The Brexit countdown is on… As I’m writing this it is exactly 44 days, 2 hours, 37 minutes and 16 seconds until the UK officially leaves the EU and many organisations are bracing themselves for what’s to come.
Travel giant Thomas Cook’s spectacular collapse last month made big headlines. The Group could no longer manage its massive debt and went bust, after 178 years of trading, leaving 9,000 UK jobs at risk and 150,000 holidaymakers stranded overseas.
This week MPs heard further evidence surrounding the holiday firm’s financial troubles. The business cited the usual industry pressures: fuel prices, overcapacity, and Brexit uncertainty, as reasons for its disappointing performance.
In reality there was, of course, a lot more to it.
Some serious mistakes were made.
A multitude of factors contributed to Thomas Cook’s demise. Here are some of the strategic errors, which are now costing Thomas Cook, its customers, staff and UK tax payers dearly.
Lack of understanding of customer needs and market trends: In 2011 the Group added 460 stores to its portfolio of 780 – thereby investing heavily in retail despite the growing popularity of digital travel planning and online bookings. Airbnb and other market disruptors had already started shaking up the travel market and changed customer expectations, but Thomas Cook failed to recognise this.
Inability to implement and optimise effectively: Following a successful transformation programme, a new operating model was introduced in 2015, containing initiatives intended to improve margins and reduce debt. The new strategy was focused on the Group’s own-brand hotels and seat-only flight business. However, profit margins stayed low and continued to be impacted by finance, restructuring, and implementation costs.
Failure to adapt to change and disruption: The Group’s complex business structure meant that it remained very vulnerable and slow to react to geopolitical uncertainty and market disruption. The extreme summer heatwave in 2018 left a backlog of unsold holidays in an already challenging market, which contributed to losses in the region of £163 million. In this rapidly changing environment, not having a highly agile operating model or a culture that embraces change, can be catastrophic.
But don’t be smug. Your business could be next.
The Thomas Cook Group is sadly not alone in failing to effectively transform their business strategies, structures and processes for the modern, digital age.
Too many organisations are still designing and buying staid target operating models that although they have elements of agile, will never enable them to keep pace with change.
And in regard to the true potential a rapidly iterative digital strategy can bring, most organisations haven’t really achieved much more than putting lipstick on a pig.
It’s time for business leaders to acknowledge that radical uncertainty has become business as usual. Never before has the requirement to deliver truly agile processes, technologies and strategies been this urgent. Organisations that want to survive have to be equipped with the tools and methodologies that allow them to meet the rapidly evolving needs of customers, staff, communities and markets.
These days, not taking the time to understand and adapt to changing user needs ought to be a deadly sin in any organisation. One big mistake many businesses make after a change programme is to fail to track and monitor performance and how users’ needs and dependencies shift over time.
The only way to remain relevant and thrive in this so very fast-moving world is to change, change again and to remain in this constant state of perpetual change. Embracing it instead of resisting it.
So, sorry that you had to sunset Thomas Cook. But in this rapidly evolving world, to resist change is risky.
But worse still, to only pay lip service to it, is fatal.
Jan Joubert, CEO, Rainmaker Solutions
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