I2I - Incentive Intelligence

Cutting Back on Business Travel Could Cost You 17% of Your Profit

Yeah, I said it. 

Eliminating business travel will cost your company 17% of profits the first year - and it will take more than 3 years before profits recover to match profits from the time you cut business travel.

That's not just me saying it - that's from a new study by the US Travel Association audited by the Wharton School to ensure the methodology was sound.

We don't really have a dog in this fight - but we think the data is significant.

Here at I2I we don't fulfill awards because it causes a conflict between recommending the right solution and recommending something that we get paid to fulfill.  We'd much rather just provide unbiased advice. However, we do think there is value in many of the incentive awards available.  Group incentive travel being one of them.  Also, from an employee engagement and channel engagement standpoint - meetings travel is a great way to reinforce and drive culture and business practices.

But due to the "AIG" hangover the past 10 months the business travel industry has taken a big hit - mostly undeserved (I posted here, here, here and here on this issue.)   But we've got a bit of light at the end of the tunnel.  Actually, pretty bright light.

New Survey From US Travel Association, Destination & Travel Foundation and Oxford Economics, USA

Yesterday I was on a press call with the above mentioned groups who walked us through a new study that proves a causal relationship between spending on business travel and performance and productivity.  The links to the study are here for Executive Summary and here for the Full Report.

The study is really the combination of two separate surveys of corporate executives and business travelers, a review of related research, and an econometric analysis of business travel on corporate performance.

There are some interesting bits of data from the executive surveys - but that is "opinion" - not necessarily fact. 

The key part of the study is the econometric study.  Covering 14 sectors of business over a 13 year period using US Bureau of Labor data the study proved...

• A business will lose 17% of it's profit if it eliminates business travel as a tool!  That loss is pretty much permanent since it creates a new growth curve - below that which you would have had without cutting back.
• There is a positive and causal relationship between spending on travel and corporate performance - $1 in travel spending returns $12.50 in incremental revenue and an average of $3.80 in incremental profit.

That is significant.

Remember - this is based on statistical modeling - not just the "opinion" of the executives (interestingly - their opinion did fall in line with the fact-based models.)

If you were considering cutting budgets for business travel in 2010 - don't.  It will cost you money.

If you want to drive some significant profit growth - think about beefing up your customer visits, your trade show attendance, your employee meetings and your group incentive travel.

USA Today Quotes i2i

Incentive Intelligence is the blog for our company - i2i - and we were one of a few companies USA TODAY asked to weigh in on the mounting pressure on the incentive an meetings industry.  As we have posted here over the past few weeks, due to ill-timed programs and poorly managed PR (mostly AIG) - the incentive and meeting industry is getting slammed.  We are a big supporter of using incentives, including travel and meetings, as a way to align employees and channel partner behavior with corporate objectives.

Over the past couple of weeks we have been in contact with Barbara De Lollis from USA TODAY to provide input on an article that is in today's USA TODAY called:  "Posh Trips for Jobs Well-Done are Fading."

I think Barbara does a great job of covering the issue and includes information from not only those of us involved in the planning and execution of the programs but talked to the recipients of these awards. 

As I've said before, these programs help businesses be competitive - and increases their viability.

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Travel Incentives in the Gunsights

If there ever was a case study in communication - this is one. 

Due to some high-visibility articles and the grilling of executives by our Washington representatives on television - incentive travel - heck, meetings in general - have come to be the issue du jour. 

And, because there are a fair number of people (including our leadership in Washington) who haven't been exposed to incentive travel and its brethren, meetings travel - the masses are jumping on the bandwagon to vilify business travel as junkets, boondoggles, wastes of money - you name it.

Unfortunately, this is repeated often in the media because it makes good headlines (everyone likes a villain) the majority of us don't see ourselves as fat-cat titans of business - masters of the universe.  But the sad fact is, people will believe information - even wrong information - if it is repeated often enough (it's called the validity effect - the increase in perceived validity of repeated statements.)  This is the case with business and incentive travel.

Truth

I think it is important to outline some of the facts about business travel and hopefully counter the repetition of poor information.  I'm happy to see some folks are talking about this issue and providing the kind of information needed to balance the oft-repeated lies and misleading information.

