An Adventure Story for Destination Executives

Part One: Journey of a DMO Warrior – from analysis to dance!

Anna Pollock, CEO, DestiCorp

Summary
Whether they know it or not, Destination Marketing Organisations (DMOs) such as tourist boards,
convention and visitor bureaus and government-funded tourism departments are in trouble and
face an uncertain future. The world in which they operate is changing rapidly and fundamentally
yet the majority of DMOs continue to be structured and to operate in much the same way as they
have done since their emergence alongside mass tourism in the 1950s and 1960s. Paradoxically,
this vulnerability is also occurring at a time when destinations have the potential to exert the
greatest influence over the course of tourism’s development and generate the leadership so
needed to help it weather the storms ahead.

In order to adapt to the realities of a globally networked economy and meet the rising
expectations of consumers, DMOs must grasp the opportunities afforded by technology and the
insights of modern science to re-think their role and practice at the most fundamental level. In
other words, destinations must learn to truly Dance with the Customer. This learning involves
more than mastering technical skills – it requires a fundamental shift in orientation from product
centric promotion to customer lead involvement that impacts all aspects of DMO leadership and
management.

As they prepare to meet an uncertain future, DMO leaders must assume the role of explorers and
adventurers. There are no charts or checklists and precious few “best practices” for the DMO
pioneers of today. Our captains must rely on the ability to read the sky, listen to the ocean’s roar,
select which currents to move them forward and choose which shoals to avoid. So instead of a
“how to manual”, we have chosen to share an adventure story – a parable to help DMO
executives understand the task at hand. In Part One, we observe the nature of the challenge and
point to one possible route out of the Old and into the New ; in Part Two we speculate on how life
could be lived in the new land of plenty and prosperity ……

Destinations Live in Interesting Times

According to Confucius, today’s DMO leaders are cursed by living in such interesting times and,
seemingly, bouncing from one unforeseen crisis to another. Yet within each crisis, opportunities
abound. In fact the Chinese ideogram for the word crisis is composed of two characters: one
meaning danger and the other opportunity. DMO leaders increasingly find themselves walking
along the razor’s edge of paradox: knowing they need to move away from the familiar and
unpredictable (from order); while being simultaneously attracted and repelled by the
unpredictable and new (towards chaos). It feels very uncomfortable. And so it should. For it is on
the razor sharp boundary that separates order and chaos that creativity is ignited and new more
adaptable forms can emerge.

But now to my story…The central character is a questioning, curious and troubled CEO of a
destination marketing organisation (DMO), called D.M.Orrier. He is deeply troubled. Forces
beyond his control have pushed him to the edge of his territory that abuts a deep chasm. Behind
him is an army of negative forces and dangers; across the chasm is a land of plenty, free, for the
time being, of these same dangers. How does our warrior bridge the gap? How does he face the
chasm of uncertainty, risk and possible peril? First you turn and look the present dangers in the
face….some are personal to your organisation, others may be like these:

Increasing vulnerability: Tourism is a global giant. Generating over $4.3 trillion in receipts, tourism
has enjoyed an average growth rate in receipts of 11% every year since the 1950s. Then just
after the onset of 2001, a succession of events caused either by microbes or a handful of very
angry men caused this giant to flinch. International tourism actually declined for the first time

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since 1982. While its potential is enormous – this huge global industry still only involves less than
8% of the world’s population -- its confidence has been shattered. We now know that with bigness
comes vulnerability. A host of events and factors outside of our control -- terrorism, war, disease,
economic slumps, climate change, and economic disparities -- can individually or collectively stop
us in our tracks. We have yet to learn that with bigness comes responsibility.

Resources: DMO revenues are threatened – especially those which are funded by a tax on
consumer spending. (In North America, several CVB’s receive a share of the bed tax to support
their marketing programs). In the very year when CVBs want more to spend on encouraging
customers to come back, they find budgets reduced. Those DMOs who depend on annual
appropriations from government bodies must also compete with the increased pressures on
public spending from an aging population wanting better social services (health care) or a
consuming public wanting better education, transport and infrastructure.

Consumer Choice and Competition: our customers are spoiled for choice in terms of destinations;
in terms of the way they can spend their discretionary income and leisure time; and in terms of
the channels they can use to guide their purchase decisions. Loyalty is a thing of the past –
some authors going so far as to describe them as promiscuous Virtually every established
destination on the globe is worried because its market share is in decline; most tourism
stakeholders spend most of their energy cannibalising an existing market – fighting over the
scraps and crumbs of the pie.

Traditional Marketing Approaches Aren’t Working as Well as they Used To: advertising revenues
in conventional print and TV media have declined as more consumers turn to online sources of
information. When consumers do watch TV they can avoid the ads by their personal video
recorders and video on demand. Those who do shop online hate pop-up ads and banner ads and
50% either never or rarely click on one.

The continuous mind numbing marketing repetition that clogs the arteries of
our attention every day is like one of the common definitions of insanity:
doing the same things over and over again and expecting different results

New Sources of Competition within the Travel Sector: while destinations have been the best
source of complete destination information in the past; this is not necessarily the case any more.
Technology enables virtually anyone to compile authoritative destination databases and create
attractive destination web sites in relatively short time – often faster and more effectively than
their cash-strapped, politically hidebound DMO counterparts.

Growing Pressure from Members: DMO’s own constituents – the providers of tourism services –
are the ones experiencing the worst pain. Not only has demand volume been shattered by
terrorism, war and, more recently, disease, but this has compounded the negative effects
associated with economic slumps, increased capacity and increased price transparency that, in
turn, have turned suppliers’ services into mere commodities. Members are restless and impatient
– with diminished margins they are not receptive to contributing more fees and demand
immediate results. Their own sector associations scrap incessantly among themselves over
budgets and control – so much so that the average DMO executive spends at least 50% of his or
her time managing internal destination politics.

