New Realities, Paradoxes and Taboos

By Philippe Bourguignon

“Being from a faraway country creates distance, and distance creates perspective.”

Distinguished lecture in hospitality management

You may wonder: why is a French guy working at Revolution in Washington, D.C., leading a disruptive luxury hospitality company in Denver, Colorado, and also a destination spa in Tucson, Arizona?

It’s simple, actually: I am French, I love the U.S., and I am what I define as a “frustrated citizen of the Atlantic” — which means, I miss the U.S. when I am in France, and I miss France when I am in the U.S. So today, I have the immense privilege to live with one foot on each continent.

There is a positive consequence to this, for my work. Being from a faraway country creates distance, and distance creates perspective.

Certain people, and I am one of them, believe that dreams can transform the world. For me, dream and reality constantly cross paths and it was this intuitive belief that led me not into politics, but into discovering the world. If I have been travelling the world for over 40 years now, it is because the world makes one dream.

I am not a hospitality specialist; I am a traveller and a dreamer. And, as a citizen of the world, I am free to know, free to go, free to do and free to be… Isn’t it nice?! … It is also the privilege of my age to be free! I have been asked to share my beliefs with you, what my years have inspired me to consider IMPORTANT when it comes to setting out on one’s career. What were “my years”?

After 14 years helping build the ACCOR group (20 motels when I joined in 1974, 4200 today), learning entrepreneurship and good leadership,10 years at The Walt Disney Company learning what creativity and talent meant and 7 years at Club Med attempting to convert a swinging single concept into a family brand, and learning what adversity meant. 2 years sabbatical as co-CEO of the World Economic Forum (Davos) learning the world; and at the same time 11 years on the eBay board understanding why disruption was a necessity.

I then joined Steve Case at Revolution — because he was doing something that I believe is fundamental and necessary: disrupting existing industries that shared a few common characteristics, which included: “glued in” habits and taboos, unchallenged paradoxes, and an emphasis on trying to protect what they can control, while ignoring what the world and their customers are telling them.

My presentation will have 2 parts:

What is the world telling us? Reality …
Then, what I am going to tell you… Dream

PART 1: What is the world telling us?

One thing about dreams — they require us to also be wide awake at times, and to look at what is happening around us our eyes wide open: what are the facts that will shape our future? I have been part of a think tank for a few years based in Geneva and I will share with you what we think of the world today.

Geo-Strategy. This is a very global view; Sorry, we are going to take off!

 The unprecedented transfer of wealth roughly from West to East now under way will accelerate in the foreseeable future. Emerging markets will outstrip a number of mature ones, including conventional Europe. This being said, the rise of Asia will be a bumpy one, marked by painful discontinuities.

 Demography: The relative demographic weight of the population in the richest countries (most particularly Europe and the United States) will drop by about 25% — to 12% of the total world population by 2050

Globalization has lifted more than 2 billion people out of poverty; good news, … but 1.1 billion more people on the planet in 30 years, will put pressure on resources — particularly energy, food, and water — as demand outstrips supply; 1.5 billion more people … almost all of them from Asia, Africa and Latin America, 
The most formidable challenges of all times: food scarcity, climate, … and immigration.

 The rise of Africa: Foreign investment in Africa overtook foreign aid for the first time. Africa is slowly moving away from charity to join the business world. Most investments come from China, followed by the US

 Traditional economics are dead : Two models of economic growth are weak. The American model of a credit consumption-led economy may be coming to an end. So too has the Chinese model of an economy built on export-led growth and an undervalued currency. The two main pillars underpinning the western world democracies — (1) robust economic growth raising living standards for all in the US, and (2) the welfare state and income redistribution in Europe — are shaking; and the scale of the challenge now facing most Western countries is of monumental proportions.

