AirBnB, Math and Innovation

Josiah Go’s Commencement Speech at Chiang Kai Shek College

April 27, 2019

Dr. Dory Poa, members of the board of trustees, members of the alumni association, members of the academic community, parents, graduates, ladies and gentlemen, good morning!

I am honored to be invited as your speaker for your college graduation. I studied in this school for 7 years, from 1971 to 1978. I must admit I was as a C student but because of focus and God’s grace, I found my calling and became passionate about what I do – as an author, an educator, a consultant, a blogger, a regular newspaper contributor, a businessman, and an advocacy supporter.

In the time allotted to me today, and typical of my marketing, innovation or entrepreneurship seminars, I would like to leave you with more questions to ponder on instead of giving you the answer so you would have a lifetime to reflect on these questions. But I hope you will discover the answers to my questions sooner than later.

Accounting and HRI: 

First, a little trivia. Did you know that as of the end of 2018, the Marriot Hotel Group has some 1.3 million rooms while the Hilton Hotel Group has over 800,000 rooms worldwide? In terms of stock value, Marriot is worth US$37 billion while Hilton is worth US$21 billion.

Amazing, isn’t it?

What’s more amazing is that AirBnB, which does not own a single of their over 5 million places to stay, is valued at over US$38 billion, more than Marriot and a lot more than the world’s leading hotel brand, Hilton.

Hotel rooms are assets; that is an accounting term; the more assets, the higher the value of the company. But why is AirBnB, which does not own a single room, worth more than the biggest hotels in the world?

So to our accounting graduates, are we too engrossed with assets and liabilities that we forget the importance of new paradigm of business model innovation?

As accounting graduates, you will realize sooner or later that you will join and compete with so many others in your field. Many of them will simply be doing recording work in the beginning, but what will differentiate you as an accounting graduate? In terms of value, what will make you more valuable than the accounting graduate behind you? Have you internalized what you have been studying about value? Would it not be better for finance people to be business strategist than a bookeeper or an accountant?

And to those graduating in HRI or Hotel, Restaurant, and Institution, where will you classify AirBnB? It is technically not a hotel we are all used to, it is not a restaurant; it is not a traditional institution like hospitals or museums? It is a new service concept, powered by IT. Should you now call your course HRIA for Hotel, Restaurant, Institution, and AirBnB? Or HRI for Hotel, Restaurant, and IT? You see, branding influences what we think and how we think.

IT:

Third, information technology, as can be seen, in AirBnB, is no longer just a support group. It can be the company’s differentiator. Just learn from the story of Bayad Center.

Do you know how Bayad Center was created? Meralco had many challenges in collection before. Their field collectors often got robbed, customers refused to pay when these field collectors are not wearing their uniform for security reasons, branches were too small to accommodate all customers paying such that lines stretched so long that customers not only get dissatisfied but annoyed; depositing to banks posed another problem as the mass market felt discriminated when security guards look at them from head to foot if they are not dressed well. The result became Bayad Center, where customers can go to malls or any payment stations to settle their bills conveniently. Without IT, Bayad Center’s innovative model of using franchising to expand fast would not have happened. After that, Bayad Center became a payment hub of key service providers in the Philippines.

But you can wonder why didn’t banks put up Bayad Center? Why did it take an outsider to create something new? The founders of AirBnB were also industry outsiders. Is it possible that the biggest strengths of industry experts can become their biggest weakness, blindsiding them to a new market space that they are quick to ignore? Is it possible that expertise in existing operations becomes the enemy of innovation?

When my eldest son wanted to enroll in an IT school 17 years ago, I decided to help him shortlist by calling up some popular IT schools. The first school passed me from one person to another that I decided to hang up. Imagine I was not yet a customer, but they were already treating me badly. The second school I inquired to told me that yes they offered IT but no we still cannot enroll online, and cannot also pay online, which made me wonder not just about the relevance and differentiation of the IT school, but most of all, it’s believability. They do not practice what they preach.