Demands of Government: Straddling the public and private sector, DMOs are required to
generate short terms fixes to today’s crises while exhibiting the ability to think strategically. Their
public sector handlers demand long-term strategies and in-depth consultation processes. Such
strategies are inevitably based on linear extensions of the status quo that have no means of
incorporating the unknowable and that often fail to admit that the unknowable even exists and
could strike again.

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Our warrior shudders with apprehension. He is running out of fixes. Like the CEO of many
enterprises in the western world he has the courage to admit to himself that the old solutions
simply aren’t working. He turns and looks across the chasm not daring to look down and
considers the brighter new opportunities that lie on the other side:

Access to Market – thanks to the global diffusion of the Internet, there are now at least a billion
consumers online world-wide that can potentially accessed all day, every day and virtually free!
Unlike print or broadcasting media, the Internet affords marketers two other powerful advantages:
it’s interactive; you can actually converse with your customers; and second, it’s highly plastic. The
message can be continuously changed and personalised. Opportunities to make money by really
serving our guests are enormous

New Distribution Channels: online travel has grown even faster than online use in general and
travel is one of the top three most popular sectors online. As a consequence, the Net has opened
up a number of major and minor travel portals and travel sites that provide access to pre-qualified
consumers. In addition to the Net, consumers can be reached via e-mail, call centres, text
messages, interactive digital TV, and newsgroups and chat rooms. The two new, important buzz
phrases are “integrated marketing” (using multiple channels to connect and create a relationship
with a consumer) and “Emotive Networks” (inter connected groups of consumers engaged in
communication and support for a specific product or service). Each of these new channels brings
with it new partners with whom a DMO can work to attract more visitors to it. Each satisfied
customer is converted into zealous advocates that “go forth and multiply” the message and create
epidemics of enthusiasm.

DMO’s unique advantages – despite the growing number of players getting in on the act of selling
travel, destinations have some unique strengths that could potentially enable them to assume a
leadership position in the broader tourism community: destinations are the official owners of the
place brand and enjoy the authority and sanction of the host community as uniquely able to
present their public face and extend an invitation; customers see them as providing an
authoritative “one stop” source of information about all aspects of their trip; DMOs are best able to
be in touch with the visitor at every stage in their purchase cycle; and they enjoy close working
relations with all stakeholders in the tourism ecosystem.

Technology: as essentially “information brokers”, destinations can benefit from all the major
technological developments associated with “digitisation” that have occurred over the past ten
years (multimedia, content management, multi channel distribution, transaction processing,
customer relationship management etc) to vastly increase their reach, provide better service and
reduce costs. Previous problems associated with uneven and limited connectivity; insufficient
processing power; the incompatibility of proprietary systems and lack of standards are now being
overcome. Never have destination marketers been presented with such a broad canvas and rich
palette of colours and kit bag of tools with which to work.

The question now is how to cross over? The land on either side of the chasm is as a broad prairie
devoid of trees and bridging materials. But that is as it should be. Intuitively, our hero
comprehends that he must descend down into the chasm to find a path up and out of the chasm
onto the peak on the other side. He most dig deep down through layers of causes to get to the
root of the problem. Our hero has no way of knowing how many causal layers he must
experience and how arduous a task and fearful and adventure confronts him. Few DMO leaders
have ever penetrated beneath the surface and none know how deep the chasm and how many
layers are involved.

But as I am the story teller I can give you a sneak preview….Five strategic approaches, five
layers of possibility, must be explored in ascending order of their efficacy and utility. Each is
dependent on and informed by the one beneath. To the best of our knowledge, the destination
(DMO) community has, as yet, really only come to grips with the first two. Unless DMO leaders
can experience and come to understand the remaining three, there is little chance of bridging the

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gap. Other agencies or enterprises that are braver, more daring, more curious, more willing to
experiment and risk will make it to the other side and assume the prize that awaits……..

After firmly securing his rope to the side of the canyon our intrepid explorer slowly begins his
descent……..

Layer One: Pushville

The landscape of this layer is a familiar one to most DMO warriors and is the first place tourism
executives visit when the winds of crisis blow. It is here that hoteliers and tour operators drop
their prices; airlines reduce capacity; and all stakeholders argue for increased promotional
spending; DMOs promote tourism’s special ability to generate jobs and tax revenues, vote-
catching politicians reluctantly approve enhanced subsidies (temporarily, of course) and
marketing agencies develop fresh campaigns and banners…The brand is given a facelift,
celebrities are recruited, products re-packaged and positioned, value propositions created, ads
generated and placed and the push begins.. again. The wise DMO warrior tallies here not a jot.
These worn paths hold no appeal as they seem to endlessly lead back on themselves. He espies
a flashing neon sign pointing him to a fast moving escalator that takes him swiftly down to:

Layer Two: The Land of The Techno Fix

Now this is really exciting – those boffins in R & D have finally provided a kit bag of electronic
gadgetry that will enable us to “slaughter the competition”. First interactive multimedia and then
the world-wide web and we could bombard and inundate the world with our version of the truth:
that our beaches are the cleanest; the sky the bluest; our food the most delicious, our heritage
the oldest; our culture the richest and our people, uniquely (?), the friendliesy!. Next it was
relational databases and product inventories and not long after – listen you can already hear the
cash registers ringing – the miracles of “ bookability” and online transactions. Now, thank god, we
destinations can finally sell something and, thanks to the mysteries of CRM, we can profile and
manage – or did we mean manipulate – our customers to spend even more. This layer of the
chasm was so much more fun – it was all so new that it didn’t matter whether it worked or not.
Each DMO followed the others in a form of IT “arms race” – portals followed web sites and
personalised, localised enterprise portals followed them. Syndication, white labelling and
embedding are next – whoopee. It’s like one of those rides at Disneyland– like falling through
Alice in Wonderland’s hole in the tree. Plop, right down to…..

