Jeff Clarke, President & CEO, Travelport, Tom Klein, Group President, Sabre Travel Network, Zhang Nanyan, CEO, 7 Days Group Holdings Ltd.

Gordon Wilson and I just arrived in Beijing for the Global Travel & Tourism Summit, and the World Travel & Tourism Council (WTTC) couldn’t have chosen a more appropriate location for its annual conference.  After a global travel downturn that lasted more than a year, China is one of the nations that are leading the recovery, and this means more opportunity for travelers and the travel industry. Consider a few key statistics:

• According to WTTC forecasts, travel and tourism in China will grow by an average of 9% annually   during the next 10 years, increasing its T&T GDP from $500 billion this year to nearly $2 trillion in 2020 - second only to the U.S.
• China’s capital investment in travel and tourism will more than triple during the same time period, the WTTC predicts, passing the U.S. to become No. 1 in this category.
• According to the UN World Tourism Organization (WTO), China will be the fourth largest source of outbound tourism by 2020 with an expected 100 million travelers per year.  It is also an increasingly popular destination for international travelers.  The China National Tourism Office says that nearly 22 million foreigners visited the country in 2009.
• China’s rapid growth has helped make Asia Pacific the world’s largest aviation market.  The IATA reports the number of travelers within Asia Pacific in 2009 (647 million) exceeded those in North America (638 million) for the first time.

IATA also gives China credit for substantial progress in strengthening its airline industry, from improved safety and 100% e-ticketing to policies that have allowed airline consolidations and created stronger carriers.

To learn more about what these trends means for the travel industry - both domestic and international - Travelport recently worked with an independent research firm to survey business and leisure travelers in 12 countries, including China.

Among other things, China scored highest in using social networking sites to research business travel online.  China ranked third in the use of social networking sites to research leisure trips.  These results show there are significant opportunities for travel agencies and providers who can incorporate social networking sites and products into their business model.

Nearly half of consumers in China (46%) pay cash when purchasing leisure travel, second only to consumers in Russia (72%).  About one-third use credit cards, and only 1% use debit cards.  Agencies who can accept electronic payments - whether credit cards, debit cards, PayPal or other systems - will be able to grow market share.  As Chinese consumers pay more electronically, there will also be more opportunities for online travel agencies to reach new customers.

You can find out more about our survey by clicking here.

The survey results confirm the attractiveness of the China market, and the significant room for growth in demand and in new travel products and services.

Travelport has been working in China since 1984 through our group tour business, GTA.  In 2004, Gullivers Travel Associates (China) Ltd. became the first European travel company to be granted a license by the China National Tourism Administration to operate within mainland China.  The company has 100 employees serving China’s inbound market and domestic travel business with a comprehensive database and supplier network.

In the GDS business, Travelport works with TravelSky, China’s leading provider of information technology for the country’s air and travel industry.  TravelSky uses our Travelport E-Ticket Interchange system and interline e-ticketing capabilities.

As the Chinese economy continues to grow and create more wealth for its citizens, the number of business and leisure travelers in China will expand rapidly, as the WTTC and WTO data show.  Although doing business in China is often a challenge, the size of the market and the prospects for growth during the next decade make it the biggest growth opportunity for the travel and tourism industry.

Jeff

Today, Travelport participated in the official U.S. launch of  MASSIVEGOOD at the United Nations in New York, where former President Bill Clinton initiated the donation process with the ‘first click.’ Joining President Clinton were UN officials including Secretary General Ban Ki- Moon and leaders from the travel and tourism industry.

The idea behind MASSIVEGOOD is simple because it offers travelers the opportunity to make a small, voluntary contribution of 2 dollars/euros/pounds each time they book a trip in order to support programs that improve child and maternal health in the developing world.

