Innovation Book Club: ON Innovation

When Terry Jones founded Travelocity and then, among other travel startups, the idea was to give consumers an easier way to research, plan, and book trips. Jones certainly had enough experience doing it the hard way. He started in the industry in 1971, working for Vega Travel in Chicago at a time when everything was done by phone, international business often involved sending telegrams, and some airlines still entered bookings by hand on reservation cards.

Jones was always drawn to doing things differently, and soon he and some colleagues left Vega to start Travel Advisors, which specialized in business travel to Eastern Europe and the Soviet Union. Five years later he joined Agency Data Systems, which soon after was acquired by American Airlines. Jones became American’s director of product development, then moved into marketing and IT, eventually ending up as chief information officer for Sabre, the computer reservation system that at that time was owned and operated by American.

“There was a little department called easySabre that put reservation systems on AOL and CompuServe and Prodigy — those early networks — and that was eventually assigned to me,” Jones said in a recent interview with HSMAI. “And over time I said, ‘Hey, I’d like just to go do that.’ And people thought I was kind of nuts, but I thought it was going to be very big, and that became Travelocity. So Travelocity essentially started as a startup but inside American Airlines, and eventually we spun it out and took it public.”

After leaving Travelocity in 2002, Jones served as founding chairman of and managing principal of Essential Ideas, an innovation consultancy. His new book, ON Innovation: Turning ON Innovation in Your Culture, Teams, and Organization, offers 72 bite-sized ideas for disrupting business as usual.

What was the innovation behind Travelocity? What need did it fill?

Working at Sabre, we’d been automating travel agents for years, and that was a very successful business. But if you looked at the online business and how it was growing, and the fact that the internet had just been deregulated — ’94 or ’95 was the first time you could actually do business on the internet — it seemed to me that it was a logical extension from agents using computers to make reservations, that consumers would do the same thing. And we had a good track record of that in terms of what people were already doing on AOL and CompuServe, so it seemed a logical extension.

Now, it was illogical for Sabre to do it, because basically we were selling bullets to the enemy that were our biggest customer, right? The travel agents. But the people who were running the business said, “Look, somebody’s going to do this anyway. It may as well be us. We have all the technology to be a leader in this space.” Actually, we had entered discussions for a time of doing it with Microsoft, but it was too big — like King Kong and Godzilla trying to make a company. So we started Travelocity, and shortly thereafter they launched Expedia.

There are already a lot of books about innovation. What made you want to write this one?

I’ve done hundreds and hundreds of speeches about innovation to corporations and trade associations, and I wanted to have something to leave behind, because speeches are great but they’re only an hour. You can plant two or three ideas in somebody’s head, but can you really change your behavior? I hoped that the book would do that, and I wanted to put more in it than you can put in a one-hour speech.

The other reason I wanted to do it is that large corporations in particular have a hard time with innovation. They’re basically playing whack-a-mole with all these startups. And because Travelocity was a successful intrapreneurship organization, starting inside American and Sabre and yet being quite successful, there’s a little bit different recipe for that than a Silicon Valley startup, and I wanted to share that as well.

Your book offers 72 different ideas related to innovation. Is there one philosophy that connects all of them?

Yes, I’ve come to learn more and more about innovation in large companies in particular — it has to do with risk and experimentation. Every company was founded by a risk taker. They took some kind of risk, whether it was technological or they put all their life savings into it or they had a crazy idea. But as the corporation gets bigger and bigger and gets driven by quarterly results, the level of experimentation of risk is driven out of the organization, and that numbs innovation.

It really is about encouraging employees to experiment and take that risk, and understanding that some of those are going to fail, which is hard for corporations to accept, because failure doesn’t help the bottom line. And then celebrating the failures along with the successes. As soon as people understand that, “Hey, Bob’s project failed but he didn’t get kicked off the management track or fired! We actually let him continue!” — it changes the corporate attitude about innovation.

Do you have a favorite idea or lesson from the book?

I think it’s about getting rid of the attitude “We’ve always done it this way. We’ve never done it that way,” and understanding that innovation can occur anywhere in your organization. I was doing an innovation seminar at a large insurance company, and at the break this woman came up to me and she said, “Well, I’ve done something innovative. All our customers put their forms on PDFs, we send them out on PDFs, and I actually unlocked them, so they can type on them instead of having to print them out and handwrite them, and then we have to figure out how to read them.” And I said, “Wow, that’s really awesome!” What I didn’t say to her is that, “Even the IRS had done that eight years ago,” because it was innovation to them and she did it inside of this hidebound, 100-year-old organization, so it was awesome even though it wasn’t the electric car of the future. To them it was a big deal, and she did it sitting over in the claims department, so good for her.

Innovation doesn’t have to be rocket science. Travelocity was just a registered travel agent. It just was online; that was the only difference. Kayak’s big thing was offering choice, so we searched everything — you could buy at American or Orbitz or Expedia or Hilton or any reseller. We tried to get around one of the problems of online, which was people search 30 sites looking for the golden fleece, right? We said, “Hey, we’re going to search everything. And then when you click, you can buy directly from the supplier.” Well, that wasn’t that revolutionary. It was cool, it created two billion dollars’ worth of value, but it’s not dilithium crystals or space travel or something.

Does the hospitality and travel sector have a tradition of innovation?

I think it has, but it’s been disappointing recently, particularly in the distribution area, where I’ve worked. If you look at the websites of the major OTAs and the hotels, they look the same as they did in 1996. Basically, they say, “Where do you want to go and when?” And then it’s very difficult to figure out if you want to do something: “I want to go skiing with you. Or, “I want a beach with a spa and falconry.” The user interfaces haven’t changed much. I think it needs people to take more risk and to move more quickly and to experiment.

The other thing I’d say is that I’m seeing hotels do some really fun things, like their mobile apps are progressing, and in some cases you can now choose your room. That’s pretty cool. And your phone becomes your key. I think the next step that people have to realize is that you have to continue to engage [guests] with that app. We’ve gone pretty far on the side of speed and convenience, which the customer clearly wants, just like online boarding passes and all that stuff, but we have to continue to use those tools to reengage the customer, so that they do learn more about our properties, so they do eat in our restaurant and see our show and go to our beach, rather than using another tool, which might say, “The best place to do that is down the street.”

Insight Type: Articles