 New partnerships: The end of the transatlantic partnership Not only that the US and China are ruling the world (everybody knows that), but the fact that America’s interests in Asia are rising while its interests in Europe are declining Europe and the US are parting on a number of structural and key issues because their strategic interest starts diverging This is why the time has come for Europeans to think the unthinkable: the “natural” transatlantic partnership will someday come to an end and be replaced by a transpacific alliance, not a US-China superpower fight

 The connectivity and the complexity we have engendered in the global landscape transcend our ability to comprehend, model or manage events. Many limitations constrain our ability to interpret complex issues, particularly as we tend to attribute single causes to interconnected events. This is literally overwhelming the capabilities of politicians to make sensible and well informed decisions… Very, very tough.

 The potential for conflict will increase owing partly to political turbulence in parts of the greater Middle East”: Nuclear and rogue states (Iran, Iran and Iran)

Short/medium term:

 The world is suffering from a lack of aggregate demand. The combination of too much debt and too little growth is pushing countries into a classic debt trap. The “old bag of tricks” that countries have typically used to manipulate their fiscal and monetary policies and spur economic activity just don’t work as well anymore. Fiscal pressure — will make economic conditions stressed for an extended period of time. That’s bad news. Also, policy-makers will face difficult trade-offs between the need for fiscal restraint and the demand for maintaining social safety nets: Political volatility will prevail. As a result, the worldwide phenomenon of “indignation” which seems to be brewing everywhere can only increase. 2011 will be remembered as the year of rising global indignation.

Back in December 2010, a French nonagenarian (Stéphane Hessel, 93 years old) wrote a pamphlet that he called “Indignez-vous” (“Rise Up”). He was prescient. It sold more 800,000 copies in France in less than two months and has been translated into more than 20 languages — it denounces in particular the power of the financial oligarchy and its collusion with policy-makers. Since then, the “indignation” movement has spread across the world. Protests and revolts are happening everywhere, from the MENA region to Israel, from Europe to India, from Chile to China and now the USA (in the form of the “Occupy Wall Street” and other “Occupy”-themed protests).

 Unemployment: let’s not to confuse the level with the rate. Unemployment figures in the US illustrate this case vividly. Since 2010, employment has gone up 0.7% to 9% — that’s the rate. But employment gains have only brought back 1,000,000 of the 8 million jobs lost in the wake in the crisis — that’s the level.

To summarize, we have a remarkable central tension underway — on the one side, a very positive trend, a huge innovation and technological advancement — human innovative capacity is at an unprecedented height — and on the other a rapid social change and transformation. And this tension is occurring within a very complex environment, where many of our traditional structures and assumptions are eroding.

Obviously, the challenging trends I have laid out will have significant consequences on the way we all behave. At Revolution, we have done some work trying to understand these trends and identifying those that are key for the future of our companies, which include Exclusive Resorts and Miraval in the hospitality space, but also Zipcar, GramercyOne, and Living Social, directly or indirectly linked to hospitality.

I will share a short list — it is certainly not exhaustive (believe me, the full list is very long!).

First, we are moving away from a period of excess of passion, into a period of more reason. We are witnessing the end of a long period of “irrational exuberance”, as Alan Greenspan qualifies it. After accumulating debt to cover our excess spending — a tactic employed by governments and individuals alike — we now need to pay the price. This is leading to a new consumer mindset.

Jobs are the new assets. Americans are rediscovering the job as the most valuable asset a person can have. More than stocks and often now more than a house. As a consequence, a person’s view of, and relationship with, the concept of “ownership” is going to change drastically. For a home, a car, or really any equipment which you only use a portion of time, ownership or even renting is not always the solution. Exclusive Resorts is a good example of what makes them work: why buy a vacation home you use only a few weeks a year, that restricts you to visiting the same place over and over, when you can share a collection of homes located in a variety of places you want to visit?

Sharing: More and more often, sharing is the answer. while the concept of using the web to share “stuff” — from cars to apartments to tools — is still relatively new to many consumers, sharing is being adopted by a growing number of companies and I think has started to reach a tipping point and become more of a mainstream concept. This sharing concept is of course accelerated by the Internet. The best example is obviously Zipcar.

