Latest / GAIN Momentum / Experience is a Double-Edged Sword | with Neil Foster
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- GAIN Momentum episode #18 - Experience is a Double-Edged Sword | with Neil Foster === [00:00:00] [00:00:00] Welcome to another episode of the Gain Momentum podcast, focusing on timeless lessons from global industry leaders about how to grow and scale a business in hospitality, travel, food service, and technology. I'm Jason Emanis here with my co host Adam Mogelonsky. How are you, Adam? [00:00:25] Great as always. [00:00:26] Today's guest is Neil Foster, president HFTP and hospitality consultant. [00:00:32] Hello, Neil. [00:00:33] Hello, Jason. Hello, Adam. It's great to be with you. Thanks for having me on your show. [00:00:38] You bet. Take it away, Adam. [00:00:41] So Neil and listeners, our format is focused on timeless lessons that we can learn from senior business leaders for other business leaders and aspiring entrepreneurs. So Neil, our first question towards that end is when it comes to scaling a business, what is the single piece of advice you would give entrepreneurs from your perspective As a professional in hospitality and technology? [00:01:10] What a great question. to be honest, it's a bit tricky to find a, just a single piece of advice, but maybe one that, that's big picture that is important, I feel, is, staying true to your culture and staying true to your values. It can be tempting as you're scaling or growing your business as things are moving super quickly to find partners that are maybe not completely in alignment with your vision, that, may not also be in alignment with your culture, but as you're considering your partners and the different ways in which you're currently doing business that are successful, the danger when scaling is not paying attention to quality and finding a consistent approach. [00:01:50] So, culture and values are probably the one way, the best way in which you can underlie foundation, for everything else, [00:01:57] Yeah, values. Yeah, if you get those values down and you hire towards values and you communicate values week in, week out, then as everything else is changing, scaling up, hopefully, it makes a big difference. [00:02:09] hopefully so, and I guess finding good partners that, can be sounding boards for you. So one of the challenges I think is having too much confidence in, let's say you're a company working really hard within a red hot market, and there's a lot of momentum that's pushing you forward. It can be easy to lose sight of the things that are important. And if part of your grounding includes, mentors and organizations that you work with that you trust. Even being a member of an association and a group, finding your tribe, that you're able to understand perhaps some angles that might not be obvious to you and in your silo, and to help, with these different voices to help with your guiding light that you're able to scale your business, know what you might not otherwise know with all of these other pressures. [00:02:58] So good partnerships would be important. [00:03:01] you come from actually the buyer side as well of this equation of hospitality and technology, and I'm wondering if you could speak a little bit to how those values are different between both sides of the equation, the vendor side and the buyer side. [00:03:18] Wow, it's actually probably more common than one might think, where the incentives might not be fully aligned between the different parties, so, The seller is looking to get paid. That's the basic expectation that the seller has, the vendor. the buyer is looking often for something perhaps a bit more ambiguous. [00:03:38] They're looking to have a problem solved. so the buyer is, at the basic level looking to get paid and looking to have a clear scope of work. For the pay that they're expecting, and the buyer, on the other hand, might not completely have a, a clear, finish line as far as, their problems are concerned. And so I guess the, challenge that I've seen is sometimes not having a good, clear set of expectations from the beginning, where sensitive to vendors and partners wanting to get paid and also with an understanding of the problems that need to be solved. That as the buyer, that it's important to be respectful and mindful of what the seller's looking for. And from a seller's perspective, it's important to be problem focused, relationship focused, and trying to look at the long term when it comes to, working, together and finding, finding common ground. Now often, unfortunately, with that short term view, you have sellers or vendors, that may make one sale with one company and there's some reputational damage as a result of attention to detail that's missed out on. Unfortunately, with that view, a couple of things happen. The first is that it's unlikely that, vendor would be re engaged by the buyer. And the second and probably most, most importantly or most critically is that word of mouth spreads pretty quickly in our industry. And if there's an issue with attention to detail, it's usually good practice from the buyer's side to find references and to discuss with our peers some of the track records of the vendors or the sellers before committing. Now, I've mentioned sellers and, vendors. I really prefer to use the term partners. And partnership is where it is understood that there are two sides that are really looking to work hard together to find that happy medium. Where, the partners are able to succeed together, to win together, that it's not a transactional approach that's only based on money, so cost from the perspective of the buyer, and the pricing, from the perspective of the seller, that really, in order to find success, it's so much more than that. [00:05:53] It's finding that way in which the two sides can work together and solve problems. [00:05:58] You mention, reputational harm and the unlikelihood of continuing business. Have you seen any instances where the reputation has recovered? [00:06:09] A few years