The Wall Street Journal's business section has a timely piece entitled "Dangers of Clinging to Solutions of the Past". At a time of unprecedented economic turmoil, managers across industries rely on experience to cope with the gale force winds of change and, per research quoted in the article, experience often proves less than equal to the task at hand.
Academics like Kishore Sengupta, an associate professor at France's Insead business
school who designed a simulation to test project management ability, says "users with 10 or more years of
project-management experience collectively generated higher costs and
more errors and missed more deadlines than less-experienced colleagues". Another academic, Vijay Govindarajan, a professor at Dartmouth College's Tuck School of
Business, started looking into experience 25 years ago, when
considering why some companies failed at long-range strategy. After
studying businesses like Encyclopedia Britannica and Sears, Roebuck
& Co., he concluded that "some managers are so set in past ways that
they can't cope with new situations".
With hotel companies in the forefront of the free fall that is gripping the travel industry in the US, fresh perspectives to deal with Revpar declines (Smith travel reports a 5 point drop in occupancy for January) will surely be welcome. One way to stimulate fresh thought may be to emulate the Chicago Conservation Center which bucked the trend last year by launching a
bonus program to keep employees motivated during trying economic times – that idea came from appointing a board of advisers from outside the organization. For hoteliers that may be a tough act to follow but a circle of advisers could include suppliers and clients. Another way may be to engage the existing customer base as IHG has done with the social business site Jive.
Separately, one non-management related development that will surely abet a recovery is the pull back of projects such as these two as a consequence of the credit crisis. Strong revpar growth over the last three years contributed to many speculative hotel builds that were predicated, as in prior boom times, on relentless rate rises. A relative slowing down of building activity likely will restore some semblance of normalcy for the industry.