Consumers are dropping out altogether from buying non-necessities — Value versus frugality. My wife keeps telling me she does not care about the luxury packaging of her cosmetic products; she just would like more cream. In the hospitality area: why pay for ridiculous flowers in the lobby that you do not need, and be charged $20 for wi-fi which you do need, Pay for what YOU have decided has value. Not what a company has decided has value for you. At ER, we invest in villas, in accommodations vs. public areas … Do you prefer two adjoining bedrooms in a hotel, where housekeeping comes at 9 am, or an entire villa, where the housekeeper comes at the time YOU decide with no public area but a personal concierge or personal chef?

This leads us to the new definition of luxury: Luxury is becoming more personal and authentic, and less formulaic. The new luxury is about having things the way that YOU want them, not the way the Michelin guide tells you that you should want them.

Today, many travelers’ vision of the perfect luxury vacation isn’t about ornate lobbies and staff in white gloves … nor maitre’d in a black tuxedo waiting in the wings. This is another part of the success of Exclusive Resorts, where we recognize that for many people, the ultimate luxury is not having 400-count linens. Rather, it is having an easy way to enjoy a good vacation with a group of your family and friends — enjoying time together.

Another evolution is convenience: the ultimate luxury today is the luxury of more time. Nothing is more luxurious than time

With the possible exception of quantum physics, no industry — not even the luxury industry — can actually create more time. But by removing hassles and complications, by increasing convenience and ease-of-use, by designing goods and services to fit the way people live today, we can give consumers the luxury of spending more time to do what they want to do. The ability to have time, to do what you want to do, whenever you want to do it, however you want to do it Ease of access is luxury … one click away from everything.

It is a great world when you can read The New York Times wherever you are, whenever you want. The value of being able to access and purchase things on YOUR timetable, according to YOUR needs, is real luxury and one of our guiding philosophies at Revolution, and has helped spur our involvement with Revolution Money, Zipcar and even VinFolio, which lets wine lovers have their bottles expertly stored and delivered right away to wherever they are.

Authenticity: Very much related to the new notion of “luxury,” consumers today want authentic experiences that are intimate, unique and meaningful. People are starting to say “no” to too much perfection, or to an exaggerated excellence, “no” to the constant desire for still more, or still better. … the end of exuberance … remember? They are even starting to claim the right to imperfection, to approximations, to things done more instinctively. The years dominated by perfect order may well be followed by years devoted to controlled disorder! Yesterday’s culture was based on beautiful sites and excellent facilities. Tomorrow’s culture will is based on cultural, aesthetic and moral discoveries, rediscovering authenticity and simplicity. This is what we are doing at Miraval. And, Miraval also leads me to the last behavioral trend I want to mention: there is a heightened focus on nature and sustainability: Consumers want to connect with nature, interact with local cultures, and understand the impact of their choices on the environment.

Part 2: Now, it is time for me to share some of my personal thoughts and convictions.

In the spirit of “Revolution,” today let me challenge some of the things you may be learning. I don’t claim to know or understand everything, but I like to play with paradoxes and contradictions; and I also like to provoke… so some of my remarks may be seen as provocative.

What do “my years” inspire me?

Five simple things: good sense, human value and talent, passion, imagination …and vision.

Good sense first.

Fortunes are spent on marketing finding out everything about the customer and his or her needs: name, age, number of airline flights taken each year, preferred destinations, etc.

Databases are created; investments are made in technologies, reservation systems, call centers, mailings, gifts, brochures, videos, data mining, etc.; and marketing and sales techniques are increasingly personalized by segment, niche, category… Logically, so that we can offer our customers what they want i. e. more personalized products, right? Not at all! When these extremely well identified customers travel, they will be offered the same room … They want personalization, but what do they get? Standardization. Two minutes about leisure. Leisure is an opportunity for recovery, renewal, and healing; an opportunity for rebirth and to celebrate the fact that we’re alive. It is a quest for meaning, a time to regain oneself, which is where the expectation of personalized services comes in. This is what we like doing at Miraval. Leisure is not simply a suspension of the work routine, when one eats, sleeps, and takes time to do nothing. But what do most hotels, Resorts and tour operators offer instead?