ago, there was a very well known, software company, catering to the hotel industry that was acquired by a much, much larger software company that was not exclusively catering to the hotel industry. In fact, if it did, it was a small niche prior to this acquisition. The challenge, and going back to culture, is that when organizations come together and if scale and growth also encompasses mergers and acquisitions. That it's also important to understand the underlying synergies and the ways in which the different teams work together. So coming back to the specific question, this company in its merged state didn't fully recognize the expectations of our industry that are usually a little bit different from other industries. And the reputational damage that set in, my perception, there was a little bit of word on, the street. That this vendor, the standards were slipping, the responses were not, quite as they were, and that created a little bit of a problem. Strangely, it seems as though, with the benefit of time and with the benefit of refocus and, perhaps letting some of the dust settle, that this company does have a renewed focus and there are some really positive perspectives that are coming out there. [00:07:30] The challenge, I guess, is that the marketplace is dynamic, and ultimately it depends on the needs that are out there and the problems that are, remaining to be solved. And if the marketplace is finite and there aren't a lot of alternatives within the marketplace, then the reputational damage may not be as significant as it might be in a much fuller and richer marketplace. It seems to me now that marketplace, the marketplace and the ecosystem is flourishing. the challenges with the marketplace previously were, the switching costs that, that these providers very thoughtfully and smartly built into their business models. The challenge with the switching costs are that where there are others that are able to jump into the, jump into the arena and to find ways that lower the switching costs for the buyers, that this is an alternative that forces, All participants to consider switching costs differently. [00:08:28] And taking a little bit of a step back, it seems to me that, that the big elephant in the room over the years was integration and being able to find ways to have systems work and talk to, work together and talk to each other. And the challenge has historically been that you have a property management system, as an example. You want another set of systems to integrate with that property management system. But since the property management system holds the key to all of the different interactions and integrations, historically it was a very expensive and drawn out process if it was at all possible, if the, PMS, vendor was open to the idea of integration. Now, of course, the marketplace has changed, and there are participants that are offering a much more open, architecture. Which is good for the industry. this is a very positive development for the industry. It's one that hopefully the industry is leading and that the industry is not being led by The technologies and the existing, the marketplace as it existed before. My biggest fear is that the industry has been dictated by the marketplace of some of the critical partners and and suppliers to the industry where, the industry couldn't make any rational or reason reasonable decisions on how to run their operation, and even how to consider their strategy, without considering the immovable constraints of some of their key partners. [00:10:00] Neil, we're going to move on to the second question. It's actually a good lever point into the second question, which is, what are some of the common pitfalls or failures you have witnessed that business owners should look to avoid when scaling their business? [00:10:16] So, this question leads perfectly, in from the first where considering culture and considering values. Sometimes, as they say, taking your eye off the ball for a minute, it creates, a sense of confusion and from there, you know, in the sporting arena you take your eye off the ball and, your opponents quickly pick it up and, they take it, they maintain control of it and they score. I guess to use that analogy, that often there are, in our industry thinking about hotel, whether it's hotel companies or, software vendors or other, partnerships to the industry that, some of these pitfalls are, are evident where it's unclear from a customer perspective where the value is, whether these businesses are still driven by value and differentiation. If there's an unhealthy momentum where the business just continues because they've been able to do everything without making any major change and the money keeps rolling in, this is a really dangerous state for any business to be in. the business buzzword of course is the burning platform. the burning platform is, is valuable. [00:11:26] Having the, pressures, having good heated competition is usually a good thing. and if you're able to do things very differently, if you have, something that is extremely unique to the marketplace, you're in a, at least temporarily in a strong position. You're in the blue ocean, to,, to use the blue ocean strategy, finding the blue ocean should be every organization's goal. [00:11:53] when it comes to innovation and finding, finding meaning. In terms of, in terms of failures, I guess the, and going back to some of the perceptions and, when, it comes to partnerships and the relationships, sometimes these failures aren't immediately evident. when it comes to, I guess to use the example that we discussed earlier, the company that provides PMS solutions that was acquired by a much larger software vendor, it's possible that this merged company understood some of the customer feedback, but really the problem started with that customer feedback and the customer perceptions that were out there. And it seems to me that, some of the challenges, presumably with an acquisition or merger and an acquisition, that scale is part of the opportunity