What is a SMART destination? These may be defined in many ways. They are destinations that think and advance strategically, improving competitiveness and searching positioning through effectiveness. Becoming a SMART is no more than a strategy to enhance the destination value by leveraging both the cultural and natural heritage, developing innovative resources, improving the efficiency in the production processes and the distribution, which finally propels the sustainable development. This transformation generates positive effects in all sub-sectors such as energy, health services, security, culture, etc. thanks to the cross-destination impact of the tourism activity.
The key concepts that set SMART destinations apart from conventional ones are accessibility, innovation, technology and sustainability. Among these concepts, new technologies are the ones which are more likely to be perceived by the tourist, namely mobile applications, augmented reality and everything related to data smart management.
There are 4 key concepts upon which Smart destinations are developed:
-Sustainability: social, economic, cultural and environmental
The development of the SMART concept in destinations consists mainly in working to attain a higher profitability in the daily exploitation of the resources. This is to be achieved by engaging both the local community and the tourists in order to enhance interaction between them. There are already some examples of Smart destinations, such as El Hierro island in the Canary Archipelago. Some of its main achievements are the energetic self-sufficiency and the pollution reduction, which have been achieved through actions such as:
- Waste converted into energy
- Environment camouflage of telecom and energy facilities and equipment (solar panels, antenna, etc.) within the landscape.
- Reduction of the visual impact in the buildings and facilities construction, by using local volcanic stone instead of bricks.
- It has gained awareness and branding by sharing and marketing its experiences in the social networks.
Other actions carried out in SMART destinations encompass:
- Mobile Applications
- Tourism Intelligence System, including data transportation and information Smart management, which altogether turn the destination into a SMART destination.
- Smart office; a common working place where to unify processes which produces a work synergy and allows sense and common methodology guidelines in the transformation towards an intelligent city.
- Beaches with free wifi
It is important to mention Singapore Smart City, which is on the way to become the first SMART nation worldwide. The country is working on its Master Plan for the next 10 years, which will be focused on the development of smart communities propelled by integration and innovation.
This blogpost is based on http://www.visionesdelturismo.es/smart-destinations/
Once the competitiveness of both products and clusters is analyzed, the final assessment is that of the key factors for competitiveness common to the whole destination. This assessment may also include brief strategy recommendations, both to further leverage the strengths and to overcome the weaknesses, as a starting point for the strategy and action plan that usually follows the Competitive analysis.
The cross-destination competitive assessment analyzes the strengths and weaknesses of the destination in the following areas:
Cross-destination resources and attractions: (non-product related)
- Intangible assets such as history, glamour, traditions, gastronomy, etc.
- Groups of special clients attracting other clients, providing social networking value
- Conservation of the natural environment
- Destination character as a result of the cultural heritage conservation across the destination
- Cultural life, offering an attractive calendar of events
- Shopping offer
- Nightlife and entertainment offer
- Unexploited resources for tourism
- Proximity with other destinations with which it is possible to create routes or packages
Infrastructures, facilities and services
- Signage across the destination
- Accessibility from the outbound markets (flight connections, railways, roads, harbors, etc.)
- Public facilities and services (hospitals, public transportation, police, etc.)
- Experiential value of the transport systems between clusters and attractions
- Adaptability of facilities for handicapped people
- Locals’ hospitality
- Adequacy of training for the tourism professionals in skills, know-how, attitudes, etc.
- Locals’ consciousness about the importance of tourism for the economy
- Destination knowledge, and language skills of the local population
- Air and noise pollution
- Congestion issues
- Pedestrian streets
- Urban landscape harmony and attractiveness
- Destination life bringing opportunity to mingle among the locals social lives
Tourism services and information
- Character, capacity and quality of the accommodation services
- Proper segmentation of the accommodation offer
- Quality and diversity of the restoration offer
- Restoration and accommodation services adapted to handicapped visitors
- Availability of food & beverage for groups with special needs
- Information services available in many languages (at least those of the outbound markets)
- Information available through different channels: information offices, internet, Apps
- Precision, clarity and up to date information provided
- Quality and quantity of the information provided in the Tourism Guides
- Local Tourist guides services
Organization and management
- Importance of tourism in the Government Agenda
- Cooperation culture between public and private agents. Public-private bodies dynamism
- Professionalism, integrity and proactiveness of the tourism related bodies (Government, DMO)
- Adequacy of regulations to the tourism development needs
- Efficiency of the bureaucracy system to attract and develop investments
- Level of consensus on the destination model to develop
- Effectiveness of the monitoring system in detecting relevant issues with regards to negative impacts related to the environment and other aspects.
