save cost.

    Are there different levels of product innovation? And if so, do these produce diverseness in terms of value and income? Maital and Seshadri (2007:75) confirm that ‘an organization needs to optimize its own innovation portfolio’ to balance the risks associated with such initiatives, namely incremental, standard and radical. Incremental innovations focus on ‘new versions of an existing product’, while standard innovations add new attributes (Maital and Seshadri, 2007:75). The Blue Ocean Strategy argues that companies that ‘compete to embrace customer preferences through finer segmentation, often risk creating too-small target markets’ (Kim & Mauborgne, 2005:101), suggesting that incremental and standard innovations focus on creating value for existing customers. Radical innovations, on the other hand, essentially create something entirely new and tend to find new markets that did not exist before. These ‘reach beyond existing demand to unlock a new mass of customers’ (Kim & Mauborgne, 2005:102). In other words, radical innovations introduce newness, new markets and also reduce unvalued functions hence cost, which lead to higher revenues and profits. A good example is Starbucks that transformed a ‘$0.50 coffee commodity into a $5 experience’ (Maital & Seshadri, 2007:68).

    If radical innovations lead to higher income through new markets then can it be assumed that continuous innovations result stability in income generation? Henry Ford’s Model T, a great innovation in the car industry, plunged after General Motors introduced its new models giving customers a choice. It is manifested, that Ford failed to re-innovate and replace the Model T, which eventually was forced out of the market by the competition. The assumption above therefore is true. Products, however, have time dependencies. The notion called double ‘S-curve’ (Maital & Seshadri, 2007:349), the typical life cycle patterns of two product innovations, have two common problems: one is to prematurely drop an old product and two is to hastily leap the new one. In other words, constant innovations maintain competitive advantages hence uninterrupted flows of revenues. The avoidance of the timing factor, the product life cycles can have negative affects on a company’s income.

    The conclusion is that exceptional values and cost savings are created by the usage of arithmetic methods (the four-action framework) that lead to radical innovations producing something entirely new, and inventing new markets. The success of product innovations is measurable through the income and profit generated. Radical innovations create uniqueness and this type of ‘differentiation increases margins’ (Porter, 1980:38). Constant innovations, sustain competitive advantages if the timing of such innovations (double S curves) is well managed.

    My two cents ….

    In the travel industry there is no radical innovation and in a nutshell technology enables innovation only.
    After in the industry travel products and services are sold. I think NDC provides an opportunity to innovate however most players do not look at it from this point of view.

    Happy Saturday to everyone. Marianna

     
    • Paul Zwarts

      Some interesting correlations here which I agree with. I like the quote from Edison. Ironically enough Edison wasnt really an innovator himself. He tended to use technologies around which pre-existed and packaged them and made them ready for market. Similar to Bill Gates building Microsoft around purchased DOS from IBM who didnt really see it as viable at the time.

      So the question “what is innovation” is extremely poignant. The social revolution has simply created a foundation of thinking and the real innovation has yet to really start.

       
  8. Timothy O'Neil-Dunne

    Oh come now… that is rather unfair. Innovation doesn’t have to be radical. It can come from many different areas. Only the more jaundiced amongst us would really feel that Innovation is a myth.

    Let me opine that Travel has an intrinsic issue that it is very complex. I think I have said that a few times in the comments. Thus innovation is not always visible and actually the obstacles to innovation are legion. Applying say YAML and and object code to make development faster isn’t something that immediately cries out innovation but it is. Moving applications to the cloud… innovation or not? I would say that it is. Removing complexity – innovative? Of course it can be.

    So I would clearly say there is a lot of innovation and not all of it blatant. Getting Expedia (and I am sure others) to work with a GDS required a vast amount of effort and imagination to make it work. As one of the people at the coal face for that effort – it took a heck of amount of innovative thinking to solve some very basic issues that many just take for granted.

    The porn industry (lord help me) is very innovative when it comes to many developments that we take for granted today. Some political sites too are innovative. Cross to other businesses and see them adopting Travel Industry innovation.

    Are we innovative enough and are we doing enough to foster innovation. To me that is a much more interesting to see how we can get participation in solving hard problems with different perspectives on the problem and the possible solutions.

    Innovation – despite some of the challenges mentioned here – is alive and well. I see it every day and I am encouraged.

    Cheers

    Timothy

     
  9. mobileguy

    Having all travel companies – both suppliers and sellers – agree on the same data format and api for shopping and booking for all travel types would be an innovation. Then was anyone could hook into anyone.

    It’s also a pipe dream sadly. No one wants to give up control.

     
  10. Viko B.

    We couldn’t agree more (except for the flying cars, I think Elon is still finishing the electric cars — then he’s on to the flying cars).

    At Ve-Go, we’re trying to bring a small bit of innovation to hotel travel by allowing guests to control their entire stay. Guests can remotely check-in, select their own room, view their invoice, and complete checkout from a mobile device.

    Please visit our website — http://www.Ve-Go.com — and tweet us your suggestions @VeGoMobileApps

    Thanks!

     
  11. Miramon

    Concur with the article.