for these, these newly, aligned groups. And so, when you're looking to scale, and you've taken your eye off the ball, and there are some major quality issues that you haven't considered, and some reputational, considerations. Then, you're not even considering the status quo in the pre merged configuration, so let alone the scaling that your existing business is suffering. So imagine how scaling a struggling or hurting business, it'll affect your bottom line, it'll affect your existential opportunities, or your ongoing existence as a, as, a company. There are any specific examples that I want to highlight, but all this to say, and tying into number one, that if you have a good, clear sense of your culture and your values, you don't take your eye off the ball, that scale and growth should be a natural part of the discussion without having to consider changing your reason for being. [00:13:45] Neil, we're going to move into the third question now. What do you see as the key opportunities and challenges for hospitality technology companies in 2023 and beyond? [00:13:57] Well, so many things have changed over the last few years, as, everybody knows. Been reading recently a book called, Generations, which, really great book. Jean Twenge is the author. Talks about, I have no interest in the book. just happened to find it interesting. So all these different generations and what's important to the different generations. And how one might consider some of these differences when looking to, to market. So, starting with the silent generation, the greatest generation before that, but really the silence, the, the baby boomers that followed. The Generation X, which is the generation that I belong to, followed by Millennials, Generation Z, and then the Polars, as they call them, because of the bipolarity in both the sociopolitical landscape, as well as the polar, literal polar issue with, global warming, and the climate crisis. And so, I guess thinking, really big picture and understanding the generational question. It's not even open to debate that the, customers that need to be considered are the Millennials and the Gen Zs and the Polars and the generations that succeed. And so, , what I've seen from, certainly the Millennials, the Gen Zs, And beyond, and Gen X and boomers also consider this, is thinking about wellness and health. Health and wellness is an important characteristic of these generations, that they're thinking very carefully about what they're consuming. There seems to be a trend that alcohol consumption is going down a bit. Eating unhealthy food seems to be going down a little bit. And so, health and wellness, would be one, one area. [00:15:41] If hospitality is about care, that care is also about being able to provide different programs, that may tap into some, truly caring initiatives. And if we understand what's meaningful to the demographics that we're focused on, experiences are important, wellness and health tourism would be, I, there would be an experiential side to, that, but also thinking about culinary experiences, going out for, a unique dining experience. Personalized experiences, thinking about local tourism and really being able to leverage the specific, , area that you're traveling to. Some of the areas that, are interesting to consider sustainability, of course. For now it seems that these are the, the important things. In terms of challenges though, I, think one of the things that the pandemic has probably taught all of us, or should have taught all of us, is that we've got to bake uncertainty [00:16:36] into everything that we do., and until recently it's been hard to do that. There haven't been a lot of threats, there haven't been a lot of really major disruptions. we're seeing a lot of, well, I was just reading the news, there looks to be a hurricane headed towards the west coast, Mexico and Southern California may be affected, in the coming days. This is something that was never heard of. 1938 was the last time there was a weather system like that, in the southwest. We're struggling with unbelievable, heat waves that have been affecting, much of the Southwest. these are just a few examples to suggest that, look, whatever was normal before, whatever we thought was comfortable before, all that is, has to be thrown out the window as we're considering the future. [00:17:23] So for hotel guests, we probably want to consider a bit more flexibility, trying to understand a bit more about how to find compassion to some of the, the unique considerations. So if you know that a guest is coming from the Southwest and there's a hurricane or from, Maui, which is probably the best example, Lahaina, which went through just an unbelievable disaster, which is still unfolding. if we're in the care business as a hospitality industry. And we knew that someone was coming from Maui, and there were some issues, they checked in late. It would be probably a, low hanging fruit to consider compassion with guests that we know something about, that they may have been struggling to get to our city, to get to our hotel. [00:18:11] They have other things on their minds. how do we consider that a bit more holy? I know I've been jumping around a little bit here, so the key opportunities and challenges So, flexibility, looking to be a little bit more thoughtful of the human condition, and when it comes to opportunities, that there are some easy inferences that we can make from some of the generational differences, and then the old fashioned answer is probably ask our customers, figure out who our customers are, and to ask them what it is that they're looking for and how we can delight them, and to really take that to heart. [00:18:46] Yeah, I like that flexibility, because travel, things happen, but wellness too, you know, because you know, you went through the younger generations, which are just more informed than of Gen X. And then me or my parents, you know, wellness comes up a lot, but I don't know whether either of you know, like, what's the spend? Do we have