One person, Lisa Rosenthal, provides some facts about the economic impact of business travel.  Here's what Lisa Rosenthal's site: HR Thoughts offers...

• Business Related Travel...
  - Contributes more than $730 billion to the U.S. economy
  - Generates 2.4 million American jobs
  - Creates $244 billion in spending
  - Generates $39 billion in tax revenue at the federal, state and local level

• Meetings and conventions account for over $100 billion in annual expenditures
• Meetings and events are responsible for nearly 15% of all travel in the United States
• The U.S. Commerce Department predicts a loss of 247,000 travel related jobs in 2009

In other words, business travel is good for the economy.

The True Participants in Incentive and Meeting Travel

The biggest misconception that is being propagated in the news is that these "junkets" are only for the top executives within a company.  I'm guessing the public has visions of fat, half-naked old men, sitting on pillows with young ladies dropping grapes in their mouths.  Nothing could be further from the truth. 

Most incentive participants are:

• The rank and file sales person whose job depends on ever-increasing levels of performance and contains risk most of us desk-jockeys couldn't imagine.  (Do you want your continued employment predicated on your prospect being in a bad mood after spilling hot coffee on his/her lap in the Starbucks drive-thru?)
• Employees who have exceeded, by a wide margin, the constraints of their job description and have increased the competitiveness of their company
• Members of a company's distribution channel who have stuck with the company to become top producers and advocates for the product, service, brand or company - people the company needs to remain competitive and innovative.
• The spouses, children, significant others, who attend with the person who earned the trip - providing much needed reward for the sacrifices they have made to allow the earner the time and attention being one of the best requires.

Incentive and meeting travel is a critical element in building relationships - especially in this predominately electronically connected world.  These relationships will help companies weather this economic storm, create new business ideas from collaborative conversations, foster innovations that will drive business, and reduce the costs of turnover within organizations.

Do not perpetuate the false information that is filling the airwaves, newsprint and electrons. 

Understand the issue - understand that the MAJORITY of all business travel is legitimate and necessary if we are to emerge from this business cycle stronger and better prepared for the next phase.

If you believe that meetings/incentive travel is needed and valuable I urge you to go to "Keep America Meeting and sign their petition.

You know how we/I feel - what do you think?  Let's get the party started!

Wells Fargo Goes On The Offensive - Incentive Intelligence Applauds

If you didn't see the USA Today yesterday you missed a full-page add by Wells Fargo.  Due to some of the media's overly simplistic reporting on incentive travel awards, many publicly traded companies are revising and in many cases canceling their travel awards. I hate to see any company succumb to false accusations - I do respect the company for taking the offensive.  I might have liked it better if at the end of the ad they put a post script and said something like: 

P.S.  Now that we think of it - it's still a good idea and the programs are back on!  Anyone got a problem with that?  Give me a call...

While I may have edited the ad differently (earners instead of winners) - here is the copy in it's entirety.  We at Incentive Intelligence applaud you!  You know the value of these programs.

Wells Fargo Usa Today Ad

View more documents from Paul Hebert.

So there....

2009 Will be a Problem for Incentive Travel Awards...

Image via Wikipedia

A month or so ago the press was ablaze with condemnation for AIG because they held a group travel award for independent agents in California at the Monarch Beach St. Regis Hotel.  The press had a field day highlighting the expense of the trip - $20K for spa treaments, $7k on golf - and my favorite - $5K at the bar.  The total bill was about $450,000.  One of the articles said they had about 110 travelers so add in another $700 per person for airfare and you're just over $500k.  Based on 110 people, they spent roughly $5,000 per person for the trip.  The cost is pretty much in line with what most companies spend on their grand travel awards for top performers.  I've seen them as high as $10k per person and as low as $2k per person - so they're not off the mark for their program.

It's pretty typcial for most companies that use an independent distribution channel to reward and recognize their top performers.  By definition, independent distribution channels can choose what products to sell and what companies to work with and therefore it makes a lot of sense to connect and network with the people who sell your product.

It's is unfortunate that the AIG program operated one week after the bailout discussions in Washington DC.  Man - timing IS everything.