So graduates of IT, know the basic things expected of you. Beyond being a problem solver, and enabler of an enterprise, IT can be the innovator. Instead of passively waiting for instructions, can you proactively be part of the solution by identifying customer’s pain points and offering solutions that exploit opportunities?

Education:

Fourth, and my favorite, the educators. Beyond the lessons for specific subjects, what is it that makes an educator an educator? What is it that you want to share or impart?

The people who did well in life always had someone, very often an educator, who made a difference in their lives. When I remember the influence of my educators, I have fond memories of the time I spent having intellectual exchanges with Dr. Ned Roberto of A.I.M., or the late Dr. Manny Fernandez of the Ateneo who took an interest in me and recruited me to teach marketing in 1990.

In Mansmith and Fielders Inc., the leading training company in marketing, sales, strategy, and innovation, we teach our participants a framework called ‘Innovation on demand’ using basic math concepts like plus, minus, multiple or divide.

For instance, I remember my math teachers taught us how to add, but it was not applied to the real world. Shouldn’t math teachers ask the students with ‘What can you add to create more value for your offer?’ just as how Tide added Safeguard in their detergent to create greater relevance, uniqueness, and believability.

I remember my math teachers taught us about subtraction but it was not applied to the real world. Shouldn’t math teachers ask the students with ‘What can you subtract, yet can create more value for your offer?’, which is similar to how Emperador launched their Emperador Light with lower alcohol content and grew not just their sales but market penetration attracting many more new users to the new category.

I remember my math teachers taught us about multiplication, but it was not applied to the real world. Shouldn’t math teachers ask the students with ‘What can you amplify, that create more value for your offer?’ Think of Gillette’s 4-blade razor.

I remember my math teachers taught us about division, but it was not applied to the real world. Shouldn’t math teachers ask the students with ‘What can you divide, yet can create more value for your offer?’ like how television separates the control remotely instead of incorporating it in the monitor?

In other words, what kind of educators will you be? Would you be a subject matter expert or an educator who will help bridge knowledge and real-world application so students become enthusiastic learners?

Should educators encourage more discovery skills, allowing students to be curious and to keep asking questions? Should educators organize more field works to hone student’s observation skills? Should educators encourage more external linkages, in order to create more potent networks for the benefit of the students? Should educators allow more experimentation instead of rigidity, allowing students to connect the dots and discover new truths for themselves, helping them become critical thinkers and problem solvers?

I remember the day in 1991 when I was a neophyte faculty member of the Ateneo. There was a student who returned a year after taking my class, bringing with her cookies thanking me for my generous case studies, changing her mind and her preference shifting her college major to marketing. It was the most delicious cookies I have ever tasted and the sincere appreciation led to the first of a series of my marketing books.

Dear educators, what do you want the students to remember you of?

Zero-based Beginning:

Before I end, I would like to share one story about a most memorable event of a student who studied in this school in 1976. The student was summoned to the discipline office, the length of his hair did not meet the requirement of the school dean, the dean decided to hire the fishball vendor in front of the school moonlighting as a barber to cut his hair on the spot. The student was traumatized but decided to move on years after. As he grew older, he learned to forgive and treated the incident as one of life’s many challenges. That student summoned to the discipline office was me. Today, I return to my alma mater as your keynote speaker.

To those who will graduate with honors, a big congratulations to you! I just shared my own story as a reminder to those who will not graduate with honors that there is so much more in store for you, too. You just need to recognize the opportunity from new beginnings. Your grades in high school were not counted when the school tabulated your grades in college. The same is true when you start working, you will start on almost equal footing, maybe a bit at a disadvantage, but will have the opportunity to be competent and surpass all others. Instead of being a jack of all trades, focus on a single specialization first, and then go deep, that you become the best in your field.

And who knows, one day, it may be your turn to be the commencement speaker of your alma mater.

Thank you very much for inviting me.

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