- Effectiveness of the monitoring system in tracking the evolution of the tourism impacts
- Participation in the educational programs related to sustainability
- Effectiveness of new environmental friendly practices in reducing negative impacts
- Satisfaction of the local community with the tourism development
- Adequacy of the regulations to the necessary policies to guarantee sustainability
- Effective enforcement of the regulations related to development constraints & sustainability
- Conservation of the cultural and natural heritage
Tourism 3.0 approach
- Defined mission with the support of local stakeholders and community
- Mission awareness and appeal to the target social networks
- Participation of the locals and visitors in the product co-creation and storytelling
- Percentage of tourists attracted by the stories about the life-changing experiences
- Participation of the micro-entrepreneurs at the base of the pyramid in the tourism business
- Number of local service suppliers and outside stakeholders partnering with the destination
- Success in the implementation of the culture change towards collaboration and innovation
- Satisfaction of the tourists with the life-changing experiences
It is recommendable that the consultant somehow states the priority level or importance of the strengths to be leveraged and the weaknesses to be overcome to orient decision makers in the design of their policies regarding investment priorities. All these cross-destination assessments could also be accompanied with a comprehensive marketing audit, for which you may find the methodology in the Whitepaper “The Marketing Plan 3.0”.
Which other issues should be considered in the cross-destination assessment?
As with any other industry, the development of the tourism businesses requires a prior strategic assessment on the attractiveness of its various sectors to determine the optimum business portfolio to invest in. To do so, the 5 competitive forces framework analyses the structure of every sector through the five forces that shape its long term profitability:
- The threat of new entrants
- The suppliers’ negotiation power
- The buyers’ negotiation power
- The threat of substitutes
- The competitive rivalry
These five forces determine how the generated value is to be distributed among the different types of players: how much is retained by incumbents, how much is taken by suppliers and customers using their bargaining power, and also how the profitability is limited by the threat of new entrants and substitutes.
The strength balance between the different forces is to determine the average industry profitability, and a key to formulate the adequate strategy. Hereby, we will analyze the application of the five forces model for the tourism industry.
Apart from the 5 forces analysis, there are some more factors to be considered when assessing the sectors’ attractiveness:
- Market volume and main segments volume
- Market growth trends and potential: current and foreseen market growth
- Seasonality of demand, considering length of high, mid and low seasons.
- Price elasticity of the demand: price sensitivity of all kinds of buyers, adjusted according to the share of everyone.
- Expenditure in accommodation, food & beverage, activities and shopping (% of each).
- Multiplying effect: strategic value of the business in terms of its capacity of fostering the prestige of the destination and marketing it for other businesses.
- Loyalty potential: capacity of the business in retaining customers (%)
When composing the attractiveness matrix we will adjust the value of every factor according to its impact on the sector attractiveness.
Would you consider other factors when assessing a sector’s attractiveness?
The innovation platform should market its value proposition not only to the whole industry stakeholders throughout the region, but also to all potential contributors in and outside the industry. The process starts by identifying a pool of champions who are willing to showcase the benefits of open innovation for both contributors –solvers- and receivers –seekers-.
By identifying a group of visionaries in both sides of the platform, the conditions are set to face the first challenges, the ones which have to showcase how the open innovation works, and how it may contribute to improving the competitiveness of the whole industry. As soon as a few of these innovation challenges show successful results and satisfaction in both sides of the innovation process, a greater group of early adopters is likely to become interested and eager to participate to some extent.
As stated before, beyond rewards, the great motivators to take into account are the will for contribution to the community’s progress and well-being, and the will for recognition and prestige among industry peers. Such motivators suggest two main strategies to attract talent:
- Promote innovation challenges for non-profit purposes. Such challenges may be focused on helping destinations in developing countries or having suffered natural disasters, or mission driven tourism organizations, mostly related to environmental issues, like in ecotourism. Such challenges could be sponsored by private companies to offer some compensation.
- Organization of events to award best contributors and give them public recognition.
These and other strategies should be supported by marketing the open innovation platform to potential contributors in their communities and favorite media channels, which would entail social media, magazines, journals, public presentations, etc.