It’s powerful because it brings together the three leading global distribution system (GDS) providers - Travelport, Sabre and Amadeus - in a partnership with the Millennium Foundation, which created MASSIVEGOOD, working alongside UNITAID. MASSIVEGOOD will create a sustainable funding stream for UNITAID’s efforts to expand the availability and reduce the cost of treatments for HIV/AIDS, tuberculosis and malaria - diseases that are devastating in poor nations.

It’s not often that the leading players in a highly competitive industry come together behind a common cause. But when the opportunity to make a difference in our world is so profound, the decision to act collectively is an easy one. We hope this cooperation within the travel industry will be a model for other industries across the world.

The potential is huge. Together, the GDS providers handle 1.1 billion transactions per year, representing hundreds of millions of travelers. The contribution process is built into our respective point of sale applications and will be available when travelers book through a travel agent. Even if only a small percentage of travelers participate, MASSIVEGOOD can make a huge difference in the lives of millions of people who will benefit from medical and pharmaceutical advances.

This is a fitting role for the travel industry because mass travel is a powerful force for cultural awareness and understanding. The more people travel, the more connections they make with other lands and people, the more they recognize their roles as global citizens, the more likely they will take part in this vast humanitarian effort.

You can find out more about MASSIVEGOOD at their web site, www.massivegood.org. Also check out the work being done by UNITAID at www.unitaid.eu.

And click here to see director Spike Lee’s film “Masterpieces” created for MASSIVEGOOD.

As MASSIVEGOOD rolls out across the world during the next few weeks, I encourage all travelers to take advantage of the opportunity to make a small individual contribution - and a huge collective contribution - to this ground-breaking initiative.

It is simple, it is powerful, and it can bring about real change in helping to save lives on a massive scale.

Jeff Clarke, President and CEO, Travelport

Few cities in the world can match Paris for its combination of history, art, culture, business, politics, entertainment, food, wine and all-around joie de vivre.  You can lose yourself for a day in the Louvre or a sidewalk cafe - or literally get lost (pleasantly) in the winding streets of an ancient city.

I had the great experience of living in Paris for two years from 1996-98, which gave me an appreciation of the city and its people that only time and familiarity can really provide.  It’s fascinating to revisit the places I lived, walk the same streets again, and get re-acquainted with the city squares, museums, bookstores and restaurants I knew so well - to see what has changed and what has stayed the same, and how my own perspective has changed after more than a decade away.

Every neighborhood in Paris is unique.  I’m partial to the Latin Quarter (where I lived) yet often find myself clear across the city after a day of walking about.  I particularly like running in the vast Parc de Sceaux with its soft walkways, classic chateau, reflecting pools, topiaries and horse trails.  I enjoy the energy of the city - the smell of the ubiquitous corner bakeries, Sunday markets at Rue Monge - as well as its classic architecture and the beauty of the bridges over the river Seine.

Of course, dining on French cuisine and enjoying French wine is one of the world’s great pleasures - especially in a city where the culinary arts are the equivalent of a highly competitive sport among its many outstanding restaurants.

My other favorite destination - Bali - couldn’t be more different than Paris.  It’s one of the few places today where you can truly escape the modern world.  Yes, my BlackBerry works there, but it seems out of place in an environment so far removed from the relentless pace of New York or London.

From the white sand beaches of the south to the dense rainforests in the north, Bali is a tropical island of stunning beauty.  I highly recommend the inland village of Ubud, which is well known as the center of Balinese art, dance and music.  Here you will find bustling markets, ornate temples, and galleries featuring everything from folk art and crafts to fine art.  The nearby mountains and rainforest let you experience Bali’s natural beauty.

The Balinese people disarm you with their welcoming smiles and gentle dispositions.  The island is a quirky place as well.  Statues are often adorned with colorful clothing, and farm animals and pets roam un-tethered and unconcerned with the activity around them.

