As you plan your ambitious business development to penetrate the European hospitality market, consider some lessons from the past.
History shows us many remarkable cases of unlikely but long-lasting military success. One for all: Francisco Pizarro conquered the Inca Empire and its two million square kilometers with a handful of mercenaries, and changed the history of the Americas forever – for better or worse.
Pizarro was no doubt brave. But more important – he was lucky. You can be brave and hope for similar lucky breaks – or you can plan for success. Dwight Eisenhower said, “In preparing for battle I have always found that plans are useless, but planning is indispensable.”
Without cool-headed planning, failure is more or less a certainty. I have seen market leaders in the United States succeeding in Europe because they were part of a major chain with consistent standards of services compatible with the local expectations. On the other hand, I have seen just as many market-leading companies struggling to penetrate European markets with business models that worked superbly in North American and Asian markets.
Sun Tzu, the legendary military theorist, warned us to carefully consider all these factors before taking a step beyond our existing frontiers. In “The Art of War,” he said, “Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.”
The hospitality arena in the Old Continent is a mature, well-saturated market, fragmented by many languages and now characterized by a deep recession and the challenges of an aging population.
So, what makes the difference?
In a mature market many actors are chasing the same success criteria: quality, efficiency, niche appeal, price. The danger is that too often a competitive market means a less profitable market because sooner or later price becomes the primary determinant of success.
In the long run, price cannot be the primary competitive weapon for a new entrant. If nothing else, the continual emergence of disruptive technologies with their ancillary reorganization costs constantly re-levels the playing field and eliminates hard-won cost efficiencies.
Europe is a continent with a high population density divided by many languages and cultural differences, as well as deep and well-entrenched traditions. All of this reinforces the adage that success requires us to think global and act local. Not all European markets are the same, and like good anthropologists, we need to understand not just the observed behavior differences, but the social and business context as well, if the differences are to be meaningful to an outsider. It is therefore essential to work with local partners who speak the local language and have a personal knowledge of the actors, their habits and preferences; an understanding of the market; and a hard-won knowledge of the most important contacts and other assets to support and accelerate your developments.
Europe is a huge market with an aging population, and a high level of expectations of hospitality products, in terms of facilities, security and convenience. Word of mouth is very important and so it is essential to invest in acquiring the first customers – if necessary with selective, time-limited (and discreet) reduced prices in order to get traction and test the local acceptance of the solution and the compliance with local regulations and standards.
A common mistake in business development in this environment is to introduce a 90 percent solution with deficiencies to be addressed after the first customers are acquired. In reality you are in competition with existing, well-established competitors, and competing for clients who are often risk-averse. A bad first impression is generally fatal.
In conclusion, companies that want to develop technology business in the European hospitality market must understand that preparation is 90 percent of success. The remaining 10 percent comes from augmenting a solid, well-integrated and flexible organization, capable of implementing your strategy with strong local partners who will help you quickly identify and respond to ever-changing challenges.
Just don’t forget what Sun Tzu writes, “In the midst of chaos, there is also opportunity.”
Danilo Molaschi has more than 10 years of experience in business development in the Italian and European hospitality markets. He has been director and country manager for companies such as Swisscom, Wayport EMEA (AT&T Group) and The Cloud (BSkyB Group).