Layer Three: The Re-engineering Workshop!

Having recovered from the bruising incurred on this unexpected descent, the now increasingly
nervous D.M.Orrier, finds himself in a laboratory filled not just with rabbits running back and forth
shaking their timepieces but bespectacled scientist types in white coats and carrying clip boards
and tape measures. These serious and earnest men had an unnerving habit of following the
warrior around and asking endless questions: “What are your business processes? How does
work flow? What interfaces and legacy systems currently exist? How do they “interface”? What
data structures, ontologies and taxonomies have been deployed?”

No wonder this layer in the descent to the dark underworld of destination tourism was perceived
as so dangerous. These were new and penetrating questions that had rarely been asked before.
“We’re marketing and promotion agencies” D.M.Orrier humbly responded. “Our job is to create
attractive sales collateral and put bums in seats and beds. We create videos and expensive
brochures and go to trade shows all over the world and get sore feet. What did you mean by
work flow, exactly? We spend so that the visitor will come and spend?

“Well how do you know whether what you do really works?” insisted an aggressive, impatient
engineer. “Well, well, it’sssss ssss…simple really”, stammered our hero. “ When visitor numbers
are up we take credit and get industry awards and when they are down it’s due to a crisis beyond
our control – and fortunately there’s no shortage of crises: foot & mouth nearly killed off tourism
as well as thousands of sheep in England, terrorists attacked in New York and Bali; Presidents
Bush and Blair went to war in Iraq; currencies rose in value and made us look expensive etc etc.

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The engineers shook their head in disbelief. This is all so fuzzy and soft – “What we need” they
muttered “is some quantification – a time and motion study at least; some quantifiable objectives,
targets and goals; some firm performance measures. We need to dissemble this machine; re-
engineer it and get some efficiency. What can we learn from the production line? How can we
reduce costs? Ah yes, we need to create specialist departments – marketing, sales, research,
visitor services, MICE. Make sure they focus on their job and obey orders from above. To
motivate them, perhaps they should compete for internal resources? Information can be power so
they will hold onto it. God forbid that these workers should think for themselves – they are cogs in
a wheel and need to do their part without question. We need to gain some economies of scale by
getting bigger. No, on second thoughts, perhaps what we need is to downsize and outsource?
Most importantly of all, we must stay in control and you must be held accountable. Unless we
introduce some discipline, some standards and procedures, the organisation will run down; the
brand will fall apart. We must develop a standard approach and stick to it or else ….”

Unfortunately, our first reluctant hero fell under the spell of the reductionist engineers come clock
makers who saw the DMO as a machine. He spent the next fifty years on a treadmill of re-
organisation and management courses: first it was Management By Objectives, then Total Quality
Management; then Business Process re-engineering. The need for a strong, cohernat brand
grabbed his attention for a while as the subject matter seemed so colourful and juicy. He only
woke from the spell when the phrase Outsourcing penetrated his subconscious and he realised
that he was about to be re-engineered out of both a job and a pension.

The sterility and coldness of the engineer’s laboratory finally got too much for our hero.
Fortunately, he was guided to an escape route by the aroma of fresh flowers mingled with fresh
java coffee – thank God, a Starbucks franchise opened last week. He moved towards the light
and warmth and down what was previously a hidden passageway to an impressive wooden door.
Miraculously, it opened with the slightest of touch. Had it been there and open all this time?

Layer Four: A Cultural “Cul de Sac”

Almost as soon as one foot moved from the sterile slate of the lab floor onto the plush pile of the
carpet of this adjacent world, D.M.Orrier was greeted by a booming voice emanating from a
permanently smiling giant of a man. His huge oak desk was empty of papers. Everything was
perfectly arranged. Problems safely delegated he could focus on being the very essence of Mr.
Destination. “Welcome to Customerland and congratulations for making it through! You’ve seen
the back of those cold timekeepers. Now you can really learn how to get on in tourism. You see
DM” and the giant of a man put his strong arms around DM in an affectionate, fatherly hug, “the
customer is King around here! Look we’ve even printed that on all our coffee mugs just to prevent
our staff forgetting. We’ve a great strategy: it’s called EHW for short. First we grab their Eyeballs,
then we appeal to their Hearts and then we grab their Wallets. It’s real important to manage our
relationship with them. Do you know, our new web technology even enables us to recognise them
by name? Makes them feel wanted, I reckon. That way they don’t notice it when we’ve got them
lined up in our sights like sitting ducks and “boom” we can hit ‘em with that great new offer. Our
market research has shown the best time to get our call centre operatives to “take aim and fire” is
around 6:15pm – just when they’ve come home, while their dinner is getting cold. They’ll agree to
anything then. Our call centre staff folks are terrific. They stick like leeches to the script we’ve
given them – those psycho boffins whom we hired to write the script for the call were real
expensive but they sure got our response rate up 50%. We just wear ‘em down…It works just
great. Our numbers are up, ADR and occupancy is improving too. We measure everything. We
even know which customers are worth the most – the cheap skates we drop. Let the competition
worry about them, eh??!!”

And so this charming, utterly sincere man boomed on incessantly – one cliché after another. He’d
read and parroted every management book on customer care under the sun and clearly hadn’t
understood a word of it. Our hero began to feel sick to his stomach – he remembered that he

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wasn’t an “eyeball” or a seat; he was a human being with real feelings, personal dreams, cares
and ideals. He didn’t want to be treated as a target. All he wanted was to be listened to; treated
with some respect. He cast his mind back to when he was-- a would be traveller – all he had
wanted to do was “get away” for a break with his wife. But it was all so damm complicated. All he
wanted was some consistency; some integrity; someone; some group of some ones whom he
could trust. And that’s when our hero finally “got it” – companies are just that; a group of human
beings just like you and me who live and breathe. Companies and DMOs weren’t systems or
machines – they are living breathing organisms. Come to think of it destinations were living
systems too. Their energy source was the visitor; they existed within a much larger
system….Maybe it wasn’t only about exploitation, brutal competition, and survival of the fittest?
Maybe it wasn’t about hierarchical command and control structures with a CEO who acted like a
general fighting a war?. Maybe there were other metaphors that we could use to help us organise
to serve our guests, our members and the tax payer better?