    The first OTAs were innovations — though they weren’t exactly unobvious at least they were new. Same for the first online aggregators. Everything since then has been pretty much humdrum with a few spasmodic efforts to break the mold that largely have failed and either disappeared or descended into the conventional and routine.

    I’ve thought for some time the next big thing should be intelligent travel management — your personal full time secretary, concierge and facilitator — but this is evidently too hard for anyone to actually do right, with tripit being the acme, and not very useful at that for anything but planning.

     
  12. Heddi

    “True innovation is yet to arrive, but I can bet that when it does hit us it will come from an unexpected direction. And, then, it will be really exciting and worthy of the “innovation” monicker.”

    If you look at http://www.mytab.co and our Match myCash feature – this is the epitome of innovation. The more customers funding trips, the more myTab can use this powerful attribute to negotiate with airlines/hotels for exclusive deals. Suppliers generate revenues at slow/long leads at a fraction of traditional marketing costs to a cash rich specific demographic/socioeconomic and customers get the best deal on the planet. This not only makes for a happier booking experience (vs spending weeks trying to find a ‘deal’) and also stabilizes the industry from erratic price fluctuations since they reach revenue targets faster. Innovation? Absolutely!

     
  13. Sceptical Corporate Traveller

    Excellent article. Much of what has been vaunted as innovation in travel is only related to change in the presentation of information or the booking process.

    You are spot on when you point to the lack of innovation in core product, most of what we have seen is tinkering at the edges.

     
  14. Psycho

    So the point is that the real innovation doesn’t come from the industry itself but from infrastracture that is created for more general use.
    So what can be after online travel booking? “Inbrain” booking? Booking with one thought? Or some new ways of transporation (teleports ;))?
    But again it’s not about industry itself – it’s about infrastructure that is used by industry. Meanwhile we can speak about demands of industry itself and try to fix something that looks broken – maybe not by real innovation but by small iteration and improvements of something that exists already.

     
    • Dmitry Bagrov

      I want teleport 🙂 Although it is rumoured to have insect-induced side effects.

      But seriously – I think you make a good point here. Innovative sector appears on top of infrastructure, builds upon it, enhances it, and by doing so creates a platform for the next wave of innovation. We are somewhere on stage 2 – enhancing, I think.

       
  15. Craig Fichtelberg

    The challenge is that there has been a wave of over consolidation in travel and that has stifled innovation. There are too many travel companies dependent on too few travel booking tools which minimizes their ability to innovate. On top of that, the companies that are actively acquiring get too big and lose the flexibility to customize and innovate to serve their target customer base. Those large companies have too many layers to work through and find it challenging to get anything done. It is not just in travel, but you find this phenomenon in many industries. The lack of innovation Dmitry reports should not be a concern but instead be looked at as an opportunity. Companies that power their own technology and stay lean can capitalize on this opportunity and change this myth into a new reality.

     
    • Dmitry Bagrov

      Craig, do you mean that in your opinion consolidation should be going around technology, and not market segments or particular products?

       
      • Craig Fichtelberg

        I am saying that consolidation is limiting innovation. On the TMC technology side, conservatively, online adoption is around 60% and with so many TMCs using the same few 3rd party travel booking products, that means that 60% of the booked TMC travel has basically been commoditized. There is little room for true innovation as the companies that are directly servicing the customers are not the ones developing the booking tools. As consolidation continues both at the technology level and at the market level there is less competition and less of an incentive for large companies or technology companies to innovate.

         
        • Dmitry Bagrov

          On one hand I agree with you about the consolidation effect on innovation. On the other, I think it creates an environment where independent players will be very much needed, and therefore will appear with a flourish – i.e. through offering a new product or approach, i.e. innovation.
          Yes I know, I am an optimist.

           
  16. Cary Broussard

    Could not agree more. I was musing this morning on how breakthrough it was in the late 90’s, early 2000 for the industry to grasp that women were the fastest growing segment of business travel and purchasers of travel. Listening and responding to women was innovative. So we’ve come a long way, but from what point to where? Very thoughtful article. Thank you.

     
  17. Steve Reynolds

    Nice article Dmitry. I couldn’t agree more. The travel industry (especially corporate travel which makes up around 50% of the market) has not seen anything “innovative” in many years. By my count, probably close to 10. The last semi-innovative thing to come along was TripIt and their ability to aggregate direct bookings to create a single itinerary. Doesn’t quite follow your definition but it did create a new line of products and enabled a new segment of the market to book direct rather than use a travel agency to get a consolidated itinerary. The question in my mind is why is this? What’s wrong with this market that is killing innovation? Is this pace of innovation the same in other markets? If so, are our expectations too high?

     
    • Dmitry Bagrov

      It is an interesting question indeed: what happens if we compare pace of innovation in several sectors, for example Travel, Logistics, and Finance? My gut feeling is that we will see roughly the same picture, since the underlying stack of technologies and ideas is the same and fluctuations can be explained but some industries playing catch-up with the rest of it.
      But a very good question indeed and the one worth thinking about – thank you Steve. In the words of a famous fictional character, “Meditate on this I will, hm!” 🙂

       
  18. Joseph

    Teleportation is an innovation that’s century. We look forward to 🙂

     
 
 

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