Dealing With Disruption by Adapting Your Business Model

The bromide is that disruption can be the stimulus companies need to innovate, but disruption doesn't feel that way when it happens to you. Here's how Joie de Vivre Hospitality responded.

“Show of hands: How many of your business models have been disrupted?”

Roughly half of the large crowd raised their hands when Chip Conley, founder of Joie de Vivre Hospitality (JDV), posed this question at a Build/Live event.

Conley never expected his industry to fall prey. “When you get into the hotel business, you don’t expect to be disruptively innovated,” he admitted. “This is a business that’s been around forever.”

But in 2001, it happened. Orbitz, Expedia, and Travelocity came along. Instead of selling rooms directly to consumers, JDV now had to pay a 25 percent commission on sales coming through the travel sites. “How many of you,” Conley asked the crowd, “have never used one of these sites?”

One person raised her hand. And Conley sadly nodded: Exactly.

The impact on JDV was game changing. “We lose 25 cents on the dollar, overnight,” Conley explained. All this after 9/11, when the economy was tanking and travel was on the downswing. “I didn’t know how we were going to make payroll,” he said.

He survived by adapting his business model.

Using the psychologist Abraham Maslow as his muse, Conley took customer satisfaction to a higher plane. In Maslow’s hierarchies, social belonging and esteem trump basic survival needs. Conley realized that he, too, had to go beyond basic customer and employee satisfaction.

He strove to meet emotional desires--aspiring, even, to make his guests and staff feel self-actualized. It sounds hokey and a bit new-agey, but it worked: JDV survived a disruption and a recession. In an era when travel sites created new levels of customer promiscuity, JDV found a way to breed loyalty.

This article was originally published at The Build Network.

Find Engee Business Guide on Facebook

Follow Engee's Business Guide on Facebook and Twitter