Gordon Wilson, deputy CEO, Travelport; President and CEO, Travelport GDS

South Africa: Cape Town (which is where the Wilson family will be spending New Year’s) has to be one of the best cities in the world.  It has the lot - the ocean (although it is freezing), Table Mountain, the Cape wine country, rich history, jaw dropping beauty and some of the best restaurants in the world.  Oh, and sunshine when it is cold, dark and wet in the UK.  Furthermore it has some extremely good friends I made for life when I lived and worked in South Africa between 1996 and 1999.

The neighbouring country of Namibia also has the spectacular natural beauty of the Skeleton Coast.   This is true Africa, and there is nothing in the world that can compare to sleeping out under an African sky with no electricity or man made distractions for miles around - just the wonderment of the creation that is Earth.

Portugal: I lived and worked in Portugal from 1993 to 1996 and this country in all its aspects (apart from their driving) has a special place in my heart and, to a degree, my stomach.  No one eats like the Portuguese.  Each year there was a special dinner held in the middle of nowhere for the great and the good of the travel industry in Portugal to which I was privileged to be invited.  As I recall, the “lunch” went on for six hours; rabbit slow-cooked in a whole pumpkin was but one of the stand out courses, washed down with some of Portugal’s finest wines. The Portuguese are clever with their wine - they don’t export the really good stuff but save it for themselves, so if you want to try it, you have to go there!  Again, some of my best friends are Portuguese and only in May my family and I dined right on the beach in the Algarve with some of them, enjoying some of the freshest, tastiest fish you can imagine.

Other places I have visited which are incredible include Mauritius - one of the few places in the world that actually looks like the picture - soft, white powder sand, clear turquoise ocean, rainbow-coloured fish.  I also love Australia as a country of amazing contrasts - red desert with an awesome beauty, the verdant South Australia with the Barossa Valley, penguins waddling ashore at Phillip Island in Victoria, crocodiles lounging in the sun at the Kakadu National Park in the Northern Territory and then the great cities of Melbourne and Sydney. And there is no better place in the world to be than Australia on the day after Scotland has just beaten them for the first time in 27 years at rugby. OK, so it took 27 years but what is a mere quarter of a century between old friends.

I would be remiss if I did not also mention my homeland - Scotland. If you ever get the chance to visit one of the most beautiful places in the world you must. This is the nation whose people invented the telephone, television, golf and whisky. On a fine day in Scotland there is nowhere like it on earth with its dramatic and stunning beauty.  The trick is finding those fine days!

Ken Esterow, President and CEO, GTA

I recall my trip last year to Shanghai for China International Travel Mart as incredibly exciting.  Having been away from Shanghai for a few years, the amount of development and construction reinforced the long-term opportunity Travelport and GTA have in China.  As a visitor, I was impressed with how rapidly Shanghai has become a top city with world class amenities, incredible culture, great sites and unforgettable cuisine.  I had to run extra long on the treadmill to work off the fantastic meals.

At the Travel Mart, four or five airplane hanger -sized exhibition halls were filled choc-a-bloc with travel companies, from the traditional players that everyone knows to entrepreneurs trying to establish a foothold in the Chinese travel industry.  At the GTA booth, where we were promoting the GTA USA capabilities, we hired a Marilyn Monroe look-a-like.  We happened to be located next to the Las Vegas Convention Bureau, which had hired an Elvis Presley impersonator.  Well, “Elvis” took a fancy to “Marilyn” and spent a lot more time at the GTA booth than at the Las Vegas one.  We had queues of Chinese travel industry folks lined up to take pictures of Elvis and Marilyn together.  This light and fun moment highlights how interconnected the cultures of the world are becoming – just as the Chinese are familiar with American icons of the 1950s, Americans were overwhelmed and impressed by the pageantry of the Beijing Olympics in 2008.

For leisure, I’ve been to a number of great places, but I’d have to say that Florence and the surrounding region of Tuscany are among my favorites (and certainly among the most romantic).   Memories of Florence’s incredible culture, history, wine and food stay with you long after you leave.  Standing before the artistic masterpieces of the Renaissance combined with the warmth of a Tuscan village is an affirmation of what an amazing journey we are all on.