While musing in this way – the booming CEO had long since left to go to another urgent meeting
– DM (our hero kind of liked the nick name Mr. Tourism had assigned him) became aware of a
rustling at his feet. Despite all the order in this warm, plush, beautifully decorated office, there
was an army of purposeful warriors crawling over his Gucci loafers. He stared and stared. It was
a colony of ants heading north. And the more he stared, the larger they grew. In a flash he was in
contact – eyeball to eyeball (watch out they’ll get our hearts and wallets next – he mused. Do ants
have hearts and wallets to go with their huge eyeballs? They must have hearts – this ant is
smiling at me – almost flirting, in fact. Can’t be. It’s a worker ant. They’re male. Well anything’s
possible, we’re on the west coast….)

Level Five: Into and Out of the Labyrinth of Mystery and Meaning
The ant extended a pincer and, as gently as it could, lead DM down towards an aperture in the
heating duct and then into a labyrinth of tunnels – beautifully air conditioned – and filled with
purposeful worker ants. “Where are we going? Who are You? What’s happening?” DM shrieked.
He was feeling real scared now. All of this was very unfamiliar. It was as if his world was turning
upside down. The ant scurried purposefully ahead of him dragging our hero by his right pincer.
“All I can tell you” he rasped is that I’m to take you to WWW – the wise woman of the web. I’m a
drone. I have simple tasks to perform and I do them well. I leave the philosophising to the great
Queen. She’ll impart what you need to know”. And with those words, he pushed DM through a
thick velvet curtain and promptly disappeared.

An atmosphere of calm, serenity and warmth surrounded our very bewildered hero. He had
unexpectedly discovered right at the base of that deep dark chasm a remarkably spacious, airy,
well ventilated room held up by tall, beautifully carved pillars that seemed to reach up into clouds.

“Congratulations! The voice was strong and sensuous and sent visible vibrations reverberating
around what DM could see was a very large and elegantly appointed chamber. Not quite what he
had expected of an ant.

He stepped forward towards its source expecting to see a being. “Are you the Queen?” DM asked
timidly – afraid that congratulations referred to a successful capture and that, next, he might lose
his head… The voice chuckled.. “How much you have to learn my friend. Come forward and see
me.” DM stepped into the source of the voice but could see nothing. “Where are You?”, he
queried, somewhat timidly. “I’m everywhere, everyone. I am the voice of our colony. I express
the intelligence of us all. We don’t have bosses or pacemakers here. Intelligence is distributed.
Each ant knows his place in the scheme of things – what he needs to do to look after himself and
the colony. We are thousands of agents, busy about their business, and out of what looks like a
chaos of business, beautiful order emerges”. Came the response.

Despite being baffled and confused, DM felt his courage coming back and being a busy, goal-
oriented kind of guy, thought it about time to get to the heart of the matter. “So why on earth–
sorry, under earth – am I here? What have you ants possibly got to teach humans”.

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The Voice detected his disdain and its tone sharpened. “Ok, Mr. Impatient I’ll cut to the chase.
The planet is in trouble. You, so-called enlightened human beings have been making a right
mess of things every since Newton had that apple fall on his head. There’s no doubt he was a
smart cookie but he only got part of the picture and that picture has got us all into a right pickle”
The Voice was beginning to sound remarkably like Whoopie Goldberg DM thought
spontaneously. He could see her playing this part one day. This adventure would have to be
made into a movie. But then he remembered there was no being there at all. The Voice
continued….”In trying to make sense of such complexity and chaos, Newton described the
universe as machine, a clock that obeyed certain laws; that could be taken apart and studied, that
tick-tocked predictably and could be understood and controlled. Your scientists have been at it
ever since. Like little boys taking apart their mechano sets or dissecting helpless frogs – reducing
everything to its smallest pieces and proudly declaring that each mystery of the universe is
“nothing but a…whatever. Right now, many are hell bent on discovering or inventing a theory of
everything.”.

“But I’m just a simple man”, DM protested, “trying to put bums in beds in my destination. What’s
this science stuff got to do with me? I want to go home”, he heard himself whining and was
immediately ashamed.

The Voice wasn’t going to let him off that easily. It continued “ Let me be blunt. Tourism is now
the world’s largest and fastest growing economic sector – your international customers, all 720
million of them flit across international border like ants foraging for food (sorry for the pun!). Don’t
you think that with that importance comes some responsibility? This far you have enjoyed a
relatively free ride intellectually and been spared much grief. You’ve followed, not lead, the
forces for change and growth in your society. You started off innocently enough – helping pilgrims
get to sacred places – but this phenomenon called tourism has grown and changed
unrecognisably from there. When the steam engine was invented you climbed on board the
steamships and the railways to expand your reach; when the jumbo jet was created, you moved
the masses into more exotic places with greater frequency and ever greater numbers. Your
values and objectives reflected and followed those of general commerce. Destinations became
commodities - pieces of sunny, exotic or adventure-filled "real estate" that could be "packaged"
and sold. Guests became, at best, nameless passengers and, at worst, mere person-nights -
mobile generators of revenue, foreign exchange and positive multipliers. You’ve borrowed all the
business ideas from commerce in general and commerce has been based on a science that is
now being recognised as limited – even faulty. What on earth have you learned during your
descent? Were you sleep walking? When are you going to start thinking and take some
responsibility for the mess we’re in. You’ve spent years fighting for recognition as a legitimate
economic sector and now you have it you don’t know what to do with it. Where are your leaders?
Where are the original ideas coming from this industry? Why are your executives not speaking
out against global warming, climate change, water shortages and the growing disparity between
rich and poor? Dno’t you see that your “industry” has the potential to spread ideas and harmony
like a virus?”