any kind of number on what hotels are spending on wellness programs to like this year, last year, any kind of [00:19:15] barometer? [00:19:17] Adam, you would probably have a bit more insight than I would, [00:19:20] but I could say, if I said just one thing, it would be not enough. [00:19:26] Hotels are not spending enough on wellness programs. [00:19:29] They're not resonating, I don't think, clearly [00:19:32] enough with their target markets to suggest that wellness is on the radar and that wellness is [00:19:38] something that is part of the offering. But this is probably, there are different segments of the marketplace at the really high end. I sense that there may be better communication, there may be [00:19:50] more focus and expenditure, but that big group in the middle, my sense, just my perceptions are that, they're not spending or focused enough on those initiatives. [00:20:01] what are your thoughts, Adam? [00:20:02] Well, the first thing that came to mind was Accor's Health to Wealth initiative, where they're making wellness a part of their core brand, and just in that term, health to wealth, they've identified a clear path to profitability for their investments. And really I wanted to ask you related to this, but to other trends and to generational changeovers in terms of spending power is how can you use your systems to spot these exponential trends [00:20:38] before they become exponential? So you know that in a broad sense that the future is Gen Z, Gen Alpha. They're going to be spending at your hotels, but right now it's the boomers and the Gen Xers who are your 90 percent of your revenues. So how do you balance both those and how do you Justify, using all this granular data that we have to say, look, we know wellness is big. [00:21:09] We should invest this now. Get ahead this, sea change. [00:21:15] How do you do that? [00:21:16] What a great question. And I guess to, to consider the big picture a bit more carefully, is that on the one hand, and it's wonderful to hear about ACOR's, initiative and health to wealth, I mean, one thing that we can say historically to be true is that people are most influenced by their pocketbook for a number of different, a number of different reasons when, considering green initiatives and considering, sustainability initiatives, that more often than not, it boils down to, well, how can we find ways of creating other incentives besides a greater good that can't easily be measured, and perhaps interests that can't, external interests that can't easily be understood by those that are literally paying the price. Now, I wonder if one of the golden opportunities is to look at, so when considering diversity and inclusion, I believe that diversity of perspective should enter the argument or, the discussion. And so to have. Gen Zs and to have Millennials that are adequately represented in leadership teams, that they are able to counterbalance some of the old school thinking where it might exist and to have really healthy dialogue together where this is the future, this is the past, this is how things have been working. And we know that there's a track record, which may or may not be the ideal, but something to consider against the backdrop of the uncertainty and the unknown. So I would say that looking at governance boards, looking at leadership teams, and to have adequate representation to not be afraid of having the Millennials and the Gen Zs and the Polars when they come of age to have a seat at the table and to have, to engage in respectful dialogue. [00:23:02] You just brought it right back to values there in terms of [00:23:05] the core culture. [00:23:07] There might be a can of worms that I've opened up with that, one of the, challenges with, so Gen Z, [00:23:14] the sweet spot of Gen Z was prompted by the 50 percent adoption rate of the, of the smartphone as the book [00:23:21] posits. [00:23:22] And so smartphone adoption has changed fundamentally one of the ways in which we interact as humans, and we exchange ideas. [00:23:31] The Gen Z approach, based on the comfort of [00:23:35] using smartphones and having, being completely acclimatized to smartphones, [00:23:40] and technology of that [00:23:41] nature, in sort of the collaboration process has completely changed the way in which, meeting and getting together in a room or even on a phone call, has historically worked. So I think that the big challenges. That I think the older [00:23:56] generations have to stop thinking that they [00:23:59] know everything. Maybe this is a really broad [00:24:02] discussion, but one of the challenges I think of experience is that the experienced believe that they have a perspective that needs to be accepted., where new perspectives, while they're playful and they have, perhaps a different view or a different angle on how things are moving, that, I think the, status quo is hard to change. And there's something about experience and, the solidification of experience, sort of like how cement becomes really this rigid, as it solidifies, it's not moldable, it's not changeable. So the experience is sort of, It's a double edged sword where you may have legitimate learning and perspectives that one might need to take into account, but the solidification of it, where it becomes, where it's no longer malleable, makes things a little bit harder. If historically learning was from top down, where we've always learned from the prior generations, Maybe going back, you know, years to the oral tradition and how in indigenous cultures that you had the elders that taught the [00:25:09] younger generations. And through that there was a sense of respect that was afforded to the elders. [00:25:15] And a way in which as a civilization that we took information from the elders, maybe we added a little bit onto it ourselves and we were able to bring it down, that continuous improvement was based on, the sacred perspective of the elders. I would say that the shift of this technological enhancement of the smartphone and the way that we've