Tag: business modelling

Business model innovationCollaborative business modelsInnovationStrategySustainability

Destination Models 3.0: Comparative performance between different destination models

To better realize how destination models 3.0 outperform other models in creating value, reducing efforts and marketing efficiently, hereby are compared three destination models:

Cultural destinations: based on cultural or natural resources with several business owners operating independently. In some cases these cooperate in partnership with the government for marketing the destination.

Resort destinations: based usually on natural resources with one owner operating or controlling all business units providing service in the destination, being also responsible for the marketing. All business units are therefore integrated within the resort.

Destinations 3.0: based on either cultural or natural resources with business units belonging to many owners, and operators cooperating with different levels of integration on the management and marketing of the destination.

COMPETITIVENESS & MARKETING: KEY DIFFERENCES BETWEEN THE THREE DESTINATION MODELS

  CULTURAL DESTINATIONS RESORT DESTINATIONS DESTINATIONS 3.0
VALUE PROVIDED
Experiences Typically local cultural experiences

Based upon cultural & natural resources, and locals creativity

Standardized experiences

Based on standard products, natural and artificial resources

Life-changing, personalized and imaginative experiences

Based on stakeholders co-creation

Feelings Cultural character and authenticity with heritage protection and hospitality programs Lack of character and authenticity (replicated facility style)

 

Enhanced authenticity through urban aesthetic harmony and locals’ inclusiveness as experience suppliers
Service quality control Some service suppliers have Quality certifications

Ratings for restaurants and accommodations

Comprehensive service quality control

Ratings for accommodation service

Comprehensive and incentivized service quality control
EFFORTS REQUIRED
Discomforts Dependent upon every service supplier and local service standards Fully specified comfort standards, adapted to the needs of tourists Only discomforts associated to cultural environment
Insecurities & risks Dependent upon government regulations and control Full information and safety controls on critical issues Full information.

Safety dependent upon government regulations

MARKETING
Needs satisfied Functional and emotional Mostly functional, but also emotional Functional, emotional and spiritual
Target tourists All kinds of tourists Limited segments All kinds of tourists, but primarily tourists 3.0
Marketing guidelines Differentiation Differentiation or price Mission, vision & values
Tourist relationships Sales transactions and satisfaction monitoring Sales transactions and satisfaction monitoring Experience co-creation, storytelling through communities
Marketing channels TTOO, TTAA and direct sales TTOO, TTAA and direct sales Mission driven agents, communities
COMMUNITY IMPACT Economic prosperity concentrated in local business owners Economic prosperity concentrated in the resort owners Poverty alleviation, socio-cultural change, environment protection
MAIN CHALLENGES Harmonize experience system and quality standards Develop unique experiences to compete upon differentiation Integrate and associate stakeholders

Foster culture change

Would you consider other destination models to compare performance? And other relevant points to be compared?

Business model innovationStrategyStrategy planning & execution

Destination Models 3.0: Development strategies (IV)

Service planning

Once identified the portfolio of partners, infrastructures, facilities and service suppliers needed to start operating the platform, it is necessary to envision the necessary service capacity or carrying capacity for each of them throughout the subsequent development stages. This entails determining the needed capacity for every business and facility in each of the destination areas in a reference day, foreseeing the expansion of the model to the utmost of its potential.

There should not only be planned the service capacity of facilities, infrastructures and service businesses, but also for the entire portfolio of experience providers, to guarantee a balance in the variety of experiences offered throughout the destination, according to the demand.

The service planning serves as a layout for the expansion of the model, setting the direction on which services and facilities have to be developed in which location, ensuring a balanced and harmonious development in every stage of the model’s expansion. It depicts the type of businesses, facilities and infrastructures that have to be developed in each phase of the model expansion, specifying the service capacity of everyone. Such service capacity planning should be flexible for both facilities and service businesses, in different ways:

  • For facilities, some resources such as personnel should be flexible to adapt variable costs to the needed service capacity according to demand. Every facility should have an established maximum service capacity, but its associated costs would depend upon the needed capacity.
  • For service businesses, there would be an initial plan of the service portfolio, which could be changed as long as the experienced demand for every kind of service advises to do so.

Would you add any other consideration when planning the service capacity throughout the expansion phases of the model?