Painted With The Same Brush

My point of this post is that all the press that AIG got from this rather mundane and normal activity (group travel for top performers) will poison all other incentive and influence programs that have been planned for the near future.  Almost every industry will be having conversations about their programs and will be asking themselves "is there going to be any negative fallout from running the program?" 

Companies that may have just had layoffs - should they cancel their program?  Companies that have postponed some capital expenditure - should they cancel their program? 

The problem is that these decisions are being made based on "impresssion" not fact.  Because the program gives the impression they are spending money foolishly they don't want to be lionized in the media or within their employee base.  The truth is that in many cases, these programs have increased sales or at least allowed the company to maintain sales in a tough economy.  In other words, the programs typically pay for themselves and if they weren't conducted the company would probably be in worse shape.

It's a tough, tough call. Not to mention the cancellation fees associated with group travel - they can amount to upwards of 50% of the total cost depending on the contract and how close to program operation the cancellation occurs.

My prediction is that because it is a tough call the companies will bend and cancel most, if not all, the incentive travel for 2009 if there is any hint that it could be at the expense of jobs or other business expenses that seem more "normal."

Unfortunately, these things have a habit of metastasizing and affecting other companies, whether they have the same issues or not.  Incentive travel is a fabulous way to gather top performers together, hob-knob with executives, build relationships, talk business and hear what is going on in the real world of business within an industry.  I believe personally - there isn't a better way to reward those folks that can really make or break a business.  

2009 will be a tough year.  And because these programs are typically planned at least a year in advance I'm sure someone is cancelling 2010 stuff as well.  Short-term strategy my friends... short-term strategy.  Relationhips are built during good times and in bad - and I'd submit that the work done on relationships during bad times is where the real payoff resides.

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13 Questions with Julius Solaris

Getting Better Results by NOT Planning Your Next Meeting - Have an Unconference

Meetings and events are one of the tools used by corporations to bring employees or other valued members of distribution channels together to learn, share and build relationships.  Typically, the content  and activities within the meeting are developed and directed by the executive staff of the organizing company.  But there is an “new” approach to meetings and events that may provide greater return – but possibly greater anxiety for most corporate meeting planners and event managers.  They are called Unconferences.

From the Wikipedia site:

"An unconference is a conference where the content of the sessions is created and managed by the participants, generally day-by-day during the course of the event, rather than by one or more organizers in advance of the event. To date, the term is primarily in use in the geek community. Open space Technology however, is an unconference process that has been around since 1985 and is now in widespread use. Open Space Technology is an energizing and emergent way to organize an agenda for a conference. Those coming to the event can post on a wiki ahead of time topics they want to present about or hope others will present about. The wiki can also be used to share who is coming because it is the attendees who have a passion to share that contribute to the event and will make it great."

I was made aware of unconferences by Julius Solaris an event manager and a blogger based in Italy.  Below are my questions to Julius with his answers.  Julius also took the time to ask me a few questions concerning team building events as a motivational tool on his blog.  I encourage you to click through and read his post.

Questions on "Unconferences"

1.  How have these types of “user-generated” conferences been traditionally used?  What industries or groups have been the biggest proponents

Open Space Technology, unconferences and Barcamps share a common sense of urgency.  A few years ago a group of people realized that meetings coudl be more effective if the content at the meeting should be put in the hands of those participating. This statement is well summed up by Harrison Owen's (who I recently interviewed in my blog and to whom I'll reference a lot during the interview) point of view that no matter how well conceived a conference, the most useful part of it is usually the coffee break. That is the moment when people link to each other and discuss what has been presented. It is at this time when attendees gain possession of the content and use it to interact with their peers. And this is what unconferences do.

Traditionally unconferences have been adopted when there was:

• an issue very important to a group of people
• the issue needed an answer
• the participants were the best people to get to the answer

It could be thought of as a brainstorming activity but it is really a mass gathering where there is no set agenda apart from the agenda the attendees decide upon - typically on the spot.

Unconferences as well as Barcamps have been traditionally linked to IT and technology but are gaining momentum in business environments where creativity is preferred over control. I like to think as unconferences as open source applied to the Meetings industry, the Linux of events.

2.  Given the almost religious zeal surrounding Return on Investment in the corporate world today how do you measure the success of an “unconference”?

