Airline labs tout the benefit of failure when innovating

When it comes to innovation, the product cycle for airlines is typically measured in years, not days or weeks. Regulatory approvals, certifications and testing contribute significantly to that pace but development costs are also part of the challenge. More and more, however, labs are cropping up within airlines to help change the approach, allowing them to be more nimble and, just maybe, discover how to fail gracefully and improve because of it.

During last week’s Future Travel Experience conference in Las Vegas, the heads of several airline labs came together to discuss their innovation efforts and encourage fellow carriers to join the effort with a common theme: Failure is a good thing.

The individual approaches to these efforts vary wildly, but with a common them, well articulated by Sveinn Akerlie, WOW Air’s CIO and head of WOW labs:

We are stuck with infrequent, massive updates. Airlines are focusing on avoiding failure rather than incorporating failure into the learning process where you fail often, fail small and fail fast. Old technology is our greatest challenge. If you want to use science and make a true impact on your airline you need labs to be at the core.

Regulatory and safety challenges are nonnegotiable but many other aspects of the passenger experience can see small changes implemented quickly in small groups, and the ability to test against various use cases without a full system rebuild. SAS ran a number of projects related to NFC chips for passengers, some integrated with eInk hardware and, in an extreme case, subdermally with one passenger.

Lufthansa has built booking and customer service bots and service dashboards designed to work outside for the Lufthansa Group of airlines. They are all focused on expanding the impact of the airlines beyond just transportation from A to B or as Lufthansa Innovation chief strategist Sebastien Herzog put it, “from [trip] inspiration to sharing.”

Building a venture capital business involves significantly more structure than an internal lab, a challenge JetBlue handles with, among other things, a larger team than the others. But there are many similarities to the labs. JetBlue CIO Eash Sandaram said the group has a goal of four or five invested companies by the end of 2016 and as many as 50 just two years later. Part of that comes from building the group to rapidly scale up; part comes from a willingness to fail based on making smaller investments. The group is focused on Seed and Series A rounds and, as Sandaram explained, “You have a lot more appetite for seed rounds, even with a 90% failure rate.”

Very real financial targets define how JetBlue Ventures will choose its equity positions but the goal is to be more than just an investor. “We want the IP, we want to be the launch customer. At the same time, as a technology company behind the scenes we do work with many startups, trying out the technology without an investment. How you pull all of that together is important for us,” said Sandaram.

kontron newestIn all of these cases there is a challenge around just how much money is being spent and how to track ROI. By failing fast and small – in days or weeks rather than in years – it is possible for the labs to eventually hit on a winning combination of technology, cost and use case.

SAS head of innovation and digital solutions Massimo Pascotto championed an eInk bag tag from his lab, despite the fact that many competing products already exist. He believes that his group can build a solution that integrates better with the SAS platforms and scale up at production to drop the price down to $10 or less, well below the $50 price point suggested just a year ago by another entity at the same conference.

Not every solution will price properly, acknowledged Pascotto, but with the low costs of running the labs there are more opportunities, “Give me a little bit of money and I can test use cases, prototype and solve it and then we can discuss the business case.” Herzog echoed this concept, with a focus on ROI not at the individual project level but for the overall lab, saying, “It will not work to make a specific business case per project, but overall I know what we spent and how much money we brought back to the company.”

That APIs to access passenger or operations data is considered a new development demonstrates just how far behind the industry has fallen. But with the quick development cycles of labs it just might be able to crawl out of that hole. Assuming the winning designs can be implemented in a reasonable timeframe, however, may be a leap too far.

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