To our hero, it seemed as if the entire cavern was pulsating with a passionate energy as the
Voice continued:

“720 million people cross borders every year thanks to you. That’s at least 3.5 billion
opportunities for information exchange and understanding; 3.5 billion opportunities for world
peace. You are our best hope – you can’t leave it to the people in Wallmart, Amazon,
MacDonalds or Coca Cola to restore balance and save the planet.”

“How do you figure that out/” asked an incredulous DM. It’s simple: supposing each of those 720
million tourists meet only 5 – yes only 5 other people from a different culture on their travels (taxi
driver; hotel receptionist, bellman, waitress, rickshaw driver) and recognise another living human
being capable of the same bodily functions and as having similar dreams, worries and aspirations

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– wouldn’t they stop wanting to blow “them” to bits; wouldn’t they want to stop exploiting them for
their own gain; wouldn’t they want to just stop and watch the sun set together; argue who should
be in the First Division of the Premier League or watch a swallow feed its young. Wouldn’t you
want to just celebrate the beauty of being alive on this wild and wonderful and very free planet
called Earth – our Home. You see Earth is not yet, to our knowledge – a tourist destination. But it
soon could be. If “we“ and I mean “we” got our act together first, we might have a better chance of
ensuring these alien tourists didn’t trash what we respect the most.

“OK”, said DM – by now very humbled and inspired. “I get it. Take me to your Leader…..”

OK Reader – you’ve heard the story. Your left brain is stimulated. Now let’s cater to the
right side. What’s to make of it?

A Diagnosis
We believe there are five root causes for the current disillusionment with “business as usual”
These five causes are like the layers of an iceberg – only the top 25% is visible above the surface
of the water and is attracting attention. Each layer rests upon and is supported and influenced by
a layer beneath and comprise: technology and design, corporate structure, corporate culture,
changing consumer demands and prevailing worldviews of life in general and business in
particular.

1. Technology and design. The majority of articles, whitepapers and discussion groups
that focus on solving the performance issue fixate on technological and design solutions.
They include more sophisticated CRM technologies for customer acquisition, retention
and service enhancement; web site design improvements following intensive usability
analyses; increased access via new devices and the adoption of integrated “ 360 degree”
approaches to deliver consistent service across multiple channels etc. Huge additional
investments in software are anticipated.

2. Corporate Structure. Inappropriate corporate structures - often referred to as the “Silo

Syndrome” have also been cited as a cause for poor customer service. Service offerings
are fragmented across multiple departments (marketing, sales, production, R & D,
shipping) each operating in relative isolation often having developed their own legacy
applications independently of one another. Most companies organise themselves on a
mechanistic model devised in the 1920’s that may have been appropriate when capital
and value were based on “hard” assets, such as land and resources, but simply prove too
rigid for an economy where knowledge, innovation and creativity are the real
determinants of success and value. The multi-divisional firm was first modelled by former
General Motors President Arthur Sloan in the 1920’s and hasn’t been questioned until
relatively recently.

In the first half of the 20th Century, it was prudent for companies to grow in size in order to
reduce and control transaction costs and gain economies of scale. Only in the 70’s and
80’s when transaction costs started to decrease, thanks to improvements in information
technology, privatisation and deregulation, did it make sense to splinter companies into
smaller business units. But size still matters and the organisational silos and associated
incompatible internal management and information systems have persisted.

Business pundits such as A.T. Kearney, Tapscott & Lowry, Camrass & Farncome, and
Aldrich are now urging companies to splinter even more and re-ask themselves what
business they are really in?

Rather than organising around integrated business units, a company will evolve around
the underlying business capabilities or core competencies. Defined by A.T. Kearney as

© Anna Pollock, DestiCorp 2002 Page 8

 “a set of value elements (built through knowledge, assets or processes) within the value
chain that lead to a specific output. 1

While we agree that this functional and corporate disaggregating trend is probably
inevitable and will likely help improve enterprise agility and responsiveness, we also
believe it will only go so far and ultimately fail if executives do not probe further and
assess the corporate culture and values that drive business in the first decade of the 21st
century. Hidden within the A.T. Kearney quote cited above is a perspective that, left
unchallenged, will bring with it yet another slew of problems.

3. Corporate Culture: The organisational structure of today’s corporation is informed by

cultures and “ways of doing things” that may have represented brilliant breakthroughs at
the time of their inception but that have now outlived their usefulness and relevance.
While the practice of marketing has increased in sophistication, it remains essentially a
push activity that starts with the Product and deploys Positioning, Promotion, Pricing and
Placement to push a product, service or solution to a relatively distant and passive
customer.

Influenced significantly by Freud’s devotees – who held a jaundiced and negative view of
humans in groups – customers became objects to be manipulated, targets to be exploited
or captured. Given the spate of ex-military personnel that were absorbed into commerce
following two world wars, it is not surprising that military thinking has dominated the
lexicon of commerce. Enterprises, like armies or battalions, compete to “capture a
market” using an arsenal of weaponry (persuasive advertising and communications) to
“gain the high ground”. The prizes in this war are the hearts and minds of consumers
that, regrettably, are often de-humanised and objectified by the very statistical
approaches used to better understand their behaviours and preferences.

Organisational structures, like armies, are hierarchical and employees, as the combat
troops, are expected to obey orders (stick to the script) and are provided information on a
strictly “need to know” basis. These factors have all lead to a growing distance between
company and customer and an inherently disrespectful, exploitive culture that treats both
employees and customers as objects. Have you ever heard of Friendship Relationship
Management (FRM?) I doubt it. I hope not.

