Interview: Starwood CEO on Why Agility Is the New Company Buzzword

Starwood Hotels CEO Frits Van Paasschen does not know what the Generation Z hotel guest will want ten years from now, but he wants to make sure Starwood is the first hotel brand to provide whatever that turns out to be.

“I wish I did know, I’d go buy some start up stocks somewhere,” he told Skift during this week’s annual Starwood Rendezvous buyer/supplier conference in Boston.

A primary theme at Rendezvous revolved around Starwood being the first to bring hotel innovations to market, such as smartphone keyless room entry at Aloft Hotels. However, Van Paasschen asserts, in order to remain at the forefront of the hospitality industry, Starwood Hotels has to become more agile than ever in today’s “era of great change.”

Using his own children as an example of this change, Van Paasschen says the chasm in technology development and usage between his Millennial-age child and two Gen Z kids is “pretty remarkable” in the six years that separates their ages. He added that the change is simply staggering since the Clinton era, explaining that the White House and Kremlin had less computing power at the time than we have today in our iPhones.

“Part of what that tells me is that it’s going to be really hard to know what people are going to take for granted not so far out into the future, and what it means for a huge organization like Starwood,” said Van Paasschen. “So how do we make ourselves more agile? That’s what we’re talking about internally. Agility is the new smart. We’re much better off creating optionality and building flexibility into how we work as a company, since I really couldn’t tell you ten years from now what this Gen Z group is going to want in a hotel.”

That said, Van Paasschen consistently anticipates and discusses the future in terms of global economic trends during his presentations, explaining for example, that 65 million people are moving into cities worldwide annually, presenting great opportunities for all travel companies. Furthermore, over half of global economic development is happening outside of the world’s 100 largest megacities.

Understanding that, and realizing the next innovation in hospitality might just as likely spring up in Kazakhstan or Querétaro as it might in New York or London, global hotel companies need to be nimble enough to recognize good ideas anywhere in the system and scale them quickly.

“So what we can do is set ourselves up so the moment we see something, we can get on it,” said Van Paasschen. “For us it’s this interesting interplay between not being centralized, but not being completely dispersed either. We’re throwing out the whole notion of centralized. It’s the triumph of the best ideas wherever they are in the company, and making that the global standard.”

Starwood Looks to Start Ups for Inspiration

John Peyton, SVP, global initiatives at Starwood Hotels, gave a presentation at Rendezvous about how the hotel group is attempting to become more agile. He says Starwood began studying start up culture and some of the world’s most innovative global companies outside of hospitality a couple years ago to glean inspiration from them.

Peyton uses a “hyena to hippo” analogy to describe the evolution of company development. He says start ups are like hyenas: hungry, opportunistic, scrappy, highly adaptable, relentless. Then as companies become more successful, they become more like tigers, then lions, then bears and finally hippos. As hippos, large companies might be powerful but they can’t move or adjust very fast in their environments.

Peyton asked the audience of Starwood customers, “So what animal do we want to be as a company, and what kind of animal do you want to do business with?”

Next, Peyton explained the physical manifestations internally at Starwood resulting from this new insight.

“If we’re going to drive loyalty beyond reason, we said we’ve got to be more maniacal about being good at change than ever before given the business environment today,” he said. “So we started looking at start up companies. They have no walls, no boundaries, everyone sits around a table and there’s no formal hierarchy. Unlike big companies like ours and many of yours, they don’t have all of this stuff that develops over time that prevents people from cooperating and sharing.”

Peyton explained that start ups put forth audacious goals, so Starwood is aiming for 10 million people to upload the SPG (Starwood Preferred Guest) app on their phone in two years, up from the present three million today.

Start ups focus on getting products to market fast versus making them perfect, and then they iterate product redevelopment and user experience repeatedly. So when Starwood wanted to launch keyless entry at Aloft Hotels, it started with just one hotel floor at Aloft Harlem, working with only a handful of high volume guests who provided dozens of necessary adjustments for Starwood’s tech team during the test phase.

Peyton says in the past Starwood would have launched an initiative like this across a whole spectrum of hotels, making it more difficult to iterate and improve the product numerous times in rapid succession.

Meanwhile, executive development training for Starwood employees has shifted from over 60% of time spent in the classroom to over 60% of training taking place on the job and online, based on Millennial age preferences for learning.

Peyton explained that Starwood is now actively crowdsourcing. Starwood created an SPG Community of passionate guests who provide constant feedback on the hotel experience worldwide.

And lastly, Starwood is developing a new StarLab technology incubator in Manhattan, due to open later this year, to better recruit and retain top technology talent where that talent wants to live and work.

“Over the last few years, we’ve been traveling around the world talking with associates that it’s time to start acting more like a start up, and talking about this fable from hyena to hippo,” said Peyton. “We have to find the agile sweet spot to stay lean and fast so our processes don’t stifle creativity. We’re asking our associates, what kind of animal are we?”

Greg Oates covers hotel/tourism development and travel brand media. email / twitter