Just that, commodities! Bigger! More global! More sterile! That is why every big hotel lobby on the planet features a large, round table with an immense bouquet of flowers lit from above by a spotlight recessed in the ceiling. Magnificent, of course, but it’s the same everywhere you go, so much so that you don’t even feel as if you’ve left home. And how can you begin to talk about niches, segments, experiences or personalized marketing when customers are welcomed to a hotel by an employee who doesn’t even lift his eyes from the keyboard as he greets you with a “Hello, Mr. Bor…, Boor…, Boorgogno,” while you see the top of his head without even making eye contact? From Los Angeles to Singapore, New York to London, I have my little routines. I stay only at hotels where I know I will find staff with whom I can continue a conversation begun months, even years, earlier; staff who will ask me, “How have you been since last March?”

So what good are all these surveys for getting to know you if you’re going to be offered the same thing as everyone else? And what good does it do you if a hotel spends a fortune on the above technology, marketing, and loyalty programs when, as soon as you get to your room, you’re going to be down on all fours looking under the bed for an outlet to charge your cell phone (which you will end up charging in the bathroom, precariously perched on the hair drier)? You would probably prefer that the hotel invest more in improving its facilities. And installing a few more electrical outlets … rather than loyalty programs, isn’t it?

Why is that? To achieve high volumes, the product must be able to sell everywhere and please everyone, something we refer to as “global reach.” But the larger the target, the more impersonal, colorless, neutral, beige the product become (I hate neutral colors like beige!). And yet as we said, everyone knows that what the individual likes is personalization. We are, therefore, faced with an enormous contradiction: critical mass is sought in order to be able to offer the lowest price, but the object or service offered is not what the consumer really wants, which is a personalized product!

And because the critical mass must be ever greater, ever denser, you make the product ever more impersonal … until the customer becomes less loyal. In an attempt to retain him, the company introduces discounts, reducing profits it hopes to make up by adding another layer of even lighter beige to its products, but it succeeds only in motivating the customer to look elsewhere! It is at this stage that the company will attempt to hold on to the customer through costly loyalty programs …

And we come full circle! Loyal and return customers are simply customers who are satisfied. If you enjoyed your vacation, you’ll come back! This concept of individualized service is what we do so well at Exclusive Resorts. The Member Service Manager job is a perfect example of how we do customize the service experience uniquely for each member and one of the keys to the company’s success. You can talk about the relationship we build with members and how we get to know the intimate details of their family and travel preferences.

In summary: keep good sense; No need for gimmicks: a great service, a good product, basic needs fulfilled, an enjoyable stay, a great experience, and good memories … Isn’t that better than miles?

Now, let’s spend a few minutes on human value and talent.

When I was looking for my first job in 1971, the horizons were wide open for young people, who were easily able to find work. This is the time where “human resources departments” replaced “personnel departments” recognizing talent, not just skill: My people are my best asset.

At the same time, Computer departments became “information systems”: I have state of the art technology.

But soon, purchasing departments became “procurement” the art of getting what you need to make a product or provide a service. But soon they also became “cost killers.” Do not rotate suppliers or lay off employees (unless you really have to do it). Do not replace “My people are my best asset” by “Procurement”. In other worlds, do not become disloyal to your people, at a time you expect loyalty from your customers.

And as we talk about human touch, this is what hospitality is all about. As such, Hotel managers, often transformed into management robots, should really have their desk in the hotel lobby, rather than spending their time answering emails or writing reports in an office…. I know, on the hedge, but I told you, I love to provoke.

Today, at exclusive resorts, we are allowing the local concierge teams to deliver service “their way”. No pitch. We encourage the team to serve the members with their own personal Spirit versus the “robotic” consistent service approach — “My Pleasure” — taught at most Hotel brands… people.

People will always be your best asset.

