So much discussion over the past week on Google and ITA and the implications for travel, but a topic I’ll steer clear of given that it is a little too close to home. But I did see a nice diagram recently from PPC Blog that they are calling How Google Works and which I’ve reproduced below. Click the link in the prior sentence if you can’t see the image clearly enough.
This diagram reminds me a little of a company for which I have a lot of time, even though I don’t know any of the people there personally. I’m referring to XPlane. To massively oversimplify their business model, you pay them a lot of money and they give you very little in return – but this is the beauty of the model; it is all about quality and not quantity. There are few things that cut through the clutter like a really nice clear diagram or other visual representation of a process or a set of relationships. This is why I like things like the above diagram, and why companies like XPlane that specialize in the art of getting across a point in one page rather than a 50 slide deck in Powerpoint are of such interest to me.
Extend the analogy to your airline website, or any airline IT process, and to take a line written by Paul Coby when he wrote on the topic of Corporate IT just got interesting again – 6 IT mega-trends that are changing business:
Simplicity is a beautiful thing, but I suppose one of the keys reasons Google choose to buy and not build their travel capability is the fact that airline IT is anything but simple.
July 7, 2010 at 2:20 am
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i will visit this web more often and read about your post,
i like ur topic specially about
How Google Works
Awesome
Cheers
July 7, 2010 at 8:11 pm
Thank you Martin for your kind words about XPLANE. When I started the company in the early 1990′s our model was really untested. In effect, we were a solution in search of a problem. But then the web happened and everything changed.
It seems that airlines have been the opposite — a problem in search of a solution — for a long time now. The only real successes seem to be companies like Southwest Airlines, that blew up the model and started from scratch. I’m not sure about this but I think they had to start anew with their IT systems also.
My intuition says that air travel is still extremely valuable. Even though it seems to be considered a commodity in most airline business models, some of us spend a huge chunk of our time in airports and airplanes, and a small boost in the quality of the experience is worth real dollars to me.
I have a feeling that there are many unexplored opportunities and possible business models that have yet to be imagined. The biggest barriers seem to be two:
- Existing systems and habits
- The cost of experimentation
I mean, you have to spend a lot of money to try something new in the airline business, and that kind of thing seems to inhibit imagination.
July 8, 2010 at 7:39 am
Dave, your point about Southwest is a fair one, as they really started a new class of Low Cost Carriers with a more simple business model that was point to point with no connections and no partner airlines. But even the LCC’s are becoming more complex these days and the original distinction between LCC and Network Carrier is very blurred these days. This obviously has implications for their IT systems as well.
Given that high value airline customers value the complex networks and overseas alliance partners, the point you make about existing systems is a pretty tough one to overcome. Your second point on the cost of experimentation is interesting – I remember meeting an airline once telling me their philosophy (mainly related to their website, and of course not safety), saying it was better to puts new functionality in production when they were 90% certain it was OK, rather than waiting the extra time to get 100% confidence. This attitude then extended into other innovative things they were able to implement quickly. When the systems become more complex and especially when partner airlines or high value business customers are involved, the cost of experimentation is high as the risks of getting it wrong are increased.
But as I cover on this blog, this is one of the reasons why online travel is such an interesting area. Innovation may be a more difficult process than some other industries or sectors, but this just makes the rewards greater whenever someone gets it right.