The demise of Thomas Cook is a major blow to the travel industry, with the ripple effects continuing to play out across the industry. Not only did its abrupt collapse strand 600,000 vacationers around the world, it also put 22,000 jobs worldwide in jeopardy.
While many could not fathom how an iconic 178-year-old brand could collapse, its fall was not that surprising to industry observers who had already seen signs of endangerment for the British travel giant in recent years.
According to the BBC, the company’s “fate was sealed by a number of factors: financial, social and even meteorological”. A perfect storm of mounting debt, Brexit and a record hit wave came together to bring down one of the world’s oldest travel companies.
But Thomas Cook’s ultimate demise was mainly its own doing. The management was too entrenched in legacy systems and mindsets, and continued operating based on an outdated business model that was too reliant on high street firms, and failing to evolve to meet travel booking patterns that have largely migrated online.
For a Victorian brand that survived two world wars and invented the concept of package tours, Thomas Cook did a great job transitioning from trains to planes to bricks, but the world’s oldest travel agency failed to make the jump to clicks in today’s highly dynamic operating environment until it was too late.
Thomas Cook India (note: both companies are independent entities) appears to better understand and navigate the reality of continuous innovation and disruption. To future-proof its business, Thomas Cook India’s chairman and managing director Madhavan Menon said the company is placing a focus on automation and technology, including using robotics to run processes and SaaS analytics to get a better picture of its businesses.
“Today’s travel is changing so fast with OTAs, the Oyos and Airbnbs of the world, but we believe we have a segment which is package tours and that is where we play our role,” he said. “We’re in the DMC business, which is a little bit more uncertain because they depend on source markets to aggregate and give business, but I genuinely believe we sell experiences and don’t do anything else.”
It is hence vital that Thomas Cook India “reprojects” itself from a legacy company into “an experiences company” moving forward, Menon insisted.
These examples serve to illustrate what famed economist Joseph Schumpeter referred to as ‘creative destruction’. In the relentless wave of ever-evolving technologies, companies which do not adapt will be destroyed, but those who do will thrive.
The rise and fall of a storied institution like Thomas Cook is a cautionary tale in industrial disruption to all companies in the travel sector and otherwise, especially incumbents who are stuck in their traditional business models and are unable or reluctant to embrace a digital strategy.
Be disruptive, or be disrupted.
