It’s interesting that at The Phocuswright Conference last month, I was having a conversation with a senior leader in online travel about the changes going on at Expedia Group.
I had just come from Explore ’19, the Expedia conference which, for the first time, charged delegates about $500 to attend, and jokes had been made as to whether this was a new ancillary revenue for the group that had not posted stellar results in the last financial quarter.
I was more interested in the transformation strategy Okerstrom had brought into the group, essentially breaking down the silos between business units to deliver on the promise of a “frictionless travel experience.”
Okerstorm said he believed Expedia had all the assets – flights, hotels/vacation rentals, cruise, tours and activities; insurance; tech platform; talent; and data – to reduce friction at every point of the travel experience and he spoke of “unlocking the full power of our global platform to drive change of another kind.”
And his newly unveiled leadership team on stage had referred to this as Expedia’s “Everest,” after a keynote speaker asked everyone to think about their Everest moments.
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Clearly, this Everest was deemed one mountain too high by the chairman of the board, Barry Diller, who, in announcing the resignation of Okerstrom and chief financial officer Alan Pickerill, said: “Ultimately, senior management and the Board disagreed on strategy. Earlier this year, Expedia embarked on an ambitious reorganization plan with the goal of bringing our brands and technology together in a more efficient way.
"This reorganization, while sound in concept, resulted in a material loss of focus on our current operations, leading to disappointing third quarter results and a lackluster near-term outlook.”
While I was more interested in his thoughts on the strategy – whether it would be possible to transform an organization as large as Expedia and with so many different “armies” used to doing their own thing – the industry observer (who I will decline to name), but who used to work at Expedia for several years, chose to comment more on the difference between former-CEO Dara Khosrowshahi and Okerstrom.
He said that Khosrowshahi, now facing his own challenges at Uber, has the X-factor as a leader and can somehow rally troops to follow him into the battlefield, no matter how daunting the odds. And he wondered if Okerstorm, with his different style and his financial background, would be able to get troops behind him the same way his predecessor did.
His thinking is, no matter the strategy, it’s the leadership that counts. Who can get it done? You can argue on that point forever – who’s got more X-factor, it’s pretty subjective – but what’s clear is that when it comes to running Expedia, you need to have the trust of the chairman who very clearly has a soft spot for travel.
No matter how busy he is, he’s at every Expedia conference, reminiscing about old times, staunch in his belief that travel is the best industry for a better world. “No travel, no life” is one of his favorite phrases.
Old buddies
Diller and Khosrowshahi have a relationship that’s lasted the test of time. At the Expedia conference in December 2017, Diller was openly sentimental about his loyalty to his former prodigy. When Okerstrom asked him to pick between Uber and Lyft, Diller said, “As long as our Dara is with Uber, everyone in this room must never use Lyft.”
Handing the baton to Okerstrom that year, he spoke about how hard succession is for most companies and people to do but “it took us 90 seconds and here you are,” he told Okerstrom, “You were there and in a position to succeed and hopefully you will.”
He had also famously described the transition in leadership “as natural as water flowing down a snow-packed mountain.”
Well, clearly it wasn’t as natural, and things have changed because times have changed. You could argue that Okerstrom did what he thought was best in the face of the competition facing the group.
On its home market, it’s got Booking Holdings breathing down its neck, and in Asia, you have the rising power of Chinese companies like Trip.com Group trying to grow outside their home markets. Running a global company with local relevance everywhere is hard.
Okerstrom was also caught in a hard place – between trying to live up to a chairman’s very high expectations and steering a group used to individual brands and business units doing their own thing and competing with each other, and getting them to go in one direction.
Of course, it’s always easy to look at things on hindsight, but I had the impression at Explore ’19 that things didn’t feel the same as they did in the four years I have been attending the event. Of course, it didn’t help that the event was held so close after the announcement of its dismal third quarter earnings and it would have been hard for anyone to put on a brave, happy face.
Game-face on at all times
But all credit to Okerstrom – he did. He was the consummate professional because, even then, he must have known the axe was about to fall. His opening speech was light on numbers but high on aspiration and purpose.
He wanted people to think bigger and higher – Purpose over Profit. He was present at the diversity sessions, lending his weight and commitment to this new agenda at Expedia Group.
You sensed a softer touch at the Expedia wheel – under his watch, the group spoke more about corporate social responsibility to the media, and in his interview with me in August in Singapore, which he timed with a family holiday, he said: “We are the platform to allow people to experience the world and we are working with governments in countries like Thailand to get tourists to understand that yes, city centers are incredible, but there’s much more to discover.
“It’s good for travelers (to spread out), they crave authentic experiences and this is great for those who work in the travel business – from tour guides to hosts – and we help create new economies.”
And while he was slightly subdued during the press conference in Las Vegas, he handled questions professionally.
When he was challenged on whether he was “scapegoating” Google, he didn’t lose his cool, he said there were other ways to grow and one channel would be direct and that would be what Expedia would work on.
He spoke about the opportunities of the Asia business, how China would remain an inbound-focused business for now but there were promises on the outbound horizon, and how its relationship with Traveloka places it well to compete in Southeast Asia.
And he didn’t lose his sense of humor. When I congratulated him on the great production and show of Explore ’19 – the group really took the production quality to a different level this year – he quipped that he wished results could be taken to the next level as easily.
In the interview in August, I asked him how hard it was to take over a very well-run, established company, and what he had to unlearn (one of Diller’s favorite words), and he said, “It would have been easy for me to step in and say I will continue on essentially the path that Dara and I were on. But we had gotten to a point where to go to the next level, we had to do a bunch of things differently, and so I had to never totally forget, but never rest on your laurels.
“I had to forget the successes of the past, forget the things that we had tried before that didn’t work and we had to push everyone to say, how can you imagine a better future, standing on the shoulders of what we have done but not shackled by them?”
In the end, Okerstrom made the moves he could and tried to imagine a better future for Expedia but remained shackled by the past and market realities. It was clearly a “test and learn” that went a bit too wrong for Diller’s liking.
All credit to Diller – in his parting message, he said, “Mark Okerstrom is a talented executive and his 13 years of service to Expedia has greatly benefited the enterprise. The Board and I wish him the best for the future…”
It’s also interesting that when I asked Okerstrom what is the one thing he’d like people to understand more about him, he said, “I am a pretty open book, maybe to my detriment.”
Well, maybe it was in this instance because whatever you may say about putting Purpose ahead of Profit, when it comes to the corporate world, Profit still comes first, and Peril awaits anyone who forgets that.
We wish Okerstrom all the best in his next adventure – backpacking, dancing or whatever new purpose he finds.