Innovation arrives from outside industries and those who turn a blind eye to pending changes can be left behind.
By Erin Rigik Del Conte, Senior Editor
Hospitality Entrepreneur, Chip Conley, gave the keynote address during the Wednesday general session of the National Association of Convenience Stores (NACS) Show in Chicago.
Conley is the founder of the second largest boutique hotel brand in the world—Joie de Vivre Hospitality—and the original head of global hospitality and strategy for Airbnb, where he is now strategic advisor.
Conley walked attendees through the waves of disruption that have hit other industries. He noted that whenever your company finds itself saying, “People don’t want _____,” you’re likely to be disrupted as a result. He gave the example of his grandfather, who was a banker who said, “people don’t want a machine between them and their money” before ATMs changed the banking industry. When Uber and Lyft were just beginning the president of Yellow Cab in San Francisco said, “people don’t want to be transported in someone else’s car.” Yellow Cab in San Francisco is bankrupt now. Examples abound and can be found in a range of industries.
Innovation Fills A Need
Those creating the next wave of innovation are filling a need. ATMs were created because the creator hated standing in lines at banks. “Amazon does want to take over your industry. You’re safe as long as you take steps to be convenient…. In 5-10 years people won’t want to stand in lines at c-stores,” he warned.
According to Conley, there are three rules of innovation.
- Innovation doesn’t arrive without foreshadowing.
- Innovations usually address an underlying human need not being met.
- Overtime the establishment embraces innovations that represent long-term trends.
Industries ripe for disruption have a tendency to ignore new competitors, Conley pointed out. He explained some of the disruptions that have occurred in the hospitality industry, and encouraged c-stores to consider how it might pertain to their own industry.
Hospitality Disruptions
Holiday Inn started in 1953, when the interstate highway system came about and customers wanted predictability in their accommodations. The 1970s brought the timeshare disruption, which the establishment bad mouthed, but when it couldn’t fight the disruption, it finally jumped on the bandwagon.
“The biggest time share companies in timeshare today are Marriott, Wyndham and Hilton,” Conley said, driving home his point that disruption comes from outside the industry, and establishment eventually jumps on board.
Boutique hotels, which were smaller, independent and stylish compared to major hotel chains of the day, were the next wave of disruption in the mid 1980s. They filled the need for a middle of the road accommodation that offered a unique experience.
Airbnb came about when three roommates were struggling to pay rent and decided to rent out mattresses in their home to people coming into town for a conference when all hotels in the area were booked.
While Conley still owns hotels, he joined Airbnb four years ago. The writing was on the wall for Airbnb’s ability to succeed. Conley pointed to boutique hotels as foreshadowing the rise of Airbnb, because they showed customers no longer cared about predictability when it came to accommodations. It fit a trend of being more experience driven, with a local feel. VRBO (vacation rental by owner) and Craigslist, already existed, so people were already renting out homes. Home swapping had been around since 1953. Such signs showed consumer interest existed.
Airbnb today has 4 billion listings.
Conley noted that feedback is a key to Airbnb’s continued success. While hotels may only get 5% feedback from guests, Airbnb gets feedback from 70% of its users, Conley said.
When it comes for preparing for the coming disruption in the c-store industry. Conley had the following advice: Surfing can’t control waves. When comes to c-stores, don’t spend all your time focusing on what the competitor across street are doing. “The most interesting innovations you’ll get will be from outside the industry.”