As I previously mentioned there should be a strong question behind setting up an unconference. The success can be measured by analyzing the answers given to that burning question. I've participated at unconferences where at the end of the unconference roadmaps and documents where created and actions where taken to solve the problem. These were the result of the effort of hundreds of people and therefore innovative and revolutionary.

Moreover, participation could be another item to monitor in order to understand success. Low participation from the very beginning could mean that the question may have been posed in the wrong way or it is not very relevant to the perspective participants. 

To understand the results that could be achieved I'd provide an excerpt from the interview I had with Harrison Owen:  "... a group of engineers at Boeing re-designed the manufacturing process for making doors on their airplanes. They did this in two days when everybody “knew” that doing something like this could take several years. Not every Open Space produces results like that, but after 20 years and several 100,000 iterations in 134 countries it has become quite clear that the Boeing experience is not unique."

To me this sounds like a good achievement and if we want to quantify that in terms of hours of work saved, increased satisfaction of the employees and high levels of motivation, I reckon the benefit of this approach is a realty check for those planning the next convention or corporate event.

If we look at it from a sponsorship point of view there could be great opportunities in terms of the community echo that could result from participating or hosting an unconference. In the same way a lot of big companies are trying to get a piece of Myspace, Secondlife, Facebook, etc., they should dive into unconference as they are the real representation of the virtual forums and communities. Having a presence there by donating the venue or supplying catering will expose e.g. the donor in the Barcamp wiki, on which I'll talk more later.

3.  Most events and meetings are almost micro-managed in order to keep things from “going wrong” - it would seem that unconferences rely on a “lack of control” - how do organizers handle that level of ambiguity?

I must say this is one of the aspects which have challenged me the most when I first tackled the subject. Working in events, my running sheets have always got to a detail that included at least a plan B - and in many cases, a plan C - for every single step of a conference. With such background it is very difficult to release control to someone else.

I have in the past assumed that I knew what was better for my customers. But my customers aren't kids. They are very smart people who can actually contribute and create the kind of value that will be of immense relevance, because is co-created. Co-creation and participation generates satisfaction and this concept is now present in most of the recent marketing research.

This is also why advertising is now generated by customers and companies such as VISA and General Motors have decided to profit with this approach.

4.  Is there a typical demographic for which an unconference works better – or worse?

I must say that of course, people in technology tend to understand the approach better as they are more familiar with what Linus Torvald has introduced to IT.

But this is not an IT thing.

I reckon that the methods of unconferences will be loved by anyone who cares for a particular subject matter and is ready to contribute to the solution. Therefore, I'd say that those stepping into the methodology should question themselves about the degree of motivation their audience has toward what will be discussed.

If motivation is low the role of the unconference manager is to clarify objectives and questions and to facilitate participation.

5.  How would a company go about converting to an unconference when all they've ever done is the traditional meeting structure?

I think that the first step would be to give responsibility to their employees. Responsibility enables dynamics such as reputation among peers. These results have been pointed out as one of the fundamental reason behind the success of Open source technology.

Secondly I'd suggest to release control as much as possible while asking for answers at the same time. This combination could introduce great surprises.

Thirdly I would leave the question as general as possible in order to let the participants decide how to get to the answer and not a scientific committee.

6.  Do unconferences lend themselves to specific objectives or can they be used for any type of meeting or event?

As I said before the objective could be of virtually every kind, as long as this it is relevant to the group of people participating and the answer is generated by them.

7.  What is the biggest concern a company should have relating to unconferences?

The level of control of companies participating is the exact same of all other participants. In this view, it is very much accepted that a company could suggest a topic to discuss but bear in mind that the reaction will not be controlled.

Those companies that have strong values and believe in a creative approach should be using unconferences. On the other hand, those hiding behind advertising claims and escaping from customer feedback should avoid the practice.

8.  Are there companies that specialize in unconferences?

As the trend is growing and there is a lot of interest toward Barcamps in particular. The most attentive companies are increasingly participating, sponsoring or suggesting themed unconferences. But again the degree of participation is equal to all others participants, therefore only companies with strong statements approach the field. 

A reporter from CNN money was surprised to find at a famous unconference top execs from  Adobe, eBay, Microsoft, Google and Yahoo working together.