Collaborative business modelsInnovationInnovative cultureOpen innovationStrategy

Destination Models 3.0: Development strategies (II)

Open Innovation system development

Being one of the key assets to invigorate creativity and sustain the destination model competitive advantage, it is necessary to design a set of strategies to engage stakeholders in contributing up to leveraging the most of the collective intelligence. The open innovation platform is to unlock the creativity of all stakeholders, starting by its employees, followed by its closer partners, and beyond.

One of the key factors to make the open innovation work is to constantly connect with external networks, which are more likely to bring in new ideas than creativity alone. Based on the same principle, encouraging the network members to travel, research and learn about other destinations should nurture the innovation ecosystem with inspiring ideas.

Most productive innovation networks are characterized by a decentralized structure with many leaders who have collaborative mindsets. Such decentralization not only unlocks initiative and creativity, but also fosters further interaction and collaboration among the network members.

When developing the open innovation system there are four critical steps to follow from the design phase, to the execution and management of the network:

Connecting and organizing people:

  • Find open minded people who are motivated for innovation
  • Combine people with different approaches to innovation (idea generators, experts, producers)
  • Make sure there are members with different profile in terms of skills, seniority, and field of expertise
  • Include subgroups devoted to specific tasks and goals

Setting goals and engaging members:

  • Define the role of the innovation network and groups in relation to the organization’s mission
  • Establish innovation goals and metrics to track progress
  • Plan how to establish trust among network members and engage them quickly

Supporting and facilitating:

  • Determine technology support required for network members
  • Define additional support if necessary
  • Define key information inputs

Managing and tracking:

  • Define incentive system to reward contributions
  • Determine accountabilities and timing to track and assess performance
  • Decide who takes new responsibilities and who leaves responsibilities

When composing innovation teams for specific purposes such as business model innovation, some rules should be applied. For instance, there should be a balance between four kinds of contributors:

  • Idea generators, who come up with out-of-the-box approaches and questions to start with
  • Researchers, who bring along an analytical perspective based upon market insights
  • Experts, who bring deep knowledge in their field of expertise
  • Producers, who coordinate the activities of the network and connect with people from outside

Furthermore, mixing people from different backgrounds -in terms of education, culture, and industry expertise- is likely to bring along different approaches when trying to solve complicated challenges.

To start operating the open innovation platform, there are many steps to be followed:

  • Guarantee internet access to all internal stakeholders (partners and employees)
  • Train them on how to use the tools
  • Set up content creation contests for experiences, stories and marketing materials; setting clear rules to make sure they are aligned with the values and the mission. Everybody should be empowered to start their own story or to collaborate with others’.
  • Storytelling facilitation: stakeholders would attend training workshops on how to write stories
  • Training on business model innovation methods and frameworks to establish a common language
  • Presenting a story and other marketing contents as successful cases to inspire participation

Would you consider any other step in the development of the open innovation system?

Business model innovationCollaborative business modelsThird sector and social sustainability

Destination Models 3.0: Development strategies (I)

Once designed the architecture of the model, it’s time to design the strategies to develop it to the utmost of its potential. The development strategies are likely to be quite different depending on the initial scenario, whether it is a resort, a decentralized destination or a group of resources to be exploited for the tourism business. Hereby are described the four key development strategies that are to determine the success of the destination model 3.0 in most of the cases.

Human resources development

One of the key factors that makes destination models 3.0 deliver a superior value proposition to other destinations is the better human development of its service suppliers, along with the service quality control and incentive system. The human resources development strategy intends to unlock and leverage all the human potential of destination stakeholders, by stimulating their creativity and empowering them to develop and bring in all their talents in benefit of the destination, giving them incentives and recognition for their contributions. There could be many kinds of training programs:

  • Empowering locals to become micro-entrepreneurs, coaching them on how to develop their idea.
  • Training employees and service suppliers on how to deliver a memorable customer experience.
  • Language training in the main languages of the target outbound markets.
  • “Storytelling training” for all local stakeholders on how to create and tell stories, developing their communication skills, and eventually giving them the chance of participating in rewarding contests and publishing their stories.
  • Training to develop artistic skills such as photography or graphic design, to be used in the creation of marketing contents.
  • Educating on business model innovation in order to both help entrepreneurs reinvent their own business and to participate in the open innovation system discussions about revamping the destination platform business model.

