Partnerships

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Partnerships

  1. 1. Partnerships Why Have Partnerships and Why have them in Tourism? It's all about SYNERGY really: the concept that the total can be greater than the sum of the constituent parts, sometimes described as the situation in which 2+2=5. [This perhaps can ignore the reality that dependent upon the willingness of the respective parties to work and share together, 2+2 can = <1 or even 7+ That is to say that synergy can be easy to aspire to in theory and that much more difficult to engineer in practice]. In general, then, why engage in partnership activity? The answer perhaps lies in the following Bs: • Belonging • Better Performance • Bigger can be Beautiful • Balanced Competition / Co-operation • Be Quick (or be dead) • BELONGING. We all (individuals, companies, resorts, macro-destinations etc) are seeking to survive, develop, improve and grow and this can rarely be done successfully in isolation. Just look at ourselves – if Abraham Maslow was right about our personal sense of needs and desires, immediately after our base needs (physiological + safety) are met, we begin to feel a need to belong to something bigger than ourselves, to appreciate that we are not alone, we are not lonely 'islands in the stream': we seek to belong. Belonging involves: o openness, o reaching out, o appreciating others and their nature, o communication o exchange o sharing o mutual support because BOTH parties find something of value in the relationship and are prepared to invest something in it because each feels that they will be better off as a result. At what point this becomes capable of being termed or viewed as a 'partnership' is a moot point. Perhaps this would have to involve more than just a communication exchange, but it would not necessarily have to be encapsulated in a legal agreement or involve formal partnership documentation and joint financial investment. • BETTER PERFORMANCE. It is a tough world out there. Everyone is trying to perform to their best and out-perform the competition, but no-one knows it all, controls it all or has the monopoly on creativity or innovation or access to unlimited resources and capabilities. Why do we make associations and partnerships in our personal lives: o Study buddies? o Pacs / marriage partners? ... etc ... We share and exchange for mutual benefit. We individually benefit from the effect of the sharing. In a commercial situation this may involve the 'partners' out-performing competitors: what each then does with his/her enhanced performance / revenues / profits is up to the individual partner: but each will
  2. 2. know that this will be more than would have been possible had each acted independently and competitively. • BIGGER CAN BE BEAUTIFUL. Size does matter (at times at least). Some opportunities can come our way which we cannot deal with because our resources and capabilities are always limited. The opportunity for partnership can increase the resource base available to the individual operators. o Case Study. Immediate post-war Japan.  Starved of resources and with a limited industrial base, Japanese industrialists HAD NO CHOICE but to co-operate and pool resources. The proverbial 'Big Idea' was to pool resources to buy the best technologies then to develop world- beating ranges of products and services based upon these. Within barely 25 years, by the 70s and 80s Japan had moved from cheaper, second-rate products to leading edge electronics and car manufacture.  Interesting to note that post-war Germany was in the same situation: zero industrial base, rampant inflation and a currency that had no international value... and now it is the world's largest exporter. Might the fact there was little or no alternative to cooperation have had something to do with it?  Interesting that from having no choice about co-operation as a direct result of scarce financial and other resources, both Japanese and German industries have now largely out- performed those those nations that won the war by virtue of their superior productive capacities and technologies .... it would seem that co-operation can be a very powerful tool when wielded in the right way. • BALANCED COMPETITION / COOPERATION. Competition is a double-edged sword: o On the one hand the need to improve and out-perform the competition drives research and development, innovation and efficiency, effectiveness and economy gains – which have obvious benefits for economic development generally, the consumer and the supplier.. o On the other it can be very wasteful: much expenditure is duplicated by most or all of the operators in the marketplace. For example:  All do the same / similar R & D work  Any innovation has to usually be copied by all the other players even if there is little or no gain to be had:  Case Study: 1990s UK supermarket reward cards. • Tescos started it and attracted a market away from competitors: First-Mover Advantage. • Sainsbury's etc had to follow to stem the tide rather than to improve performance • Now all have higher costs as a result but only Tescos really gained anything and the customer lost because of these higher costs being passed on by all suppliers. The result is that an efficient, economic and effective market needs to benefit from some of the positive effects of out-and-out competition and yet, paradoxically, to avoid some of the consequences of such competition by means of a degree of co-operation. Potentially this suggests that the most effective and efficient form may be one in which players cooperate on certain
