How do you manage working with your neighbours to attract visitors to your region, then competing with them to ensure these same visitors spend dollars with your business? Can this happen collaboratively, or is it just a myth? What do the strategy theorists say, and how is industry responding?
The strategic argument for collaboration
The overriding reason for collaboration is to achieve an outcome you cannot achieve alone. Michael Porter, the Harvard Professor and original thinker in the field of competitive strategy, identified five key forces: the threat of substitutes, the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, and industry rivalry (1).
Of these the intensity of competition is the one that most dominates the minds of the tourism operators. If industry rivalry is the strongest force, why the logic to cooperate with your local rivals? The answer is that when competing for attention of new customers they are not your enemy but your ally. The strength of your region can be directly related to the united efforts of the individuals who make up that region.
This is even more important in today’s upwardly mobile digital era, when a consumer can be flicking between Instagram pictures of someone in Bali, or a friend on Facebook liking a cellar door in the Barossa, their desire oscillating as to where they can escape next. The competition is numerous, fierce, global and local at the same time. How can a single operator penetrate this and create that desire for a destination? Individually they may directly control a sphere of influence of existing customers and supporters (which is essential), but collectively they may be able to break through to new potential customers. Tourism Research Australia’s recent report identified this as a key action for regions, “Behavioural economics show that when faced with many decisions and uncertainties, people choose the path of least resistance. This means we need to put the pieces of the journey together for visitors during their decision-making process.” (2)
Additionally, a collaboration is much more likely to leverage support from government and other complementary customer offerings, making your individual marketing investment go further. As Simon O’Callaghan, CEO of Yarra Ranges Tourism says, “A Regional Tourism Organisation offers a unique support for small business, based on one principal – the power of collectively working together. There aren’t many places you can invest your discretionary marketing dollars and have it leveraged through an organisation that matches it with government funding.”
Company strategy should be about developing a sustainable competitive advantage by choosing where you will devote your business energies to compete for customers(3) based on your business’s capabilities to exploit those opportunities(4) If you have decided your ideal customer is a high net worth international visitor but your collaborative group is devoting its marketing energies to target day trip low value, high volume, local visitors, how do you manage this disparity?
Is the industry association merely replicating what you can do yourself? If a region plans an event on a weekend that you will already be busy, and then charges you dollars to participate, are you paying extra dollars to attract customers you were expecting to get anyway?
These are very basic examples and the answer in your region will probably be more complex. However, it is worth examining the organisation’s strategy to identify misalignments and challenging the marketing plan to ensure it is adding benefit you could not effectively do individually. If it isn’t working for you there are two options, get involved as a stakeholder to persuade/influence change so it is better aligned, or be selective in what parts of their program you will be involved with. Both are legitimate responses.
While most businesses act with a sense of honour and community, the reality is often more opaque. I recently asked a number of regional industry leaders about this and most reported good governance at the very senior levels (e.g. at Board/Executive level) but a number of operators had experienced issues at the next tier of an organisation (e.g. a Marketing Sub-Committee) and/or with individuals on trade or media missions where the line between promoting their own business versus being a spokesperson for a region became blurred. The opposite is also true, that genuine collaboration and true teamwork can have a positive effect. When asked about this Wine Australia said they use it as a competitive strength, “One of the Australian wine sector’s great points of difference is how well people work together. This is often raised by the international trade and media, who are impressed by the collegiality and conviviality evident between business competitors at our promotional events, whether the event is overseas or in Australia”.
There is opportunity for the good governance in place for Board members (e.g. charter of behaviour, independent Chairs) to be extended deeper into the organisation, both documented and informal. Perhaps an annual conversation each year with the marketing sub-committee or a circulation of expected behaviours for participating in regional events?
Some ways for your business to respond
- Review the strategy for the RTO or industry association, check its Mission Statement or Strategic Plan. Ask a simple question: if they succeed in that mission would it help you in your business? If not, what will you do about it? The short-term approach may be to exit the organisation, thus missing out on the benefits of collaboration. Or will you take the long-term path and look to the future by seeking to adapt the mission?
- Advocate for any group you are involved in to continue to ‘have the conversation’ about expected behaviour when collaborating with rivals and managing conflicts of interest. Advocate for transparency in decision making as the best way to build the trust and cooperation of all stakeholders, not just for those in the room.(5)
- Form organic cooperative arrangements with other local businesses, especially those with complementary customer offerings, working closely with them to make a visitor’s experience in the region seamless and value-added.
- Look at the behaviours in your own business. Do you celebrate the success of a neighbour by seeing it as a success for the region overall?
If we lived in a perfect world some of this would be easier but working with others where sometimes we are allies and at other times competitors is complex. The best approach though can be surprisingly simple; to quote Eliza Brown, CEO of All Saints Wines, “If you look at your neighbours as competition you are not going to get anywhere, you need to keep your head up and look at bigger fish to compete against.”
Simon Napthine Snapper Consulting www.linkedin.com/in/snapperconsulting
(1) Porter, Michael E. (2011), ‘The Five Competitive Forces That Shape Strategy’, Harvard Business Review, HBR’s 10 Must Reads on Strategy.
(2) Tourism Research Australia (2019), ‘The beach, bush and beyond: Understanding regional dispersal of Australian tourists, p4., www.tra.gov.au
(3) Greenwald, Bruce, & Khan, Martin, (2005), ‘Competition Demystified. A Radically Simplified Approach to Business Strategy’, Penguin Publishing
(4) Anderson, Martin, (2016), ‘How To Crush The Competition – Tactics For Business Growth and Development’, 2nd Edition, Amazon Publishing
(5) The Institute of Community Directors has many resources and training kits that help steer NFPs through this complicated field, www.communitydirectors.com.au/icda/policybank/.