Some of these programs like the storytelling training and artistic skills development, should also be offered as life-changing experiences to the tourists, who eventually may generate ideas and contents for the destination.

Would you consider other skills development goals?

Business model innovationCollaborative business modelsCollaborative cultureSustainabilityThird sector and social sustainability

Destination Models 3.0: Integrating partners (IV)

Selling the vision to community stakeholders

The challenge of integrating all the community of stakeholders requires its own marketing plan, usually known as internal marketing plan. This plan should encompass the target stakeholders to attract in every phase, the integration formulas, and the communication strategies and actions to achieve these goals. Since the beginning when presenting the first model prototypes to pre-test and design the integration formulas and when eventually marketing the destination model to engage the community stakeholders, it will be necessary to explain them the model vision in a compelling way that connects first with their emotions and human spirit, and ultimately opening their want for a deeper understanding of the destination model rationale.

Stories are the best way to help people imagine how the new model is likely to improve their current status quo, how it creates value and therefore improves the community’s life quality. Stories convey the new model ideas to the people’s minds describing them in a way that overcomes resistance, the most likely reaction to new model propositions challenging the status quo. By capturing people’s attention and curiosity, compelling stories are to pave the way for an in-depth presentation and further discussion about the new destination model, to eventually make the potential stakeholders understand the implications that the new model would have for them: costs, obligations, efforts, and benefits for the individuals and the destination as a whole.

To better convey the idea about how the new model would operate for the local stakeholders, it is convenient to use one main character similar to the audience profiles (service suppliers) to be the protagonist. Such character should have similar problems, needs, concerns, fears and aspirations as most local potential stakeholders, so to make them feel identified with him and connect with the story. Then, the story shows the character finding out how the new model addresses all these needs and concerns, so to help the audience visualize the answers to their questions and fully understand the operation of the model.

Furthermore, it is convenient to provide potential stakeholders with an interactive tool where to “play” with the model simulating how it would be to become an integrated partner within the new platform. So long as the model system is complex, such tool is crucial to help potential partners understand and envision their possible fit. This should be complemented with workshops where platform representatives would attend community stakeholders’ queries.

Such destination’s vision is not only necessary to convince the community members to integrate, but also a guiding force that constantly aligns everyone’s efforts on their contribution to expand the destination mode to the utmost of its potential and to accomplish the mission.

In this stage, when defining the model to be deployed throughout the destination, one of the key points is to decide upon harmonizing the urban aesthetics style to be deployed throughout the destination. This should be quite flexible and should be voted by locals.

Would you consider other strategies when selling the vision to the community stakeholders?

Business model innovationCollaborative business modelsCollaborative cultureStrategyStrategy planning & execution

Destination Models 3.0: Integrating partners (III)

The design of the integration strategy requires making the local service suppliers envision the future of the destination through the development of this model, and listening to understand the different levels of risk attitude and enthusiasm that the project inspires, identifying their fears and concerns about the integration process. This should be done through the Partner Discovery process, encompassing three main steps:

  • Mobilizing community leaders. The first step is to create awareness about the need for a new destination model, presenting a consistent proposal as a starting point, and establishing a common language to discuss about the new model. Community leaders are the first to participate in the discussion, though in the following phases other community members should also be consulted.
  • Upon presentation of the first proposal, the second step consists on getting feedback and understanding of the locals’ concerns, problems, needs, fears, and aspirations that the model has to address. Hereby we may identify different partner profiles, with different concerns and aspirations, which set the direction to refine the integration formulas to accommodate all profiles.
  • Designing. Based upon the feedback and insights obtained from community leaders, the initial prototype(s) should be rethought to adapt to the previously unknown requirements. Both “design” and “understand” are parallel processes interacting constantly along many rounds to revamp and pre-test the model, its formulas and the valuation criteria to integrate businesses into the platform.

Regarding the development strategy for integrating partners should consider several development phases stating the milestones when priorities change. For instance, the second phase should not start until the platform is able to operate providing all services for a minimum flow of visitors. This may entail also a spatial development strategy in which the model scales up when a determined area is fully or almost fully integrated into the destination model.