A more detailed explanation about the operation of an open innovation system is to be provided in the Whitepaper “Envisioning open innovation in destinations”.
Do you think of other strategies or tactics to attract talent to the open innovation system?
It is necessary to develop incentive systems to recognize and reward collaborative partnerships between innovators. Mind that the most powerful motivators that drive contribution are:
Contribution to the greater good. As long as innovations contribute to improve the community’s quality of life to some extent, this is itself highly rewarding. Intrinsic motivation is actually the primary driver, as a satisfactory result is already quite rewarding.
Peer recognition. One of the highest motivators –probably the highest- is the status and recognition attained through contributions. It is therefore crucial to find ways of recognizing contributors, rewarding them with appropriate community prestige.
Compensation. It is necessary to think of a flexible system of compensations, according to the various motivations within the pool of innovators. Beyond money rewards, it is necessary to find out other kinds of compensations that contributors would be willing to strive for.
Fostering collaboration in the innovation efforts poses many challenges, primarily related to the culture of trust, which has to be created over time, starting by the design of an appropriate system of rewards to tackle with critical issues such as intellectual property transfers and confidentiality, among other concerns.
The best way to start with collaborative innovation is in mission driven challenges that appeal to the contributors’ human spirit rather than for its compensation, which is actually likely to be symbolic or insignificant. The collaboration in non-profit challenges is expected to progressively weave interaction and networking among innovators, as well as trust among the frequent contributors. Such practice is also expected to inspire reflection about the design of collaboration systems for compensated challenges.
Can you think of other motivators or strategies to foster contribution in the open innovation system?
In contrast with free ideation where the mass crowd of solvers is empowered to bring in their ideas with little or no direction –as many companies have approached open innovation with rather bad results-, the most effective method to deliver real solutions to the seekers is challenge driven innovation. As aforementioned, this method consists of formulating specific and actionable problems or opportunities, to better focus the innovation efforts of potential solvers to a real solution that can eventually be implemented.
The open innovation platform is to be managed by a pool of Project Managers (PM) in charge of dealing with the Innovation challenges. Every time a public or private stakeholder (seeker) wants to open a challenge, a PM is assigned to the challenge and follows a series of steps:
- The PM works with the Seeker in the formulation and definition of the challenge.
- Once the challenge is defined, the Seeker has to set the prize or prizes for the winning solutions. There may be many prizes of different amount to take advantage of many ideas and encourage more participation.
- The PM has to define with the Seeker the terms of agreement to be offered in the tender.
- Beyond the registered innovators in the platform, the PM should search for more innovators outside the platform, especially when the challenge requires specific expertise which is rather scarce or nonexistent among the registered innovators.
- Once all potential innovators have been invited to participate to the challenge, these have to submit their solution by the specified deadline, complying with the stated requirements.
- When submitting the solutions, the PM screens them all to ensure that they all meet the requirements established by the Seeker, prior to deliver them to the Seeker.
- Then, the Seeker may decide which solutions are suitable and award as many as he considers, or none at all if any solution is good enough.
- In the case of discarded solutions, the Seeker has signed an agreement upon which he cannot use the non-awarded ideas without permission of the Solver. To guarantee the accomplishment of this agreement, a pool of Innovation controllers are empowered to carry out Innovation audits on the “Seeker companies” to make sure that such ideas are not used.
Regarding intellectual property (IP) transfer, there are many possible options to regard:
- IP may be fully transferred to the Seeker, especially when the reward is according to it.
- IP may be transferred under a non-exclusive license to the Seeker, if the reward is too low.
This issue is to depend also on the nature of the assignment, taking into account that some innovations are only applicable to one case, because of the uniqueness of the Seeker or because the job is tailored for the Seeker, such as a graphic design.
The funding of the platform may come from two complementary sources:
- Brokering commission for every challenge managed to be paid by the Seeker.
- Sponsorship by many industry stakeholders, including the government.
The platform should engage a vast range of shareholders within the industry, encompassing private businesses, educational institutions, governments and even non-profit organizations.
How do you thing that this operational system could be improved?
The open innovation platform is to be structured in many areas of innovation, according to the nature of the needed expertise. Hereby, six areas of innovation are envisioned:
- Technological solutions (mainly IT related)
- Environmental friendly solutions
- Product development
- Marketing designs and merchandise
- Business model innovation (strategy challenges)
- Stories in different formats, photos, videos, etc.