  3. 3. issues /measures /policies /investments /developments whilst competing on others. • BE QUICK – OR BE DEAD! These days the business environment changes so rapidly and demands all but immediate responses from businesses. At times, alone, we can find it difficult to address the threats or to seize the opportunities that the changing environment presents because of the limits we all have to work under. BUT, if we can share resources, ideas, capabilities we do have a chance of being able to respond at the rate required. BUT, in turn, discussing, negotiating and agreeing and finding a way of working together can slow things down immensely and even offset the synergy gains of cooperation! o Case study. 'Touch Screens for England's TICs'.  In the late 1980s in England, Tourist Information Centres were looking for an 'after-hours' solution where by means of a touch screen in the window, tourists could find hotel or restaurant or tourist attraction details outside opening hours. There were some 500 TICs. To produce a coherent national system the TICs needed to discuss with the Local Authorities that funded them, the Regional Tourist Boards that organised them and the National Tourist Board that networked them... plus of course the system providers. Of course cooperating would have advantages:- • A recognisable national system for the client / tourist • One main supplier / solution for hardware and software • Standardised training • Bulk purchase discounts  BUT, it took so very long to consult, discuss, negotiate between all the parties, that by the time an agreement was about in place a newer system had arrived that had far better operational characteristics Result: - the reality of the degree of cooperation resulted in a timeframe which was longer than the new technology horizon and even more inefficiency! Had the TICs been allowed to select their own systems – yes there would have been networking and recognition problems and the unit cost would have been higher, but at least there would have been after hours touch screens actually in place!
  4. 4. All this might suggest that we need a form of something that we might well call: 'Co-opetition'... If we have learned anything from studying Sustainability, Global Politics and Macroeconomics, we have begun to appreciate that we have a small 'cake': we just do not have enough of the world's resources to go around to meet the needs (let alone the wants) of everyone. Wasting resources on all-out competition in all markets is clearly counter-productive at best and sacrilege at worst. The world needs: • The stimulus of competition where appropriate • The common-sense of cooperation wherever mutual benefits can be achieved . .... and the world needs these both at one and the same time. • Case study. Mohammad Yunus and Microcredit: the Grameen Bank. You can read the history for yourself (and you really should) – but this World Bank Macroeconomist went out for a walk one lunchtime and as a result ended up changing the lives of more than 250million people across the Indian subcontinent and his own with a Nobel Peace Prize in 2006. His bank (Grameen = 'Village', by the way) offers small loans of a few tens or hundreds of dollars to individuals to develop businesses and compete for their livelihoods, BUT, co-operation is a key part of his bank's modus operandi: o The bank works primarily with female clients – women who tend to communicate, advise, help and share perhaps more easily and willingly than men o Loans are managed and loan recipients supported by a village community committee which mentors and encourages new participants. Their products or services may compete on the street to some measure, but their respective chances of making sales and successful businesses has been enhanced by the degree of co-operation and mutual support which has at least got them to the marketplace with a viable product to sell. It works for the bank too: it has one of the lowest loan failure rates of any bank anywhere despite the fact that its clients cannot offer guarantees or capital backing. Again, cooperation rather than full-on competition has made the model work.