4. Changing Consumer Behaviour: There is considerable evidence that today’s

consumers are fighting back. Thanks to the ubiquity of information on the net, savvy
consumers now occupy a world of near perfect information that is reducing many
products and services to commodities. Consumers are increasingly searching for
meaning from experiences not the acquisition of things. In a recent survey, acquiring
material possessions was identified as important by only 38% of an adult sample
compared to nurturing relationships with family and friends (98%). Our lack of time – not
always money – causes us to value enterprises that appear to help us achieve our
personal objectives in a world of seemingly endless choice.

5. Paradigm or World View – the Changing Science of Business: But to attempt to “fix”
or address these cultural problems without understanding and revealing their source
would also prove futile. The current subject-object; I win-you lose; mechanistic and
exploitive culture that underpins most corporate cultures is based on a collective
worldview or paradigm that is also being called into question. While much misused, the
term “paradigm” is really the only term that describes something as fundamental as the
way that human beings choose to make sense of their world at a given period in history.
When established in our societies, paradigms are rarely discussed – in fact, they are so

© Anna Pollock, DestiCorp 2002 Page 9

 taken for granted, they become invisible. This was the case for medieval Europe at the
time of the Inquisition. It took brave pioneers such as Copernicus and Galileo to
challenge the prevailing worldview and create the conditions for a different collective
agreement on reality to emerge. We live again at a time of shifting paradigms and to
“make sense” or find meaning in the world of commerce, we need to challenge all the old,
hidden assumptions about who we are and how the world really works because the old
assumptions, based on old paradigms have simply outlived their usefulness.

Throughout the 19th Century, the way we look at business, commerce and economics has
been shaped by science. The culture and practice of today’s commerce is based on a
“scientific” worldview that viewed the universe as a machine, operating according to
linear laws of cause and effect. The language of commerce is loaded with mechanical,
engineering terms drawn from a love affair with locomotives, cars and airplanes.
Companies and economies are viewed as machines that can be “kick-started”, “got back
on track”, re-engineered and fine-tuned in order to wrest ever-higher productivity from
employees and profit margins from customers. Back in the 1920’s Frederick Taylor,
whose landmark work, The Principles of Scientific Management guided Henry Ford, drew
his ideas on efficiency of organisations from Newtonian not quantum physics. Workers,
he said, were to be viewed as passive units of production and the system or the
workplace was like a machine. In tourism, we too have “industrialised” our relationship
with both our employees and our customers – objectifying the latter into Passenger nights
(PAX); ADR’s, occupancy statistics and load factors.

Ironically, at about the time that so-called “scientific management theories” were enjoying
acclaim throughout the 50s to 90s, science has been experiencing a revolution across
virtually every discipline and now bears no resemblance to Newton’s understanding of a
predictable, law abiding, clockwork-like universe. Discoveries in quantum physics,
microbiology, zoology, and chemistry are now pointing to a messier, organic view of the
universe in which chaos and complexity dominate; in which unpredictability, flux and
uncertainty are the only constants; in which the whole is greater than the sum of the
parts; in which relationships are more important than objects; and in which order emerges
from the interactions of countless independent agents. While this fundamental revolution
in our understanding of how the world actually works is now filtering – albeit very slowly -
into mainstream business; its existence let alone its potential is barely recognised in the
travel, tourism and hospitality sectors.

A Suggested Cure
The shift in power from seller to buyer is not just necessitating an attention to service quality and
consistency at levels unprecedented in travel but is turning the traditional way of conducting
business on its head. If e-business is not fulfilling its promise, if customers are in revolt, if CRM
isn’t working how it’s supposed to, then it makes little sense to be tinkering with existing
technologies. It also makes little sense to tackle corporate structure, if the cultures on which such
structures rest are also being shaken from beneath. Furthermore, it may not be prudent to
change cultures unless you can harness the underlying forces on which core assumptions about
value and meaning are founded. Finding hidden opportunities amidst the crises and setbacks
associated with tourism in the new millennium involves a complete change in perspective. It
means looking at “root causes” not superficial symptoms. It means a fundamental re-think in how
we approach our business, based on a fresh, more realistic understanding of how the world
works as being discovered on the frontiers of modern scientific inquiry.

This re-think has three fundamental and interwoven elements:

• Moving from a “product centric”/ “inside out” perspective to a “customer centric”/outside in

perspective

• Changing from a “make and sell” orientation to a “sense and respond” approach.

© Anna Pollock, DestiCorp 2002 Page 10

 • Shifting from a perspective of the economy as machine to economy as a complex, living
system .

None of these shifts can be made without a thorough examination and re-think of every aspect of
the enterprise, at every level: from leadership roles and styles; corporate culture; organisational
structures; governance; success criteria, and technical infrastructure. Practicing “customer
centricity” means far more than personalising a newsletter – it means ensuring that every aspect
of an enterprise is devoted to helping a customer complete the task they consider to be important
to them at any given time. It means rewarding not penalising your employees when they go the
extra mile. It means being able to offer seamless service via multiple points of contact (print, call
centre, web site, wireless device, TV, kiosk) and at every stage in the customer’s experience from
dreaming researching, selecting, reserving, experiencing, reflecting and recommending. It has
nothing to do with the “corporate speak” of corporate visions and missions where all the right
things are said but rarely done. To borrow a phrase from popular psychology; it’s about “walking
the walk” or, better still, it’s really about “dancing the dance”.

Desticorp has developed the notion of Dancing with the Customer as being the best way to
approach and apply a very different set of concepts, tools and attitudes that will enable tourism
businesses to survive and prosper in a highly unpredictable, chaotic and complex world.