9.  How important is it to have a technologically savvy participant base?

Well, wireless internet is a must have at an unconference but I have to say that this is the most technology you'll get there. Participation, a fun yet productive environment, and diversity are the main features of unconferences.   To me, these attributes appeal to anyone who has ever found himself/herself bored while listening to a person reading bullet points of a presentation.

10.  Unconferences sound a bit like improv.  On the surface improv doesn't look like it has rules but I understand that in order to have a good improv session the participants must follow rules.  Is that the same with unconference?  Are there any rules?

I fell in love with this approach when I read the rules of Open Space (from Wikipedia):

• Whoever comes are the right people
• Whatever happens is the only thing that could have
• Whenever it starts is the right time
• When it's over, it's over

People can choose different roles for participation in Open Space meetings:

• Host: the person who feels a burning passion for the subject and is willing to take responsibility to call the conversation, invite others in and make sure something gets harvested.
• Participant: Anyone who is drawn to a conversation wants to stay the whole time and participate fully.
• Bumble bee: The ones who move from conversation to conversation cross-pollinating the learning.
• Butterfly: A butterfly may not want to be in any conversation, instead they prefer to sit on the lawn and look beautiful. A new, unexpected conversation may happen when two butterflies meet.

Just reading the rules I feel that buffet/coffee break atmosphere which Harrison Owen mentions in his book

11.  Assuming most of the attendees at an Unconference probably have a history of attending the traditional meeting format – is there any training that should be done prior to an unconference that will help make it work?

There is no a specific training but they need to be informed. Barcamps use wikis to do this. Wikis are a stable platform where participants register, connect before the event, suggest the topic they will present, share transportation to the location, etc,

On wikis, the organization can communicate rules and culture of the event and educate them about best practices. This also helps in skimming the audience from those not willing to participate or co-create.

12.  Is there a common participant response to unconferences?  In other words, do they like them, do they feel anxious at first – or is it pretty much a great time for all?

Harrison Owen in his book "Open Space Technology. A User's Guide" as well as in his interview describes how even the worst enemies enjoyed the newness of such approach and started working together. The relaxed atmosphere of the gatherings allow the audience to make themselves at ease. At the same time, the role of facilitators and event coordinators becomes crucial. They need to guide the people through the methodology and facilitate freedom at all levels.

13.  What advice would you give a company thinking about using an Unconference as their next meeting format?

Do some research. Read Harrison Owen's book as I find it very inspiring. Review what has been done, especially in the Barcamp scene. Barcamp.org offers a lot of support for those that want to approach the methodology. It will also be a good idea to have an experienced facilitator guiding the process when first attempting to host one.

As I said before this method is quickly changing the meeting and events business. It does not seem like this is a bubble that is going to burst; I look at it in the same way Myspace has energized the Internet. Moving toward the practice and understanding the logic behind it, might give today a huge competitive advantage to those companies that want to really innovate.

Many thanks to Julius for taking the time to outline this interesting approach to conferences and meetings.

From my point of view the "unconference" can, for the few who believe that their employees and other partners hold the keys to success, provide the perfect format and venue to move the impact of virtual communities, user-generated content and social networking to the real world. 

Now - if I can just get the top dogs to loosen the collar a bit and take a leap of faith with their next sales meeting....

Family That Earns Together

Typically I don't focus on the "what" to provide in the awards arena - I normally like to look at the behaviors that allow someone to earn an award.  But I know there are a few of the readers of this blog that want to see what's "hot" in the award world.

Here's one New Persuasion - Family Togetherness.

Seems quality family time is the new hot destination choice.  Should family awards be offered more often?

Activism Mixes with Awards

What should people earn when they hit their goals, change their behavior or simply stay with your company for 5 years?  In the "old" days a dinner out with the "wife" or a new set of golf clubs would probably buy you some loyalty and thanks.  Today's employees are different.  I've posted before on the employee of the future (and today) and what gets their motor running is different.

Take a look at these options (embedded slide show at Fast Company site) for possible travel awards that could tie one's need for adventure with the need to do good for the world.  Is this the next wave of travel awards for incentive and performance programs?  I'm thinking yes.