Passion

So much for dreams… so many hotel companies, are trying to transform hospitality into an exact science. They have segmented and over-segmented it. Their product becomes a mere commodity — a lifeless, colorless service — the moment that what I call the “emotional charge” disappears.

The tourism industry will have to keep restructuring until it becomes … the world of travel again, not selling pure commodities. Business should not become an end in itself. And passion should not yield to commerce alone. To be provocative again, strategy should be elaborated by company’s creative departments, not by finance departments….

And emotion should be part of how we manage. In 1992, Disney was so obsessed about opening Euro-Disney that it lost it soul: the name Euro Disney evoked no emotional charge. Any talk of Euro Disney focused on the construction site, the 40 million cubic meters of earth displaced, the 50,000 trees planted, the 40 attractions, the 60,000 visitors per day … Emotion?Because there was no emotion, comments focused on strained business relationships, the hours spent waiting in line, and the stock price … By 1993, under a new name, Disneyland Paris, it regained its soul and became successful.

At Exclusive Resorts again, our marketing campaigns shifted from the rational (how many homes, how big) to a more emotional campaign that focused on creating memories and allowing families to spend time together. Sasme thing at Miraval: from a catalog of activities to emotion /// Emotion …

My advice: keep your passion for travel, keep your emotions and put marketing at the service of your passions, not the reverse.

What more? Imagination!

Products or services inspired solely by the desire for profit often translate into poor marketing. We should not give the public only what it wants, we must imagine what he would like. It takes daring to create a masterpiece. True innovation means not only questioning the consumer, but also sharing an idea; an idea you think is good for you and may be meaningful for others. Innovation does not stem from experience, but from a vision of what we wish to experience tomorrow. That is how the companies I have been associated with were founded: this is how Walt Disney created Disneyland, Paul Dubrule Novotel, Gerard Blitz Club Med and Pierre Omadyar eBay… same for Miraval … And Exclusive Resorts … and Zipcar, …and so many companies today: pick one of those if you have a choice …Yes, I believe that the path to follow is imagination.

“Imagination rules the world. The vice of our modern institutions is that they do not speak to the imagination.” The author of these sentences? Napoleon.

And last, vision: Stop models.

Growth is not a vision …. And for the “Street”, growth is never enough; you need “explosive” growth. Meeting your target is not enough; you must exceed your target. Financial markets are not looking for a vision, but only for a model. Then, it is no longer the company vision that guides decisions over which service or products to launch; it is the economic model. And earnings must grow faster than company economics allow … So markets do not care if a company is destabilized along the way, with its talents gone, its employees transformed into robots, its customers becoming disloyal.

The whole system is geared toward driving up stock prices faster than the company’s economic and / or organic growth can … not sustainable!

So some allow themselves to be tempted by what is referred to euphemistically financial “creativity”, staying just this side of the legal line (or crossing it, in the case of Enron or others), in order to maintain high stock prices.

But when the stock price is too high, there is only one way for it to go. A harsh correction is in the offing, often proving fatal to the CEO, but never to the analyst or investment banker who pushed him.

Decisions must be made in the interest of the company, not the interest of the stock price. Because what is good for the company is, by definition, good for the stockholder. And what is in the immediate interest of the stock price can be counter to the interests of the company. This is what Michael Eisner (or Jeff Bezos) never compromised on…. And the reason I was let go at Club Med, but also the reasons I joined Steve Case at Revolution: good sense, human value and talent, passion, imagination and vision: That’s what Revolution is all about. Revolution invests in people and ideas that can change the world.

Conclusion

Customers expect personalized products, but what do they get? Sterilized offerings. Brands seek to keep loyal customers, but what do they do? Betray their suppliers and employees. Financial analysts demand a level of performance that forces companies to take risks, but what do they do? Penalize daring: the age of paradox.

No! These paradoxes exist. We simply need to recognize them and be willing to find solutions, not through outmoded responses, but by looking for new ideas. Of course, it won’t always be easy, but the future, which is being shaped by the technological revolution is brimming with possibility. This revolution will be driven by young people, by you. You can, and must, fight taboos and preconceived ideas.

