The Convenient Fiction of Program Optimization

Second in a series on Managed Travel 2.0 based on my keynote speech at the Beat Live.

 

Travel program optimization.  It sounds so desirable, doesn’t it? A worthy goal. A complicated process. A successful achievement.

“Program optimization” is a phrase deeply embedded in every TMC sales pitch. It’s a phrase that travel managers put at the top of their strategic goals.

It’s a phrase that’s nothing more than a convenient fiction.  Convenient because we really want to believe it can be delivered.  Fiction because it can’t.  At least not in the way we usually think about it.

TMCs and Travel Managers Don’t Have the Full Picture

Here’s the optimization problem: Companies want to get the most value from their travel spend.  That means maximizing the gap between a trip’s expected value and it’s total cost. A trip’s total cost is the sum of the trip’s expense plus the cost of the trip’s traveler friction.

So now we see the source of the fiction.  TMCs and travel/procurement managers don’t know two key pieces of the puzzle.  They don’t know the trip’s

Managed Travel 2.0 – Explanation and Implications

What do chickens and travelers have in common?  Both might be better off without fences.

That’s one of the issues I raised today at The Beat Live’s closing speech.  This speech covered

• The driving forces behind Managed Travel 2.0 and its five key principles
• The three requirements for this concept to take off
• And most intriguingly, several key implications for the major stakeholders in the travel industry.

Here’s the full presentation.  It’s a much deeper presentation than what Evan Konwiser and I covered in Boston at GBTA.  Like that presentation, this one is in ballroom style (pretty pictures, few words), so it loses some punch without the voice-over.   We’ll push out a series of posts to put these pictures into context.

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From Friction to Fire at GBTA

The sparks are flying.

No, not about GBTA’s IP policies – we got that resolved a couple of weeks ago.  Thanks to all who weighed in on that – GBTA leadership heard you loud and clear.

This is much, much bigger.  It’s the issue of how to manage travel in modern times.

Evan Konwiser and I will fan the flames at GBTA’s Convention in Boston. We’ll present some pretty provocative views on this.  We’re backing it up with evidence, and laying out a direction that has big implications for buyers and suppliers.

Come add your fuel to the fire – join our session on Monday, July 23rd at 9:00 am.

Meanwhile, here are a couple of the sparks we’re throwing out there:

Traveler welfare trumps travel policies

Savings is the wrong goal

Revolution or Evolution – your choice

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The Curious Case Against Managing Travel

Achieve better trips. Increase traveler satisfaction. Spend less on travel.

That’s the trifecta of travel management, isn’t it? So which horse would you bet on to deliver these wins – the one with, or without, a jockey?  The managed travel program, or the unmanaged travel program?

GBTA’s “Global Business Traveler Study 2012”, a 72-page report, shows the winner is the unmanaged program – and it’s not even a close race.  That’s the conclusion I draw from the study’s facts as they pertain to U.S. travelers.

TIILTS: Policy Points for Good Self-Bookings

TIILTS stands for Travel Innovations I’d Like To See.  You’ll see quite a few more of these in the weeks to come. This first one deals with corporate self-booking tools.

There’s a trend toward empowering corporate travelers when it comes to making their travel arrangements. Why not swim with this tide? Why not create a positive reward, rather than a negative consequence, for travelers who are about to pull the trigger on a travel purchase?

I’d like to see companies reward travelers for doing the right things. Before you say “No way – employees are expected to do that in the first, middle and last place!”, take a breath and hear me out.

What is one of the biggest obstacles to travel policy compliance? You got it – Frequent Flyer Points.  These loyalty schemes work really well, so why not take a page from the suppliers and put the concept to work for you buyers?

Here’s a mock-up of what a points-driven self-booking tool might look like (click on the image for a better view):

The keys are that the traveler gets very clear reinforcement of the desired booking behavior, the reward associated with it,  his current status, and what it takes to get to the next level.  There are lots of variations on this, but you  get the idea – a way-easy element to build right into the point of sale when – and where –  it matters most.

Travel Procurement Workshop at NBTA 2010

Yesterday I led a full-day workshop on travel procurement at NBTA’s annual conference.  We had a terrific group of about fifty folks participate.  About two-thirds came from travel backgrounds, and about a third came from the procurement side.  Lots of good interaction throughout the day.

Here are the slides that I used during the workshop.

Coffee, Chalkboards and Travel Policy: True Innovation

Some forms of simplicity are pure genius. Therein lies the lesson for all you travel managers who wrestle with travel policy issues. After all, it’s not changing the words in the policy that matters – it’s changing people’s behavior. Let’s learn from Starbucks how a simple chalkboard can be the centerpiece of a massive campaign to change people’s behavior.

Baking and Data Reporting

What the heck does baking have to do with travel data reporting, you ask?

It makes for an interesting metaphor.  I used this concept in the speech I gave at the ACTE Canada conference this week in Toronto.  I’ll admit that the skit was a bit hokey, but the points about poor preparation of data, half-baked analysis and hanging Christmas lights on plain-jane data were too good to pass up.

Once I got beyond these process-related problems, we dived into

Tyco’s Travel X-Factors: C-Support, Communication

As readers know, Tyco International won Purchasing Magazine’s Medal of Professional Excellence last week.  I spoke with Rose Speckmann, Tyco’s Director of Global Travel, to learn more about her success factors.

The situation was that Tyco’s travel spend shrank by about 65% due to divestitures.  Tyco’s CPO, Shelley Stewart, challenged his supply chain organization to deliver savings despite the loss of buying power.

Rose initiated a three-pronged approach.  One focused on reviewing the contracts with all major travel suppliers; another focused on demand management and usage of video conferencing. (See more details here from Purchasing.com’s article.)

The third prong was all about compliance and communication.  Early on, Rose’s boss, VP of Supply Chain Management Jaime Bohnke, used a monthly President’s Roundtable to