Holiday booking

Thomas Cook shows the perils of ‘getting’ digital but not transforming

In the 1980s and 90s, Thomas Cook was an obvious place to go for traveling abroad. Its stores were commonplace on high streets in the UK and it had a long-standing, good reputation. The company was said to be the first British travel agent to launch a website, in 1995, and launched online booking in 2000. Yet something in its digital strategy went very wrong.

Instead of buying flights from Thomas Cook, founded in 1841 with an amazing brand awareness, people like me turned to sites such as Expedia, founded in 1996. What you might not expect is that Thomas Cook was examining the potential of the internet very closely. It had a marketing manager for “Consumer Futures”, Karen Bozeat, who declared in 1996 that: “Thomas Cook has undertaken a vast amount of research into the opportunities and challenges presented by the information age … Thomas Cook intends to take full advantage of the extraordinary growth in this medium.”

Yet the words didn’t really translate into fast enough action. By January 2000, had 500,000 regular users and full e-commerce capability. Thomas Cook still didn’t have online payments, though you could research from a vast database of holidays.

Instead of going all in for the future, Thomas Cook doubled down on what had worked in the past: retail stores and TV.

In 2007, Thomas Cook bought MyTravel, increasing its UK shops from 548 to 812 in a single year. Incredibly, between 2010 and 2017, not realising its blunder, Thomas Cook acquired a stake and then took full control of hundreds of Co-operative Travel shops, a network of shops hardly known for an online presence.

Thomas Cook’s big, transformational transactions were based on winning in the past, not on the future.

Meanwhile, the Thomas Cook’s marketing was distracted into an over-the-top investment in television. In 2001, the company launched its own television station, Thomas Cook TV, on Sky. Of course, TV had long had been an important part of driving brand salience for the company, so they decided to go bigger on TV. In reality, it was not a good call to run a TV channel with few viewers (compared with a 30-second ITV spot), when what was really needed was mastery of the internet.

Thomas Cook saw the opportunity and threat from the internet early on, but was lacklustre in responding to it. Why was this? Well, Donald Sull, at MIT Sloan School of Management, describes something called “active inertia”. He writes: “Inertia is usually associated with inaction—picture a billiard ball at rest on a table—but physicists also use the term to describe a moving object’s tendency to persist in its current trajectory. Active inertia is an organization’s tendency to follow established patterns of behavior—even in response to dramatic environmental shifts. Stuck in the modes of thinking and working that brought success in the past, market leaders simply accelerate all their tried-and-true activities. In trying to dig themselves out of a hole, they just deepen it.”