Would you consider any other step or issue in the partner discovery process?

Business model innovationCollaborative business modelsCollaborative cultureStrategyStrategy planning & execution

Destination Models 3.0: Integrating partners (II)

When attempting to integrate the local service providers into the platform, we are likely to find different attitudes with regards to their confidence on the project and their will for keeping the control of their business. Further, this attitude may change over time, for it is necessary not only to offer many integration formulas attending different risk attitudes or want for autonomy and ownership, but also to offer a flexible system that allows them to shift from one to another integration status.

For instance, the range of integration formulas could go from the full integration exchanging the business ownership for platform shares, to the lowest possible integration status in which the business is associated to the platform only by having to comply with certain service quality standards to take advantage of the aforementioned benefits of the platform. In between these formulas, there could be intermediate formulas guaranteeing a minimum profitability, but also with a limited dividend, to accommodate those with a medium level of risk aversion. As showed in the following table, in many cases we should distinguish between the integration of businesses and properties.

Owner’s risk perception Properties (premises, facilities, land, etc.) Businesses
High risk Renting or selling to the platform Association in low integration status
Medium risk Integration with guaranteed profitability Integration with guaranteed profitability
Low risk Full integration at all risk Full integration at all risk

Detailed information about the implications of each option would be provided to partner candidates, to help them visualize the pros and cons of every option. In general, these could be the following:

  Advantages Disadvantages & Obligations
Low integration ·   Keep ownership of the business

·   Take advantage of platform’s marketing

·   Advantageous deals in key supplies

·   No influence on platform’s policies

·   Compliance with service standards

Mid integration ·   Guaranteed shares’ profitability

·   Right to vote on platform’s policies

·   Preferential marketing deal

·   Free or subsidized training & assistance

·   Limited shares’ profitability

·   Limited voting power

·   Loose business ownership & control

·   Fix salary + bonus, subject to penalties when failing to comply with rules

Full integration ·   Stake in platform’s profits to the fullest

·   Full right to vote on platform’s policies

·   Preferential marketing deal

·   Free or subsidized training & assistance

·   Loose business ownership & control

·   Fix salary + bonus, subject to penalties when failing to comply with rules

·   Risk of no profits in case of platform’s poor results

Hereby it is necessary to remark that partners associated to the platform –in low integration status- would be also encouraged to invest in the platform to take advantage of its profits and have the right to vote when deciding the platform’s policies.

Besides, there should be a specific integration and development strategy for the new entrepreneurs encouraged through the platform development policy, establishing many integration options and setting their path to regain full ownership of their business in case they eventually wish to do so. For instance, as it happens with new employees, many new partners –especially the micro-entrepreneurs in the poorer layers of the community- should follow a trial period during which they are trained, coached and closely monitored to assess their suitability as integrated service suppliers.

What challenges do you foresee when integrating partners through this “formulas strategy”?

Collaborative business modelsCollaborative culture

Destination Models 3.0: Integrating partners (I)

When designing the value proposition and the business model architecture, the first step in the strategy formulation is to define the mission. This should be done by listening to all the local stakeholders to identify current and future challenges affecting the local community and the specific constituents of these challenges (disadvantaged persons, minorities, elderly people, etc.), mostly those in the base of the pyramid. Further, it is advisable to identify concerns related to the protection of the environment or the cultural heritage. The local communities are the first ones who have to be engaged with the mission, and so their opinion and will should play a decisive role on the mission definition.

The next stage entails searching for solutions that can be powered through the tourism activities, which involves finding ways to transform the tourists’ lives to satisfy social needs and motivations which may also be understood as another mission focused on the socio-cultural transformation. Participation of communities of creative people should be encouraged from this stage. This process starts in the strategy formulation phase, but continues permanently as the main goal of the open innovation system where all stakeholders are empowered to participate.