mobilized and collaborated differently has completely changed that dynamic where we're no longer learning from the top down any longer that I think to be successful, with Generation X as sort of the intersection that we have the baby boomers and the, silence that understood that there was a way, of doing things. And then from Gen X. Onwards, that there's a bit more independence, a different perspective, and somewhat of a decoupling in the dependence of these generations with the older [00:26:06] generations. So what I would say is that now, there's an importance to consider that the older generations, not just nice to have, but really need to learn from these younger generations. That it is absolutely critical that we learn from, the younger generations if we wish to remain involved. [00:26:25] Neil, we'll move on to the fourth question. What are the key things innovative leaders and entrepreneurs should prioritize and focus on to gain traction for their business? [00:26:35] So, having a good, clear value proposition and maybe at the most basic level, an entrepreneur is really great at, solving, at finding problems, finding problems that they think that they can solve. I came across a, a transcript of a, an interview with, Keith Grin with Fidelio, as he describes the business, and originally Fidelio, his vision was actually to create software for operas, like literally, focused on the opera business. And he pivoted his business according to the transcript to hotels, and it turned out that hotels were a much better scalable problem for him to focus on. so finding problems to solve. really important to do that, having a, clear value proposition as an innovator and leader, you probably should consider that carefully because you're looking for investors, you're looking for, folks that, find confidence in what it is that you have to offer. [00:27:38] Doing your market research and really getting out there and learning to understand what that marketplace looks like before you jump into the ring. Quality and reliability, so going back to culture and values, that if you're looking to create a brand as a, an innovative leader or entrepreneur, that you can create the brand of quality and reliability, and that can translate across different business verticals. Considering Virgin as, one such brand with, with a charismatic and innovative founder considering Apple, perhaps, that, that might have a bit more focus within the, the verticals, but still having, having built its brand based on reliability and quality and a much bigger vision. So, those are a few things that I think would probably help for focus. [00:28:26] Yeah, I always like, problem solved. Solve the problem. He who articulates the problem best, most likely has the solution. [00:28:36] Great point, and I guess the, the challenge is that the problem can probably be viewed from a lot of different perspectives, and maybe some don't even completely understand that there's a problem, and if you're trying to solve a problem that doesn't exist, that can probably backfire For you as, an entrepreneur or as an innovator, taking just as an example, Iceland, which is probably a great place from the, the health and wellness perspective, Iceland with the fresh air and, the geothermal baths, really creating an amazing niche. Now, funny enough. There is Icelandic bottled water, but it's probably only good for export because the water in Iceland is pristine [00:29:19] and it fits perfectly with, the view of Iceland as this [00:29:23] natural place that's everything is pure. so if you were to start a new, water bottling company in Iceland, focused on Icelandic citizen and, citizens and residents, you probably haven't done much market research. Maybe that'll make you come across as being a bit tone deaf, and you're probably unlikely to find, find a, big customer base, and, well, it is good to make mistakes and good to make, wrong turns as part of the learning process, and so something like that wouldn't, wouldn't completely cut off someone's opportunities as an entrepreneur, but if they make the same mistakes over again without learning that might create some, problems going forward. [00:30:04] Neil, did you have any closing thoughts? [00:30:07] Well, I really, I see this as, just thinking overall. And, the theme here is really in focusing on your values, on your vision, being able to find strategic partners. Finding the circles that are helpful to you as you're able to grow better. So if you can find a great group, not unlike GAIN. GAIN is an example. lots of industry leaders that are part of a group. GAIN seems to be a perfect medium to find, or a great medium to be able to find that external support. from an association perspective looking at, HFTP. Being able to bring people together as a non profit association, bringing people together to exchange ideas, to educate. Yeah, find your tribes. Find the support that works for you. make sure that the values are not compromised. And try to have fun. That's probably the main thing. We spend so much time doing what we do. We're so lucky to be in the hospitality industry, I think for many reasons. This is a business, it's about people, it's about emotions. [00:31:15] One of the best emotions is happiness. So if we can think about it those, in that, perspective, and that for those of us that are in the hospitality industry, if we're not having fun, if we're not getting some excitement, we're not feeling those feelings, maybe we're in the wrong industry. [00:31:32] I mean, that's such a great way to end it off is, of course, why, do anything, right? You know, if you're not having fun, if you're not passionate about it, why are you there? So Neil, I, can't thank you enough for coming on. Just fantastic answers. So much to think about with this great generational shift and all the challenges that we're facing in the 21st century. [00:31:56] Thank you. [00:31:58] thank you very much. Really appreciate the time, Jason and Adam. This is, just wonderful. [00:32:03] you, Neil. [00:32:05]