  5. 5. Conclusion. From the foregoing it follows that competition pure and simple will never deliver the ultimate efficiency, economy and effectiveness that we are increasingly seeking: it has an inherent 'streak' of wastefulness in it. Co-operation, not to replace competition, but rather subtly combined therewith could represent a viable to the problem. But operators would need to know: WHY, WHEN, in WHAT circumstances, WHERE, with WHOM and HOW to cooperate.... and the answer to these questions is not always obvious because of:- • Entrenched Ideologies. In the capitalist world, competition, secrecy, protectionism are the dominant ideologies. Capitalism has served Development and Growth well and the above ideologies are therefore very entrenched and hard to dislodge. • Competitive ethos. Competition is not just in business it runs throughout life and education: winning, being top of the class, getting your BAC / Degree / Masters. We teach Perfect Competition, Monopolisitic Competition, Oligopoly and Monopoly in Business and Microeconomics courses. Our political systems are largely win / lose based on elections rather than coalitions to maximise utility. At the pinnacle are the French Concours: competitive examinations where it matters not whether you are good enough, but only whether you are in the top 100 nationally if 100 posts is all there is this year. We don't teach cooperation explicitly or implicitly: we evangelise competition. We may say: 'It's not about the winning – it's the taking part that matters': but tell that to the person who comes fourth in an Olympic event or even to the kid whose Dad was beaten into second place in the 'sack race'. • The Political and Media Backdrop. Remember Obama's: 'Yes we can!' rhetoric and why it felt so different, so fresh, so powerful? .... Because of the 'WE' : we were in there: us: me and you. It wasn't 'I will do my best' or 'We the Party' / 'We the government' – we knew he meant US: we citizens – we were part of the process, part of the problem, yes, but also of the solution. Some may feel his 'crown' to be slipping, but that speech still echoes nevertheless. MLK may have said 'I have a dream', but it was a dream we all share(d)... JFK (with an appalling accent) may well have said: 'Ich bin ein Berliner'... but those walled-in in Berlin knew he meant that he was in it together with them. Churchill's 'We will fight them on the beaches and on the landing grounds' speech: we all had our backs to the wall and we were all together: it was about US cooperating, sharing. But when we are not 'in extremis' it seems that our willingness to co-operate naturally and willingly tends to fall back: it is only when sorely pressed and we none of us can afford the inefficiencies and problems of competition that we seem to suddenly start cooperating. I wonder whether La Crise may well prod us in that direction again... interesting on that front that Britain has its first coalition government in three generations (Conservative and Liberal Democrat). • 'When you are up to your neck in Alligators.....' (I'll explain that in class!) The point is that when things get tough or complicated or we are having to work with fewer resources (staff / money) we tend to have our heads down working frantically to get through things operational and survive the day – it can be all but impossible to allow oneself time to 'look over the parapet' and imagine another way of doing things – especially if it is rather alien to the way things have always been done.
  6. 6. And as regards Tourism? Q. Is there any special reason why cooperative / partnership models might be appropriate for Tourism? A. Plenty! • Fragmented Nature. We have debated whether Tourism really is AN industry or rather an agglomeration of different component products and services drawn or assembled from various other industries. 'The Tourism Industry' may be a convenient 'overlay' term, but in reality it would appear that it is an assembly of other components for a particular purpose: Tourism. This is likely to involve: a. All sectors of the Transport Industry: airlines, airports; coaches, trams buses; trains, private cars, hire cars etc etc..... b. Accommodation: hotels, self-catering apartments, gîtes, B&B (Chambre d'Hôte), caravan & camping, leisure resorts etc. c. Destinations. Nations, regions, cities, towns, villages, rural areas, coastlines etc. d. Attractions. Natural attractions, heritage & museums, theme parks etc e. Tourist Information; TICs / TIPs / online networks etc f. Retail. Shopping g. Sport & Culture. h. Food and catering. The result is that often operators feel allegiance to their primary sector (e.g. shops to Retail) rather than to Tourism. Yet the Tourist doesn't see it like this: he just wants to see all of it combine seamlessly to give him the experience that he desires and expects. If the so-called 'Tourism Industry' is to achieve seamlessness in the matching of expectation and experience it has no alternative: it MUST engage in cooperation. If this cooperation can be successfully achieved, let us say, in Spanish Tourism and in English Tourism and not in France, then French Tourism may well be perceived as being of an inferior quality – dangerous for any destination when the customer has a considerable choice of alternatives before him. In addition, given that this coordination and cooperation does not occur naturally, then it follows that it will have to be stimulated: brought about by some other imperative or agency: by 'carrots' or 'sticks'. It will require intervention, possibly intermediation to bring it about. • Complexity: Tourism involves all players at all levels. a. Public sector / private (commercial) sector / voluntary sector b. International / national / regional / sub-regional / local c. The international distribution system: end suppliers / travel agents / tour operators (retail & wholesale) etc The obvious result is that the sheer complexity of the Tourism Product/Service and the selling thereof demands a high degree of coordination and cooperation otherwise the necessary components will not just 'come together'. • Scale and Significance. The sheer scale and significance of the industry in terms of movements of people, contribution to the export economy/balance of payments, employment and multiplier effect etc at the level of nations, regions and destinations once again demands a high degree of coordination and cooperation.