Then, another key step in the strategy formulation is to identify the key partners and key resources the destination needs to start the virtuous circle that leads to expand the model. They are the ones that make the destination and the business attractive enough to progressively attract and engage new partners and a growing network of customers, some of whom turn into brand ambassadors. The usual core stakeholders to engage in the first phase are to be:

  • Local government, providing infrastructure, long-term shareholding and institutional support
  • Investors, so long as there need to be carried out significant investments in tourism infrastructure
  • Owners & operators of existing key tourism infrastructures
  • Land owners of the areas where the new tourism infrastructures should be built
  • Operators for the new key tourism infrastructures
  • Community leaders, who should influence and engage the local community
  • Channel partners such as Tour-operators and Travel Agents with key market influence
  • Opinion leaders such as journalists and bloggers to spread the first stories to their followers

Furthermore, it is necessary to define the partners’ profile for all resources and activities that are to be outsourced, establishing the prioritization criteria for the selection process and negotiation key points.

Moreover, the development of the destination model needs to define a strategy which sets the priorities on the requirements partners should comply with in relation to the value brought and mission commitment. In this regard, we will probably not always find the necessary service suppliers sharing our mission and values –especially at the beginning-, and so we will need to understand their values and expectations in order to build win-win collaboration. Progressively, as the model scales up, the strategy prioritizes partners who share our mission and vision, eventually replacing those who do not.

Would you suggest different roles for the core stakeholders mentioned above?

Business model innovationCollaborative business modelsEnvironmental sustainability

Destination Models 3.0: Environmental benefits

When focusing on environmental protection and sustainability, in the case of nature-based tourism destinations, there are many roles that the destination model may take:

  • Collaboration with research programs (either by universities, corporations, government, etc.) or environmental protection programs (private foundations, NGOs, government, etc.) by lending some of the facilities, programming volunteering activities related with the field work, etc. In some cases, the open innovation system could serve also as crowdsourcing resource for innovative ideas. Alternatively, the destination could also serve as a pre-testing field for new eco-friendly products.
  • Creating awareness among stakeholders about the environmental issues and challenges of the destination, by educating them on the threats and the good practices that should guarantee the protection of the destination’s environment, in order to create a network of environmental ambassadors that spread these concerns and good practices.
  • Integrating environmental friendly facilities and practices within the main business activity, thus minimizing the impact on the environment. These facilities and practices could also be leveraged for educating and creating awareness about the environmental challenges, thus accomplishing the aforementioned role at the same time.

The indicators to track the environment related mission should be designed by environmental experts according to the established goals aligned with the mission.

Beyond the aforementioned main benefits, there may be other positive impacts such as those related to cultural protection and promotion, socio-cultural change and human development on both the local communities’ side and the visitors’ side. These benefits may be difficult to measure and are most likely to be assessed through the kinds of stories that are created and their popularity.

A series of Whitepapers are to be released featuring case studies to illustrate how the destination model 3.0 approach may be applied in various tourism destinations.

Would you consider other roles to be played by the destination board?

Business model innovationCollaborative business modelsSustainabilityThird sector and social sustainability

Destination Models 3.0: Social benefits

As already introduced in previous sections, the mission of destination models 3.0 is to address social and environmental challenges that concern the stakeholders. In this section we explain the positive impacts that the tourism development intends to make according to its mission. The two main types of missions are most likely to be poverty alleviation and environmental sustainability, for which we need to define the role of the destination model in addressing these challenges, the goals and the metrics to measure its success.

When focusing on poverty alleviation, this is intended to be attained through fostering entrepreneurship in the base of the pyramid (BOP), favoring local businesses as suppliers, investing in infrastructure, and providing training, coaching and micro-funding to the poorest layers of the community, empowering them to become active players within the destination model. Ultimately, their participation brings along more human capital in the creation of experiences and stories, as well as a surplus of authenticity and variety that will positively impact in the visitor’s experience and the image of the destination.

Moreover, the raise of the bottom of the pyramid in terms of disposable income is likely to create multiple opportunities for the local economy, with all the new services and products that they may afford to buy. There could be many indicators to track the evolution of poverty alleviation:

  • Newly created tourism businesses in the poorer layers of the community
  • Increased disposable income in the poorer layers of the community
  • Newly created “non-tourism” businesses serving the poorer layers of the community
  • Increased turnover of old businesses serving the poorer layers of the community
  • Increased number of households with access to information technology and computer literacy
  • Increased access to primary and secondary education in the poorer layers of the community

Would you consider other relevant indicators?