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CIO SUMMIT 2014: Hotel chain CIO’s ‘half-baked’ ideas

NBR talks to one of the CIO Summit 2014 headline speakers: Jeff Semenchuk, chief innovation officer at Hyatt Hotels Corporation

Chris Keall: In a recent panel session you were talking about not taking an idea to colleagues or a company “fully baked.” You said people often kick-back against an idea if it’s put to them fully formed and spoke about the best techniques to get buy in. Can you explain a bit about that philosophy?

Jeff Semenchuk: This is the principle of rapid prototyping.

Historically in our business, we’ve thought that anything we do needs to be perfect.

This meant we spent months or sometime years perfecting something new before implementing it.

This of course presumes that the new thing is perfect as it was initially conceived and we know that in the world of innovation a new concept will never initially succeed as it was first envisaged – it needs the benefit of experimentation and learning. So we encourage our colleagues to take initial prototypes to the intended users (guests, other colleagues) and ask them for feedback.

This accomplishes three very important things: 1) Users feel very comfortable giving feedback because it’s plain to see that it’s still a work-in-progress (and they love to be asked!), 2) it increases pace by helping us quickly learn what’s wrong with the concept and how to iterate to make it better, and 3) it saves loads of money because we are working initially with rough, low-cost prototypes before incurring high costs to perfect the concept.

CK: Have you seen the role of the CIO change during your time in the job? Do you think it’s more business-focused now?

JS: I have seen a shift. Initially, it’s typical that most people view the role of both the chief innovation officer and innovation generally in the company as having lots of brainstorming sessions, usually to come up with new produce or service ideas. What we’ve seen at Hyatt is that innovation for us is about a culture change – to create the mindset, behaviors, practices, and conditions for all of our colleagues to innovate successfully.

And our innovation focus isn’t just new products and services: it’s new business and operating models, new brand experiences for guests and colleagues, new processes, new technologies, and new ways to go to market. It also involves doing this in partnership with other companies, both established ones and start-ups. All of this needs to be about implementing new things that generate positive results – not just coming up with ideas.

CK: You say you have a  human-centred, empathetic, design-driven innovation philosophy. How does that translate into everyday business?

JS: For years, many companies and industries have focused on how they operate their businesses. This often means they have primarily an internal focus to what they do: what functions and departments are trying to get done, what budgets are secured and how these funds are spent, going to lots of meetings that involve PowerPoint decks and spreadsheets. While many of these activities are important, they don’t usually lead to changing “business as usual” and they rarely lead to meaningful innovation. Human-centred design and innovation starts with an external perspective and with users – the people (customers, colleagues, owners) that you serve – and it begins with empathy. This means taking the time to understand their known and unmet needs, often at a deeper, emotional level. When you start with this, you can then generate new concepts and experiences that address these needs and create new growth opportunities for your company.

CK: How is the hotel industry changing and how has that fed into your role as CIO?

JS: Our industry is stuck in what we call “the sea of sameness,” meaning that most hotel companies have been operating the same way for decades. And the focus has been on operations. This is important, of course, because all guests want everything to work in a hotel, everything from hot water in the shower to clean linens on the bed. But this is no longer sufficient. We are now living in a time when guests seek personalised brand experiences. So our shift at Hyatt is to move from being great hotel operators (which we will continue to be) to also being great at providing personalised and caring brand experiences. This will increasingly involve seamless and caring digital experiences, not just physical ones.

CK: What are the best and worst things about social media for Hyatt?

JS: I can’t think of anything bad about social media for us. We embrace it in many forms and see this as a way to create a much more exciting and caring connection with people before, during and after their stay with us. It clearly creates much more transparency and gives our guests and our colleagues the opportunity to engage in more emotional, visual, and interactive ways. By the way, we see social as a behaviour and a mindset, not just social media and not just for Millennials [those born between the early 1980s and early 2000s, aka Generation Y].

CK: How do you stop the race-the-bottom pricing mentality engendered by the price-finder services?

JS: It is interesting to see how price-finder services have continued to grow. And they do provide real value to people looking for great deals. We of course participate in a reasonable way with some of the best service providers. And our guests will often find best prices on our own site without having to search with other services. Ultimately, we know that our guests book through a variety of channels based on the purpose of their trip or stay with us (corporate travel services, travel agents, our call centres, booking sites, etc), and our opportunity is to provide them with a great, caring experience, so that this is never about commodity low-pricing for a “room.” 

CK: What will you be talking about at the CIO Summit?

JS: There is no question that “Experience Thinking” is the next frontier in creating competitive advantage. But it means much more than just adopting a customer- or user-centric mindset; it requires a re-envisioning of what the customer experience can become and a monumental shift in every aspect of our business.

I will be sharing how Hyatt is transforming our focus from operational to experiential. Starting with a blueprint vision of tomorrow’s customer experience, to the development of signature brand moments and guiding principles, to the shift from physical to blended digital and physical, our evolution is coming from both outside-in and inside-out. Our innovation journey is showing us we need to make fundamental changes in how we think, how we work and how we lead the company.