Dancing with the Customer means recognising that the customer sits at the centre of an orbit, not
at the end of a chain. The role of the enterprise is to engage in a meaningful dialogue with a
customer that results in the exchange of value – the enterprise solves a problem or helps a
customer achieve an objective or complete a task. Dancing involves partners that share
leadership; it is a dialogue of bodies; an exchange of energy in which both partners “sense and
respond” to the movements of the other. The dance experience is more than the individual
dancers – it is a unique event that is affected by the context (the music, tempo, dance floor,
occasion) - that, when over, becomes memory for the participants. When two dancers meet on
the dance floor, improvisation and synchronisation are the hallmarks of “success”. They may
have developed the skill of the dance step beforehand, but the way those steps are made will be
unique to that encounter.

Five Useful Dance Steps

Dancing with the Customer is a metaphor for an approach to doing business. There is no “how to”
manual; no set of best practices; no check list for you to follow. Dancing with the Customer
implies and requires a fresh, playful, experimental attitude to doing business in a customer centric
economy in which you and your customers co-evolve and co-create innovative solutions to their
problems that are perceived by them as offering value and experienced by you as delivering
profits. The following five “dance steps” are more like guiding principles to prevent you bumping
into partners, treading on your customers’ toes or being “cut in” by an aggressive competitor.

Step One: Forget what you learned in school or “when push comes to pull”.
Destination marketers were raised on the five P’s of marketing: Product, Positioning, Pricing,
Placement and Promotion and taught to identify “target” segments of customers and presumably
“fire off” attractive and compelling sales propositions that would cause those targeted consumers
to purchase a product or select your destination. But our customers don’t buy products; they have
highly subjective and composite experiences (the trip) made up of various discrete fragments (the
hotel experience, the airline experience, the taxi ride, the sports match, the night on the town) all
of which are delivered by independent suppliers. Prior to buying something, most customers start
with a vague declaration of intent, for example: "I need a break"; "I have to move house"; " I need
to plan for retirement"; " I need to educate my children".

As soon as a customer declares an intent, he or she embarks on a cycle of need that involves
searching for alternatives, comparing, selecting, purchasing, assembling, experiencing and
evaluating. Successful companies of the future will be the ones who stop pushing products and

© Anna Pollock, DestiCorp 2002 Page 11

start collaborating to support the customer through their cycle of need. While travelling along their
cycle of need (from stating their intent, searching for alternatives, comparing, selecting,
purchasing, assembling, experiencing, evaluating) the customer occupies the centre of a web of
relationships comprising a network of inter-dependent suppliers who share the same focus and
objective: ensuring that the customer’s needs are met. Whether they realise it or not, these
suppliers form a unique virtual and event-driven community or “business web” or “business
ecosystem” around that customer and his or her time-specific task. This “business web” is virtual,
temporary and dynamic and encompasses not only the various suppliers but participants in those
suppliers’ own value chains.

In a smoothly functioning ecosystem, customers will be able to pull towards them the information
and services they need that are specific and relevant to their needs. Winning suppliers will be
those who deliver relevant, appropriate and timely services to facilitate those needs. Winning
suppliers will also recognise that they cannot go it alone – their best chance of success lies in
collaborating with suppliers of complimentary services and forming a supply community to
satisfy the diverse and complex needs of today’s travellers. Winning destinations will understand
that their role is to enable and facilitate the formation and dispersal of multiple supply
communities focused on individual customers.

Winning destinations will elarn the new five P’s of marketing: Personal, Participatory, Peer2peer;
Predictive and Psychographic……

Step Two: Understand the nature of the dance – what are our guests buying?
As stated earlier, destination visitors are not motivated to buy either products or services but to
create memories; to solve a problem (get away from it all; renew a relationship; rest the body;
stimulate the mind; “veg out”; get a tan; meet someone new); and minimise risk – they cannot
pre-test a vacation experience or return it that easily if it bombs. Are you making it easy for them
to dance with you? Two-thirds of their involvement with you as a destination occurs “in their
heads” before and after arrival. It starts as a fantasy (as a dream) and ends with a memory. Only
in the middle of the cycle – when they are at your destination – do you have the potential for
physical contact. Given the importance of the web in travel planning, their response to your
destination offering is shaped by their “virtual experience” – long before they arrive. Each “dance”
follows a similar cycle (dream, select, plan, experience, reflect and refer) that provides the
destination with an opportunity to “sense and respond” to the customer’s desires, intent and
purpose.

Step Three: Dance as Conversation

Dancing is a conversation, a dialogue of bodies and an exchange of energy. Strangers meet on a
dance floor – nervous at first, they look at each other’s feet; then their other senses engage and
they absorb more information about their partners and the context. Science has shown that
invisible communication is now occurring at the cellular level and both parties are quickly
becoming “entrained” and synchronising their steps, their gaze etc.

We have just discussed the opportunities for such conversations throughout the guests purchase
cycle. How are you using those contact opportunities to “converse” or to dialogue with your
customer and exchange information of value to both parties? Or are you literally shouting at your
customers? Most companies think they listen but the evidence is that the ratio of talking to
listening is 50:1. Forrester estimates that US marketers will send 210 billion marketing e-mails in
2004, equivalent to 1600 per consumer by 2005.

How are you creating a positive emotional bond with your guests? Yes, an emotional bond.
Consumers are NOT the rational beings that Adam Smith wrote about or that classical economics
is based upon. They are human beings driven as much by emotions, whims, and fantasies as
economic rationale. In the virtual world, consumer fickleness and promiscuity are rife simply
because once click of the mouse if often all that is required to find an alternative supplier if the
one you are currently dealing with disappoints or angers you. How many opportunities do you

© Anna Pollock, DestiCorp 2002 Page 12

have for contact with your dance partner? How many opportunities do you have to “sense” what
they want? What tools are you using to assemble and distribute meaningful intelligence
throughout your destination community? How effective are they? Who do you think are the most
important people in your CVB?