We need a new model because we are entering a new era - one that will be characterized by widespread adoption of innovative, technology-enabled services that will facilitate new ways of aggregating, displaying and transacting travel content. The model I envision is one that unites our travel industry in a way that puts our mutual customer - the traveller - at the centre of everything we do. It will:

• Accommodate a vast array of supplier travel options
• Provide agencies with relevant, tailored opportunities at the point of sale
• Deliver solutions that work across multiple channels - the agency as well as the corporate client desktop - and source content from multiple channels
• Enable individuals and corporations to buy travel the way they want to
• And focus on delivering choice and value to informed travellers.

To make this vision a reality, the industry first needs to create and adhere to some standards so that technology systems and platforms can connect and play well together without creating massive system overhead costs. The focus should be on more choice, not the lowest common denominator. In other words, the industry should not accept standards that only lend themselves to the current, well-established technologies, but instead look to the near-term potential of emerging platforms and capabilities.

Standard initiatives, such as those driven by the Open Travel Alliance, IATA, HEDNA and ACRISS, are essential to help underpin and integrate the future technology platform for which we all have such high expectations.

We also shouldn’t confuse standards with a “one size fits all” approach. The new world of distribution requires standards for communications and where to look for content - but it also needs to have flexibility in work flow as well as screen output and display.

This will require investment. Although there are few players today - particularly in this economic climate - with the resources to invest in technology that is scalable, flexible, robust and supported on a global basis, the GDSs need to do exactly that - invest. We also need to wean ourselves from an approach that focuses on segments first and everything else later. If GDSs want to be technology and service providers to the industry - and I think that’s our future - then we need to start acting that way.

There’s no question that the GDSs need to up their game. But there also needs to be a well-thought through “technology framework” for the travel industry if we are to put the customer at the centre of everything we do.

As part of a new model for distribution, wouldn’t it also make sense for the supplier, GDS and travel agency community to move away from drawing up battle lines with content held as ransom to the lowest bidder? Wouldn’t the GDS-supplier dialogue be more productive if it was more about how to increase the attach rate of additional services to the base fare sold? Can travel agencies afford to invest in GDS-independent point of sale tools, solely so they can periodically shop their segment transition from one GDS to the next? Or would they be better served actually spending the money with the GDS as a technology provider rather than as a transaction processing engine?

I see Travelport today as much more of a travel technology company as well as a transaction processing company. In other words, I don’t really see us as “just a GDS” any more. We are spending much more of our time and money on traveller desktop and workflow automation. We’re also investing in technology to support merchandising, including cross-selling, up-selling and other ways that suppliers want to sell their products and provide the choices demanded by consumers, corporate travel buyers and travel agencies. Our technology is designed to be multi-GDS and multiple-source in terms of where the actual transaction is created.

The challenge for the GDS in the new distribution model I’m proposing is that we have to disrupt the status quo. We have to invest in products that are neutral in terms of where transactions go to be processed. And we have to take a more dynamic approach to content, pricing and technology so that suppliers can sell the way they want to sell and buyers can see and filter all the available options.

There is real potential here for the three sides of the distribution triangle to come together to set standards in an environment where we all feel safe investing with a renewed focus on giving our customers informed travel choice. It requires a radically different approach, but there’s never been a better time to do it.

But we also learned with the H1N1 outbreak in Mexico and the U.S. last spring that disease is not the only risk. Poor information-sharing by governments can exacerbate the situation by leading them to make poorly informed decisions on travel advisories and bans.

Rumor and speculation, rather than facts, guided far too many global governmental decisions regarding how people should travel and how goods should be transported between countries. This inconsistent messaging and miscommunication caused many companies and individuals to cancel travel plans - adding to the already immense challenges of a global economic downturn. This can have a cascading effect on the travel and tourism industry, which generates approximately $5.5 trillion in economic activity annually, according to the World Travel & Tourism Council.