  7. 7. • Right First Time / No Second Chance. Whereas other industries (particularly in terms of manufactured goods) have the chance to rectify a service failure on the spot with a replacement product: how do you put right a disaster of a holiday that a family had been looking forward to for the last 9 months and may be paying for for the next 6 months? A cheque in compensation is something: but the loss of precious holiday experience amidst a busy year is simply not repair-able. It is therefore critical in Tourism, above all, that the experience is delivered right first time. Given the above points which all contribute to such experience, there is once again a strong case for coordination and cooperation. • Public v Private Sector. The public sector is heavily involved in most areas of Tourism: it has stakes in the transport system and its management; townscape and landscape (through the planning process); museums, galleries; culture and media, coordination via the National Tourist Office and the Ministry etc. But, generally speaking, the private sector tends not to like to work with the public sector, seeing the latter often as a brake and a constraint upon its operations. Governments and their systems are not the systems and processes of private enterprise and business. This 'natural' reticence (if not resistance) about working together means that it is all the more critical for deliberate efforts to be made to coordinate and cooperate across the divide. Conclusion. The case for coordination and cooperation in Tourism is compelling
  8. 8. So, if we want to move from coordination through co- operation and on to partnership, how might one go about it? • Common Vision ('...people perish for lack of vision'....). If you have no common ground, no shared sense of what the situation currently is, how it is affecting you and what will happen if nothing is done... then there will be little to propel you towards any form of profitable interaction with anyone. • Understanding of the status quo • Appreciation of the consequences of ‘doing nothing’ • Creative vision of strategic options available (or willingness at least to come together share ideas as to how bring this shared vision about) • Commonly held commitment to work jointly and separately to achieve agreed goals • Recognition that success requires INTER-dependence not IN-dependence of vision and action. • Willingness to participate in and be held to a jointly-owned ACTION PROGRAMME with well defined: • priorities, • timeframes, • resources, • responsibilities (i.e. Accountability – otherwise one can have a 'grand design' in a written form but there will be little chance of it actually resulting in anything in real time) • Co-operation • National / Regional / Local • Public / Private / Voluntary Sectors • Cross Sector Participation • Tourism • Transport • Industry • Employment • Retailing • Environment • Education & Training • Taxation • Commitment • Financial resources : the ‘stake’ • Staff time • Political support • Priority • Consistency • Charismatic Leadership • Visible • Commanding respect • Continuity of Corporate Identity
  9. 9. • Company rather than ‘Committee’ (ephemeral) Case Studies. NB. Some of the stats may be old – but the partnership principles and lessons learned are still 100% valid. Isle of Wight Tourism Development Action Programme http://www.tonyversity.bournemouth.ac.uk/teaching_materials/html/iow_tdap.htm (Login: student Password: malta2000 ) Local Area Initiatives http://www.tonyversity.bournemouth.ac.uk/teaching_materials/html/local_area_initiat ives.htm (Login: student Password: malta2000 ) Dorset and New Forest Tourism Partnership http://www.dorsetnewforest.com/ YOUR TASK. Identify what problems you need to address in Alsace Tourism and then identify the bodies you will have to bring together to bring about and implement a strategy to address them and the structure in which you will organise them.
  10. 10. • Company rather than ‘Committee’ (ephemeral) Case Studies. NB. Some of the stats may be old – but the partnership principles and lessons learned are still 100% valid. Isle of Wight Tourism Development Action Programme http://www.tonyversity.bournemouth.ac.uk/teaching_materials/html/iow_tdap.htm (Login: student Password: malta2000 ) Local Area Initiatives http://www.tonyversity.bournemouth.ac.uk/teaching_materials/html/local_area_initiat ives.htm (Login: student Password: malta2000 ) Dorset and New Forest Tourism Partnership http://www.dorsetnewforest.com/ YOUR TASK. Identify what problems you need to address in Alsace Tourism and then identify the bodies you will have to bring together to bring about and implement a strategy to address them and the structure in which you will organise them.

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