Now, my little piece of advice: Let me share with you the letter I sent my Children Emilie and Sebastien (who is here with me today and one of your colleagues — Ecole hoteliere de Glion and University of Wales) at the time I published my book Hop! In 2005.

I was very lucky to be born in 1948, just as you were lucky to be born in 1979 and in 1981. There is no bad or good year, no inherently dark or golden age. There is only life and what we make of it. Open your eyes and ears: our world, your world, is wonderful, even if we have a lot to do to achieve more equality and fighting poverty.

You are young: you know how to dream while still possessing the common sense we sometimes lose when our experiences and the demands of our job or way of life override deeper reflection.

I am not here to preach to you; you wouldn’t listen anyway. I am simply defending a thesis, which is that to every situation one must bring a thirst for change. Prefer new ideas over common wisdom; prefer daring over conformity; prefer dreams over ambition; prefer passion over business alone; prefer talent over skill; prefer speed over delay.

To use your imagination, never move in a straight line! Get off the highway and take the side roads, even if you don’t know exactly where they lead. An encounter, a discovery, a new idea, or simply a moment of happiness may await you there.

Rather than devise grand plans, seize the moment and what it offers. Learn to meander, not only when you’re out or traveling but, most of all, intellectually. I have always tried to find meaning in what I was doing. At first, try things, test things out, dare, but above all do. In my own case, I realized one day that I no longer needed to “do” simply for the sake of doing. So I left the action and life in the public eye behind in order to shift from doing to being.

I see so many CEOs who, like me, get sucked in by the demands of their jobs and, after rising to a certain level of power, don’t realize the emptiness of their ascension. This added to the dehumanization of work and companies, can lead one to believe that there is only one choice: get ahead or die. Not so!

A career plan with no other end in mind than the career itself is a warped plan. And all work is alienating if it is performed without passion.

We create our lives each day, often in zig-zag fashion, never in a straight line. So avoid orthodoxy. Use your imagination by seeking paths that will lead you to the future and pushing back the envelope of what is possible. Bring your own reflections to things, rather than simply doing what you are asked to do.

I am deeply convinced that the best way to prepare for change is to always leave the door open for it, and to confront it with boldness. Reject certainty, invent your own responses to things, take on the adventure of being “different,” shake things up, risk being provocative; move quickly.

Your best asset is not ambition alone, but the ability to dream.

Experience is change’s worst enemy, because it encourages us to seek the comfort of habit. And yet, to live is to change; we wake up different each day. Some associate entrepreneurship with a taste for risk-taking. Nothing could be less true. The strength of the entrepreneur resides not in his love of risk-taking, but in his or her ability to seize opportunities where others see danger. It is better to create the future under a rain of criticism than to allow yourself to be talked into sticking with the models of the past.

Obstacles? They exist to stimulate us, just as conformity exists to be challenged. Difficulties or failures should spur you onward. After each of my setbacks — and I had them, of course — I had only one goal: to succeed next time.

In conclusion, hold fast to your values, and make sure your ego never gets the better of your brain. Ask yourself off-the-wall questions. Prefer reflection to reflex, imagination to habit. Never take yourself seriously. Stay humble, tolerant, respectful, and honest; qualities that are often forgotten by decision-makers and people “in the know.”

In the end, I really have only one message for you: be both idealistic and determined, feet on the ground, head in the stars. Above all, live with passion. No beige, no neutral; add color and keep the music in you.

Philippe Bourguignon

Philippe Bourguignon is vice chairman of Revolution Places, a company that is creating a new model for travel and tourism that promotes and encourages a healthy lifestyle, Philippe establishes consumer brands that reflect those values. In addition, he serves as executive co-chairman of Exclusive Resorts, a carefully vetted collection of more than 300 privately managed multimillion-dollar residences in iconic destinations paired with highly personalized and intuitive service.