Every innovation area would have its own pool of contributors, who receive updates about the incoming challenges in which they are invited to participate. Such challenges may be classified into three categories:
- Private challenges posted by private companies
- Public challenges posted by governments, public institutions and DMOs
- Public challenges for mission driven purposes, posted by non-profit organizations, related to cooperation programs or for mission driven destinations
The difference between private and public challenges is mainly the publicity of the challenge, which in the case of private challenges is more likely to be directed exclusively to a selected group of innovators without revealing the name of the innovation seeker and keeping maximum confidentiality. Conversely, public challenges are open to the whole platform, without need to keep confidentiality on the identity of the innovation seeker.
Furthermore, there could be an “Ideation bank” to collect solvers initiatives on identified problems or opportunities which have not yet been posed as a challenge, as they are not among the top priorities for seekers or there is no budget to award solutions at that moment. This ideation bank should give room to creative initiatives and work as a social media platform where solvers may pay for enhanced advertising of their ideas and participants may vote for their favorite ideas. The posted ideas should comply with a series of parameters, requiring detailed and structured explanation of the idea, to filter the mass participation. The “Ideation bank” would not only foster innovation, but also the promotion of new talents in the industry.
Do you think of other types of innovation challenges or areas?
Beyond the aforementioned most conventional approaches, what sets destination intelligence 3.0 apart is the development of an open innovation system accessible to all the tourism industry stakeholders at a regional level.
An open innovation system works like a platform where innovation seekers -operators, tourism boards, governments, consultants, etc.- look for new ideas on how to tackle with their challenges by connecting with innovation solvers -trade professionals, consultants, creative designers, and experts in various fields- through open challenges where the problem is precisely formulated to help solvers envision possible solutions and submit proposals, which are to be assessed and rewarded as long as they help in solving the problem.
Among the posed challenges, there should be some non-rewarded ones for mission-driven purposes -cooperation with destinations in developing countries, destinations recovering from natural disasters, mission-driven destinations, etc.- to showcase how contribution to the greater good is one of the most powerful motivators in innovation, drawing the attention of a larger pool of creative talent than in other challenges.
Such a strategy is not only to support such mission-driven challenges, but also to raise awareness throughout the industry about the potential of mission-driven tourism, as the open innovation system leverages more intelligence and creativity for this type of purpose than for any other, hence providing mission-driven destinations with a natural competitive advantage, and compensating at least some of their constraints.
How do you envision such kind of open innovation challenges?
The monitoring activities should be carried out by establishing Tourism Observatories in local regions, which are in charge of collecting and processing the data to elaborate the research outcomes. Then, these local Observatories are to be coordinated by an Observatory at an upper regional level to elaborate aggregated statistics ensuring that the research methods and criteria are unified and thus the data is comparable.
Such observatories should operate in cooperation with the local tourist boards and industry associations, to facilitate access to data from the local businesses. Further, cooperation with educational institutions at a University level should also be encouraged, to give prestige to the Observatory and nurture it with know-how and young talents whenever necessary.
The Observatories are to become the reference research center for the tourism industry both at a local and regional level, elaborating not only the regular statistics about tourism industry performance, but also carrying out ad-hoc studies to satisfy special research needs from either public bodies or private operators.
Tourism Observatories may be funded by industry associations, tourism boards and also through the ad-hoc services they provide to private businesses and public bodies. Again, the monitoring system is an opportunity to foster cooperation between the private operators and the public bodies.
Do you know about Tourism Observatories activities? What do you think they could do more to support local industry associations and governments in planning the tourism sector strategy, marketing and innovation?
Beyond the aforementioned general performance indicators, it may be convenient to track performance of the evolution of specific competitiveness programs such as Quality certification for local businesses, hospitality campaigns, service quality competitions, etc.
Such tracking may be carried out through many methods:
- Mystery tourist system, consisting of periodical service evaluation by outsourced professionals pretending to be casual tourists.
- Survey on customer satisfaction in the accommodation facilities for the Quality certification assessment.
- Survey on customer satisfaction and assessment in the departure halls of airports or train stations.
- Tracking of congestion and “early sold out” services through systematic observation, to identify bottlenecks and unsatisfied demand for critical services.
Do you envision other specific programs to be monitored or researched upon? Do you think of other appropriate research methods?