The events of last spring argue for greater coordination between governments. To that end, Travelport has called on the governments of the United States and the European Union to develop a US-EU Task Force on Global Emergency Communications. The proposal is part of the Transatlantic Business Dialogue’s “Building a Transatlantic Innovation Economy,” a set of recommendations developed by the transatlantic business community. [You can see the recommendations by clicking here.]

Governments on both sides of the Atlantic need to develop a coordinated approach when communicating restrictions on global travel and shipping during health and security-related emergencies. A public-private task force on emergency communications will help us achieve consistency in messaging and minimize unnecessary disruptions of global travel and trade.

The task force would serve as a clearinghouse of fact-based information for elected officials responding to global crises. It would also help establish cross-border relationships between decision-makers and develop processes to ensure consistent communications in the event of an emergency. Ideally, the task force would be chaired by government and business representatives from the travel and supply chain industries. Other members would represent different sectors of the economy and include health and security representatives.

In a world where rumors and speculation spread even faster than viruses like H1N1, we need to make sure that we’re getting accurate information into the hands of decision-makers. A task force on global emergency communications will go a long to make sure that happens.

It’s gratifying, then, when an independent organization recognizes the work we do. InformationWeek magazine recently ranked Travelport No. 11 on its InformationWeek 500 for our innovative use of information technology. This is a prestigious list because it doesn’t just look at what companies spend on information technology - it looks at how innovative they are in using IT to serve customers and grow their businesses. (You can see the 2009 rankings by clicking here.) I’m proud to say that Travelport had the only GDS ranked in the Top 250.

Our high ranking is largely the result of the complex and highly successful project to consolidate our Denver data center operations into our Atlanta facility. The switchover required months of planning and testing to make sure we made the migration cleanly and without disrupting service important to our customers and partners.

Our team used new and innovative technologies to migrate over one petabyte (that’s 1,000,000 gigabytes) of critical data. During the migration, data was moved data from three different mainframe environments and 600 servers, more than 60,000 network route changes were made, and 45 million travel reservations were shifted to Atlanta with minimal service interruption.

Results of the migration have exceeded expectations. Customers report a 50% improvement in response time for key applications. For Travelport, the migration significantly improved our technical infrastructure, provided major cost savings, improved reliability of global operations and reduced the physical data center footprint in support of our Green Initiative.

At the end of the day, though, Travelport IT innovation is focused on one overarching goal: to create exceptional travel experiences for our customers. That’s what we’re in business for, and we’ll continue to invest in technology that helps us deliver on that goal.

Travelport recently joined with our GDS competitors, Sabre and Amadeus, to support the Millennium Foundation for Innovative Finance for Health, which supports the work of UNITAID in its global mission to combat such life-threatening diseases as HIV/AIDS, malaria and tuberculosis in developing countries.

Through a Millennium Foundation initiative called MASSIVEGOOD, our three companies will offer travellers a convenient and secure way to give back through a simple voluntary donation of $2, €2, £2 or more. The contribution process will be built into our point of sale applications and will be available whether travellers book online or through a travel agent. (Click here to view a video that explains more.)

The success of the Millennium Foundation’s innovative financing solution depends on creating a global movement. We hope that cooperation within the travel industry will be a model for other industries across the world.

The GDSs have a unique role to play. We provide a critical link to hundreds of millions of travellers - many of them with a global perspective and an appreciation of the challenges faced by those in developing countries.

Together, we issue more than 500 million airline tickets each year. This means that even a small percentage of participants could make a big difference in the lives of millions of people. We see the potential of this program to reduce child mortality and improve maternal health - saving lives on a massive scale.

This is a fitting role for the travel industry because mass travel is a powerful force for social and cultural awareness and understanding. The more people travel, the more connections they make with other lands and people, the more they recognize their roles as global citizens, and the more likely they are to take advantage of this new program to make a contribution and a difference.

