The secret sauce: Six changes that made Amadeus Nexwave a top business incubator in the travel industry
Statistical data shows that a mere 3% of corporate startups go on to create $50 million businesses. This data point makes it clear that creating a winning idea and guiding it through a complex process into a full-scale business is a full-on challenge.
Below are just some of the questions that are sent to me daily:
How can we achieve a higher success rate?
How can we recognize winning ideas?
How can a company with lots of ideas ensure it funds and advances the right ones?
What are the most effective methods and thinking tools that support innovation teams and senior management to think through the many aspects?
And, maybe most importantly, the million-dollar question in the truest sense of the word: How should the day-to-day business and the new, emerging business work together to reduce risk and accelerate growth?
In my line of work, I have the privilege of working with a diverse range of clients, from automotive corporations to tech leaders like Amadeus. As the founder and CEO of Lean Scaleup, over the past seven years, I have focused on out-of-the-box innovation and corporate new-business building. In collaboration with more than 100 corporate and academic experts, we have established the framework that bears the same name, which codifies best practices to assist corporate innovators in understanding how to achieve a win-win between NOW, the existing business, and NEW, new businesses created by scaling innovation.
In 2021, I met Steve Kopp, Head of Amadeus Nexwave Incubation Office and Chairman of the Amadeus Executive Incubation Board. Nexwave’s mission is to identify, incubate, and grow new ideas with a clear focus on the traveler experience. In the last three years, together we have transformed Amadeus Nexwave into an industry leader in business incubation. I take a look back here at the six key changes.
1. Language
For corporate innovation units or a corporate startup to succeed, they must effectively speak the business language of their corporate stakeholders. There are two fundamental reasons for this. First, the existing business generates the margins that the new, innovative units at the corporate level like Nexwave need. Second, innovation must help the company to create new margins in the future – it is not an end in itself.
Stakeholders don't need to understand innovation jargon, but want and need to understand the progress done on creating new businesses. That’s why Amadeus Nexwave redesigned its approach and switched to use terms that are more intuitive for the organization, moving from terms like ‘product/market–fit’ or ‘problem/solution–fit’ to Business Discovery, Business Foundation, Business Strategy, and Business Design. This ensured that key stakeholders were always on the same page.
An example is the work we did on the five stages of the end-to-end process:
2. Docking to Core
A great idea for a new business should not be in the innovation portfolio when it does not leverage corporate assets and capabilities and does not align with the corporate and functional strategies.
Ideas that are aligned with Amadeus’ capabilities and the core business are more likely to succeed because the weight of the stakeholders is behind them and the company’s capabilities will de-risk and accelerate the journey.
Consequently, Amadeus Nexwave made the strategic decision to focus its efforts on startup ideas that fit neatly with Amadeus’ core assets and capabilities. Anything beyond that context does not make the cut.
3. Business Building Toolbox
Amadeus employs thousands of bright, ambitious people and with them come ideas, ideas and more ideas. How do you keep innovation focused? Amadeus Nexwave created a knowledge hub to ensure that the innovation teams pursue “diligent entrepreneurship.” In practical terms, innovation teams are guided through the complex process by a set of key questions and deliverables.
A library of crucial thinking tools helps them to answer questions and make progress. This way, every team knows exactly at every point in time, what they must accomplish in the next step, which thinking tools to use to get there, and what success looks like. This approach creates consistent and reliable results from all innovation teams, so that the company’s governance boards (see below) can judge each startup equally.
4. Progress Monitoring
To ensure alignment with the core context, every innovation team meets monthly and quarterly with their governance boards to discuss activities, progress, and perspective.
These meetings are based upon scorecards which display the progress that the teams made since the last meeting, using the approach described above. Since the approach and the scorecards use business language, the innovation teams and their governance boards have a solid basis for discussing tough questions and support needs.
5. Leaps of Faith
“Leaps of faith” are not in the repertoire of the day-to-day operations. The existing business operates in a known environment with a process-driven, short-term-focused, risk-averse operating and mental model. Innovation ideas that play out “inside the box” require a detailed plan that includes assessing and mitigating implementation risks and a detailed financial projection with a clear Return-On-Investment analysis.
When building new businesses, we frequently face many unknowns. For example, customer preferences for a new offering may unclear, the go-to-market may have a number of open questions, or the costs for scaling up the emerging business may involve many variables. Therefore, to move forward rapidly in new ventures, innovation teams and their governance boards may make a leap of faith decision.
Amadeus Nexwave’s teams can pinpoint these leaps of faith, using the approach described above. This allows them to have effective discussions with its governance boards. For instance, the latter may ask Nexwave to focus on customer adoption within the next three months. When the team does not meet an agreed quantified goal, the governance board can decide to take a different angle or to stop the innovation initiative and assign the team on another mission.
6. Governance
A key factor for success is to connect existing operations and new initiatives at the highest level. At the end of the day, senior management’s primary responsibility is to excel in the core business while creating new ventures, which will potentially become part of it in the future. Amadeus Nexwave has achieved that setup for success: in the Executive Innovation Board, there are four members of Amadeus’ Executive Committee.
Results achieved to date
These six changes have produced real results. With its streamlined ability to validate and to scale businesses opportunities and with the support of high-ranking corporate officers, Amadeus Nexwave has become a leading incubator for new businesses in the travel industry. Some recent examples of successful incubations include:
Amadeus Hey! , an all-in-one traveler engagement solution that enables travel sellers to deliver personalized and contextualized services and is already working with dozens of travel agencies.
Amadeus Discover , a platform to aggregate and book over 550,000 activities and restaurants, distributed via travel sellers of all types.
Amadeus Travel Ready , a solution that digitalizes and verifies travel documents and identifications which is being used by more than 20 airlines and has already verified more than 25 million documents since its launch in 2021.
But we’ve only scratched the surface of what is possible for Amadeus. With a strong alignment between its core operations and new ventures, the company is well-positioned to achieve future successes beyond its existing businesses.
If you are curious to learn more about the Lean Scaleup framework we put into practice with Amadeus Nexwave, please have a look into my new book:
You can also get a sneak peek at the Amadeus Nexwave case studyhere .
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