If you are not using every opportunity to “get up close and personal” with more of your guests,
and encouraging them to talk and share their experiences with your destination freely; you’re in
for trouble. As official owners of the “place brand”, destinations have enjoyed a competitive
advantage – they have had the potential to be the trusted source of destination information. But
consumers now have unprecedented choice of channel, brand, values, and media. Online
travellers, for example, can quiz experts on newsgroups; quiz recent visitors on igougo.com, read
independent review on a host of portal sites, book flights through an equal number of online
agencies – all promoting their in-depth destination information; and get a wide range of prices for
the same room from hotels.com; other hotel aggregators, chain res systems and individual hotel
property sites. What makes DMO’s and CVB’s so sure that they are not now replaceable?

Well over four years ago, authors of the Cluetrain Manifesto predicted what Forrester is now
describing as Emotive Networks2 – interconnected groups of consumers engaged in
communication and support.

People in networked markets have figured out that they get better support from one another than
vendors and are beginning to self-organise faster than the companies that serve them.

Customer communities are being formed by naturally curious, gregarious consumers in every
facet of society – 38% of Hotmail’s 110 million members use instant messaging; classmates.com
has 35 million members and is growing at 1.5 million per month; HabboHotel – a graphical chat
room for tenagers now has over X million active members. Hallmark cards…….

Are you actively engaging your customers and involving them in a community? Are you
identifying your ecstatic visitors and enabling them to become zealous advocates and
ambassadors for your destination?

Step Four: Dancing in Community

Your customers are whole people having whole experiences! The vacation experience – like a
dance – is a multi sensory, complex affair engaging all the senses and activating the body, the
emotions, the mind and spirit. The experience is converted into a highly subjective memory
whose whole (the “gestalt”) is informed by all the constituent parts but not described by any one
of them. Currently, these fragmented pieces are delivered independently by separate suppliers –
linked tenuously by a common thread – the customer.

So start to think of your destination not as a place or even as an association but as a complex
“destination web” – a collaborative community of enterprises whose members share a common
customer. Membership in such a community, comprises all kinds of buyers and sellers involved in
the sale and purchase of tourism products and services who may be classified into five groups:
visitors, providers, partners, host community and DMO/CVB. A destination’s competitive edge
stems from its ability to integrate that entire community more tightly, gathering information from its
visitors through a two-way dialogue, analysing it and distributing it among all the member firms to
maximise customer satisfaction. In a Destination Web, the DMO's primary role is that of
"orchestrator" or "choreographer" facilitating the interactions that occur between all members in
order to ensure that the community as a whole can compete and prosper. Its core skill
requirement is, therefore, to be able to build and sustain relationships with a variety of players,
whose perspectives and purpose often differ. One of its core functions is to ensure that the
community has the electronic infrastructure necessary to support effective relationship building
and information exchange.

© Anna Pollock, DestiCorp 2002 Page 13

Your destination is, in fact, more like a complex living and adaptive system than a machine-like
sector and obeys the same laws and expresses the same behaviour and patterns as does its
counterparts in the natural world – eg the human body, an ant colony, bee hive, slime mould etc.
We have much we can learn from the “birds and the bees”! In the natural world, species of an
ecosystem both compete and collaborate to consume and process the energy inputs into their
system. While Darwin focused on the forces of competition, modern science is demonstrating that
the concept of “fittest” is much more complex than originally thought and involves as much
collaboration and co-dependence than brute competition. Those ecosystems that have high
levels of internal connectivity – that enable their relative autonomous members to communicate,
to share information, to build and sustain a variety of relationships – are the ones best equipped
to adapt to external changes and ultimately to evolve into more complex, resilient communities.

What steps are you taking to link you suppliers/providers into a coherent, responsive community
able to respond to opportunity or threat with agility, speed and creativity? How are you engaging
customers and true partners – not targets – who can help you co-create new offerings, refine and
improve existing services etc. Do you have a membership extranet? Are you using it effectively to
improve services, reduce costs, share intelligence?

Step 5: Infrastructure
If you wish to cater to your customers as individuals, then allow your customers to pull towards
them the services they need that match their context, circumstances and profile; free your
employees from the time consuming and repetitive drudgery that distracts them from the art of
caring; supports dialogue and knowledge sharing, then you must invest in an electronic
infrastructure and get smart about technology. The key word here is open up, connect and
automate. Allow machines to do the boring stuff, quietly and in the background. If good staff are
hard to find and keep today, then the staffing problem is going to be ten times worse in just a few
years as the true impact of an aging population is felt in Europe. At DestiCorp, we believe that
"web services" and the associated features of distributed, peer-to-peer, service-oriented
architectures will really come into their own because there is no other method whereby
customers' demands for choice, flexibility, personalisation, affordability and accessibility can be
met profitably. For more background on the technologies supporting collaborative commerce,
please read our papers “Shifting Sands: The Tourism Ecosystem in Transition”, and “Why Web
Services and Grid Computing with Turn the Travel Industry on Its Head” available on
www.desticorp.com/resources.

Conclusion
In today's customer-centric economy, customers should be able to pull towards them the
information and services they need that are specific and relevant to their needs, their profile and
their context. Winning suppliers will be those who deliver relevant, appropriate and timely
services to facilitate those needs. Winning suppliers will also recognise that they cannot go it
alone – their best chance of success lies in collaborating with suppliers of complimentary services
and forming a supply community to satisfy the diverse and complex needs of today’s travellers.
While destination CVBs have the opportunity and the mandate to organise and facilitate such
communities, their ability to do so will depend on an ability to see their role differently and learn
how to truly Dance with the Customer.

Anna Pollock
CEO, DestiCorp
anna.pollock@btconnect.com
+44 1544 388 400

© Anna Pollock, DestiCorp 2002 Page 14