The MASSIVEGOOD program will be rolled out in 2010, so stay tuned.

The travel industry argued at the time that business travel is an important stimulus of economic activity that should be encouraged, not discouraged. (See my earlier blog on the subject here.) Now, a new report sponsored by the U.S. Travel Association (USTA) and the Destination & Travel Foundation shows just how important business travel is to growth and productivity.

The study, conducted by the global research firm Oxford Economics, determined that every dollar invested in business travel results, on average, in $12.50 of increased revenue and $3.80 of new profits. This is in addition to the $246 billion in spending and 2.3 million jobs generated annually by business travel in the U.S., according to the USTA.

Researchers found that a 10% increase in business travel spending would increase productivity, driving higher sales and profitability and lead to an increase in U.S. GDP of 1.5-2.8%. Studies in the EU countries and the UK have also found a strong relationship between business travel, productivity and economic activity.

The study reinforced something I think virtually all business and sales executives would agree on - that meeting personally with customers and potential customers makes a big difference in our business success. Executives and business travelers surveyed by Oxford Economics estimated that they have an average 40% conversion rate when they meet in person with prospective customers but only a 16% conversion rate without such a meeting. They also estimated 28% of their current business would be lost without in-person meetings. There’s just no substitute for face-to-face contact.

But business travel has a positive impact beyond keeping customers and converting prospects. It also helps companies build business/vendors relationships (trade shows and conferences, to name a couple of examples). And it’s a way to invest in employees through internal meetings, incentive events and conferences.

The USTA study makes clear that business travel is not just an expense - it’s an important investment in the business and in the relationships we build with our customer, partners and suppliers. Not to mention the economic benefits it has for airlines, hotels, restaurants, rental car companies, taxi drivers and many other businesses - and their employees - who depend on travel and tourism.

I encourage you to read the study, which you can find by clicking here.

The fact is that more people are traveling to more destinations around the world than ever before. While the global economic recession has taken a toll on travel and tourism, the long term growth trends haven’t changed. Tens of millions of new tourists (think China, India, Brazil and Russia) will mean even more pressure on travel destinations - particularly historic sites and those with sensitive ecologies.

Growth is good for the travel and tourism industry, but it comes with a responsibility not only to provide the best travel experiences today but to preserve those experiences for future generations of travelers. That’s why GTA North America/Travel Bound has formed a strategic global partnership with Tourism Cares, a US-based, non-profit organization dedicated to responsible and sustainable tourism.

Tourism Cares is helping preserve the travel experience by “awarding grants to natural, cultural and historic sites around the world; presenting academic and service-focused scholarships to hospitality and tourism students; and organizing volunteer efforts to restore tourism-related sites in need of care and rejuvenation.” It does this by mobilizing the travel and tourism industry and travelers. (You can find out more at www.tourismcares.org.)

In past years, Tourism Cares volunteers started the restoration of the Louis Armstrong Park in New Orleans, Louisiana, which had been virtually closed since Hurricane Katrina, and helped clean up the historic Ellis Island in New York harbor, where millions of immigrants first set foot on American soil.

On Sept. 11, a group of 65 GTA employees in the U.S. traveled to Washington, D.C. to join other volunteers from the industry for the Tourism Cares for America Volunteer Day - a clean-up project at the National Mall and Memorial Park in Washington, D.C. The weather, unfortunately, did not cooperate and the event was cancelled, but the rain did not dampen the GTA team’s commitment to Tourism Cares and future volunteer events.

Tourism Cares is also helping in other ways. Since 2003, it has awarded nearly $2 million in grants for conservation, preservation and restoration of natural, cultural and historic sites in 25 countries around the world, including the ancient rock city of Petra in Jordan, Sagarmatha National Park in Nepal and Bartolomeo Island in the Galapagos.

