Big Interview: IAG head of global innovation Stephen Scott

Big Interview: IAG head of global innovation Stephen Scott

The latest Travel Weekly Business Breakfast heard about fear of failure, ambient user experience, marketing to machines and working with start-ups. Ben Ireland reports

IAG’s Scott: Don’t be afraid to fail

Travel firms cannot be afraid of failure if they are to drive true innovation, Business Breakfast delegates heard.

IAG global head of innovation Stephen Scott said airlines such as the group’s British Airways, Aer Lingus, Iberia and Vueling all have business-critical areas where failure is not an option.

But he said significant gains could be made by making subtle behind-the-scenes changes and adopting a test‑and‑learn approach.

“One of the biggest messages of digital transformation is you should never be afraid to fail. You have to learn fast and move on. The one constant is change.

“Our industry is heavily regulated and we have a strong focus on safety and security. We are not going to fail in those areas.”

Scott said it was easier to be innovative in head office functions, which are less public than customer-facing innovations, which he dubbed “future shiny stuff”.

“You tend to see the tip of the iceberg in the market because you only see the customer-facing innovations,” he said.

“But we’ve got a lot of history of using innovation in the right areas. You just have to stay away from the areas that you don’t want to ‘fail fast’ in.”

Scott cited Vueling adopting Apple Pay and BA being one of the first airlines to introduce a check‑in app as among IAG’s innovations.

“A lot of our role is about process change; there are a lot of processes that are cumbersome in corporate [companies],” he said.

“The question is at what point are processes serving the business and at what point is the business serving the process?

“When you move into a place where the business is serving the process, you know you can make it more lean because the processes are there for good reason.”

BA nurtures start-up ‘to tell us something we don’t know’

Large companies can mitigate the risk of innovating by embracing disruptive start-ups and helping them to develop.

Last year, IAG launched Hangar 51, an in-house start-up accelerator programme based at British Airways’ Waterside headquarters in West Drayton.

Four companies were selected from a shortlist of 26, down from an original 458 that had applied from 36 countries.

The first four companies in Hangar 51 are working in digital processing, data-driven decisions using artificial intelligence and improving airports.

IAG head of global innovation Stephen Scott said: “We were looking for firms to tell us something we don’t know. And we want that balance between quick gains and breaking down legacy programmes.”

Scott told the Business Breakfast that major airlines such as BA should not dismiss start‑ups but embrace new disruptive technologies.

“New competitors have come into the market with new products and ways of working, and that’s been challenging for every airline.

“You would be foolish to ignore your competition.

“I look at our four airlines, and they are making great gains under the surface, preparing for the future.”

Scott said aviation and the travel industry had a long history of dealing with change.

“The industry is used to being disrupted. There are many external factors and we are used to reacting to it and proactively preparing for it.”

Scott said prototypes of electrical vertical take-off and landing vehicles and SpaceX’s Hyperloop supersonic ground transportation concept were not to be ignored.

Innovators ‘need space to be transformational’

Businesses have a difficult balancing act to ensure innovators tasked with driving change deliver results.

IAG’s Stephen Scott said employees with innovation in their job title tended to be one of two distinct types.

“They’re either entrepreneurial and maverick but can’t integrate back into the business, and disappear off into the sunset,” he said. “Or they fall into just pleasing the business, focusing on revenue in the next quarter, but then they are only doing incremental improvement, not the stuff that’s transformational.”

To prevent this, IAG’s digital transformation team has budgets to spend on research and development projects that are not linked to revenue targets.

“It’s similar to how we worked with dotcoms before anyone knew what they were going to do to businesses. We had a small team working trying to shape and size the market and see how consumers reacted and what proportion of our business it was going to take.”

Travel tech ‘must offer an ambient user experience’

Travel technology must be primed to integrate with all devices and channels so it blends into the background as interactions with customers become increasingly intuitive.

IAG’s Stephen Scott said presenting clients with an “ambient user experience” would ensure firms stayed ahead of the innovation curve.

“If it’s simple, customers will use it,” he said.

“There’s a new generation of computing coming that gives us a lot of new abilities. We are going to have different ways of communicating with devices.

“If you’ve got the infrastructure and platforms in place, you are in a much better position.”

Scott said voice search might seem niche at present but competitors were looking at it so it had to be understood.

“With anything new there are threats and opportunities.

“You are seeing military grade technology in commercial areas now. That means ambient user experience – the merging of human and digital – is becoming more and more prominent.”

Scott said technology was enhancing the role of humans rather than replacing them.

‘We could soon be marketing directly to gadgets like Siri’

IAG is researching marketing to intelligent machines as they start making decisions on behalf of their human users.

Innovation chief Stephen Scott said artificial intelligence
would make gadgets such as Amazon’s voice-controlled speaker Echo and Google’s virtual assistant Siri more powerful as they played a bigger role in people’s lives.

“Imagine Siri is making decisions on my behalf,” he said. “Are you marketing to me, or are you marketing to Siri? That opens up a different world of marketing.

“You are marketing to the machine, not to me, but a machine that knows enough about me so you can tailor your offer to me.

“Every business is looking at this to varying degrees, and it’s something we are certainly looking at.”

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