How to mitigate risk on the ‘bleeding edge’
 
How to mitigate risk on the ‘bleeding edge’
08 JULY 2015 8:35 AM
First mover or fast follower? Both approaches carry benefits and challenges.
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REPORT FROM THE U.S.—Mark Vondrasek was unsure how guests (or how many of them) would use Google Glass when the technology was unveiled years ago, but that did not stop his team at Starwood Hotels & Resorts Worldwide from diving into development. 
 
“At the time somebody said, ‘Do you really think that 25% of your member base will ever book reservations through Google Glass?’ My answer at the time was, ‘I really don’t know,’” said the senior VP of distribution, loyalty and partnership marketing. 
 
What Vondrasek did know—or at least suspect—was that the flurry of activity  in the wearable tech space meant developers would soon be constrained by smaller screens and, at least in the early going, limited functionality. 
 
Google Glass might have faded from view in the years since, but Starwood’s efforts remain as relevant as ever given the launch of such products as the Apple Watch, Vondrasek said.  
 
“Because we have invested the time and our development team had already had practice in how to design in small spaces like Glass, the gap between the initiative and designing quickly with Apple to be a launch partner with the Watch was just a heck of a lot easier,” he said.
 
Reaping such learnings from dead-end roads is imperative when living life on the “bleeding edge” of technological innovation—so-called given the brain damage associated with being a first mover in unfamiliar territory. 
 
First mover vs fast follower
While some hoteliers prefer to sit back and learn from the trials and tribulations of their competitors, Vondrasek said the first-mover advantage far outweighs the risks that come with it. 
 
“When you’re first, you get to shape the experience for all those who follow,” he said. 
 
Vondrasek pointed to the company’s efforts rolling out keyless entry as one example. The process has proven challenging, but it’s also given Starwood the opportunity to define the experience for all guests. Chains that wait will have to present the technology the way Starwood has, or guests will feel a disconnect, he said. 
 
Executives at Marriott International also see the benefits of the bleeding edge, as evidenced by the chain’s partnership with streaming content provider Netflix
 
“Some are less risky than others, but we’re always willing to take on a little bit of risk and hope for success,” said Scott Hansen, director of guest technology for Marriott.  
 
Evaluating one’s place on the spectrum need not be an exercise in the extremes, explained Corbin Ball of technology consultancy Corbin Ball Associates. 
 
“It can be quite expensive to be on the bleeding, cutting edge. There are many hits and misses. Usually very early adopters pay a significant premium and there are often still bugs to work out,” he wrote via email. “On the other hand, late adopters are the ones that don’t get technology and they get dragged into new things resisting all the way.”
 
Ball recommended the path of the “early majority” instead. 
 
“These people understand the value of technology and are willing to make changes as soon as there is a good movement in the right direction. Those who installed flat-panel TVs 10 years ago paid a significant premium with many improvements yet to come, compared to those who did so five years ago,” he said. 
 
Another example is beacon technology, Ball said. While it holds promise for hoteliers and event planners, the technology is still in its infancy stages. “In a year or so, it is likely these bugs will be worked out and it will be the time to move on this technology,” he said. 
 
Mitigating risk
The first way to mitigate risk on the bleeding edge is to pick your battles, sources said. 
 
Executives at Starwood, for instance, focus on what matters most to guests, Vondrasek said. 
 
“If it is important to our most valuable guest, then we will run hard to be first or early in it for that,” he said, pointing to keyless entry as an example. 
 
The next step involves testing, testing and more testing. 
 
Starwood beta-tested keyless entry in several hotels before it started to roll out the technology across entire brands, Vondrasek said. That process was invaluable, as it provided a real-life opportunity to not only ensure the technology would hold up but that it was intuitive for guests. 
 
To address the latter, Starwood invited its most loyal guests to be part of the process, Vondrasek said. SPG guests booking a stay at the Aloft Cupertino, where keyless entry was first implemented, were invited via email to test the technology via their SPG app. The company offered tutorials guests could view online before arriving to the property. It also employed its customer contact centers to answer any questions via the phone. 
 
“And then also on-property we worked very, very hard with the on-property teams” to provide the necessary support and know-how, Vondrasek added. 
 
Leveraging those learnings and adjusting on the fly is another key, Hansen said. 
 
One example is Marriott’s efforts to allow guests to stream content from their personal devices directly onto guestroom TVs. 
 
“We thought it was going to be easier than it actually is,” Hansen said. “As we realized and peeled back the onion with regard to how Internet infrastructures are designed at hotels very purposely to prevent device-to-device connectivity for security reasons, we had to (revisit) entire established standards around Internet connectivity.” 
 
(Marriott’s efforts are still ongoing in those efforts.) 
 
Timing can play a crucial role, too, Ball said. So does technological literacy.  
 
“In order to determine the proper timing, technology literacy is essential,” he said. “There needs to be people in your organization that are closely following new technologies and have the judgment to know when to move. These people don’t jump at every bell and whistle but move with a solid business analysis.” 
 
And if all else fails, early adopters need to know when to throw in the towel. 
 
“What sometimes comes to light is that Marriott shouldn’t be the company that does it and we actually outsource that technology to somebody who is more of an expert,” Hansen said. 
 

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