Harvard Business Publishing

Erich Joachimsthaler is the author of Hidden in Plain Sight: How to Find and Execute Your Company's Next Big Growth Strategy.

“Why didn’t we think of that?”

“We have the smarts, we have the resources. How did we miss it?”

These are the questions British Airways, Virgin Atlantic Airways, and several major US carriers should be asking themselves today. Because again, as so many times before, these airlines have missed what possibly was their biggest opportunity for innovation, growth, and increased profits.

Four chic but cheap business-class start-ups, Eos, MAXjet, Silverjet and l’Avion have launched all-business-class flights on the incumbents’ most profitable routes from London to New York with huge success. They offer new services for business travelers that are so obvious and valuable: extremely late check-in, fast paths through the airport to avoid the masses, guaranteed luggage immediately upon arrival, private departure and arrival lounges, and all-business-class seating at very reasonable prices -- even as walk-up fares. Two years into the launch it is clear that business travelers are taking great liking to these new airlines, which are beginning to get a lot more attention.

It is disheartening to witness again and again how incumbent airlines simply don’t see the biggest and often most obvious opportunities in plain sight. This happens not because of a lack of trying. And it happens even to successful airlines like Virgin, as well as others that constantly pour gazillions of dollars down the innovation rat hole. So how is it possible that these airlines did not see the all-business-class opportunity?

I believe the reason for this is that there is something that ails these incumbent airlines and American business altogether. That is, companies are far too obsessed with differentiation, benchmarking, and trying to win on the better feature set. This kind of focus doesn't result in breakthrough innovation.

I suggest we need to rethink innovation and study consumers from what really matters to them. And that is, in the case of business travelers, their daily routines, the behaviors around traveling, and how companies can transform the experience altogether. I outline this methodology in my book Hidden in Plain Sight: How to Find and Execute Your Company's Next Big Growth Strategy. The four upstart airlines show that it is not merely the improvements in the menu, or the better seat that matters -- what matters is changing the entire behavioral travel experience. What matters is customer advantage, not merely competitive advantage.

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