As a strategic partner with Tourism Cares, GTA is encouraging our employees and partners to support the Tourism Caretaker program, which enables all of us in the industry to make a small financial contribution to support the organization’s initiatives.

The activities supported by Tourism Cares send an important message about the commitment of the travel and tourism industry to preserve travel experiences for generations to come. They also show that it takes more than money to promote responsible and sustainable tourism; it takes volunteers who are willing to invest personal time to serve a good cause.

GTA is proud to partner with Tourism Cares. The way we see it, it’s good for travelers (today and in the future), good for our customers and good for the long-term health of the travel and tourism business.

A good place to start is with the latest book by Wired editor Chris Anderson, Free: the Future of a Radical Price (2009).   Its thesis is that in a digital world, price is rapidly falling to zero.  The new world he describes is the digital equivalent of the Gillette model of selling razors at a loss and making money on the blades.  We’re seeing this with everything from software to photo sharing and editing sites, where online businesses attract customers with free basic services and make money on more feature-rich premium services.  It’s a model engrained in those under 30, who are accustomed to getting their information for free.

A good example is the recent decision by online travel companies (OTC) like Orbitz Worldwide to eliminate booking fees.  For a decade, the OTCs believed they needed to charge consumers to book flights in order to make money.  The fees had the effect of leading many consumers to find a flight on the OTC but book it on the airline’s own Web site.  Since eliminating booking fees, more consumers are booking their flights through the OTCs.  At Orbitz Worldwide, for example, air transaction grew 22 percentage points in the second quarter compared to the first quarter of 2009, when fees were still in place.

The Black Swan: the Impact of the Highly Improbable (2007), by Nissam Nicholas Taleb.  The title comes from the assumption made in the 17th Century that all swans were white because it was the only color ever observed - until a species of black swans was discovered in Australia.  His message is we can’t predict important events simply based on past events or conventional assumptions.  He explores the way the brain and experience works, our innate optimism and our inability to read signs.

There’s a clear lesson here for business around the notion of asymmetric risk - in other words, risks that arise from wholly unexpected or unpredictable places, outside our normal range of experience and observation.  I used the book with Travelport’s senior leadership team last year as a way to encourage new thinking about the kinds of companies that could disintermediate our businesses.

Outliers: Stories of Success (2008), by Malcolm Gladwell, looks behind the secrets of success and finds interesting patterns that defy some of our long held notions of why some people succeed wildly (think Bill Gates) while others never quite seem to live up to their potential.  He finds individual merit has less to do with it than culture, community, upbringing, fortuitous timing and dogged persistence.  All the outliers he studied invested at least 10,000 hours of intense, focused effort to become expert in their area.

There are also two older books that have had a lasting influence on me.

The first is Capitalism, Socialism and Democracy (1942), Joseph Schumpeter’s classic economic essay addressing the concept of capitalism driving innovation through “creative destruction,” a Darwinian view of markets.  This book has been particularly influential on me when I’ve managed mergers, re-engineering and outsourcing operations offshore.

The second is The Soul of a New Machine (1981), by Tracy Kidder.   I first read Soul when I joined Digital Equipment Corp. in 1985.  Kidder spent a year following a team of passionate engineers at Data General who were designing and building a new computer to compete with DEC’s products.  It shows how core technology development occurs, the risks, processes and personalities of complex system design, and the heated competition internally and externally in high tech corporations.  It emphasizes the extraordinary effort and passion individuals need to achieve breakthroughs.  It is also a poignant story.  Despite the quality of the product and the immense effort to overcome great odds, it didn’t succeed in saving Data General in the marketplace.

The book helped me understand that passion, focus and enormous hard work drive breakthroughs.  But I also learned that this passion and focus quickly dissipates in large organizations and in business-as-usual (non-crisis) environments.  As such, it’s important to set up small, empowered groups and inject a sense of urgency into their mission.

Regardless of what business or industry you’re in, there are great lessons in each of these books.  In a world as competitive as this one, we need all the insight we can get.