Managing Partner, Chicago, Sector Lead, Travel, Hospitality & Leisure Practice
The ‘Technical Debt’ Behind Stranded Airline Passengers
That could happen to us.
Few leaders will admit it, but experts say that holiday images of stranded passengers in crowded airports provided a crucial lesson for a wide range of firms—or even customers who travel. As news reports gradually revealed, the delays and cancellations of thousands of flights was due in part to outdated software applications and antiquated code. Known as “technical debt,” this problem is defined as the difference between a company’s software needs and its present-day capabilities.
As companies struggle to keep pace with technological advances, more leaders can expect their technical debt to come due, says Radhika Papandreou, sector leader of the North American Travel, Hospitality, and Leisure practice at Korn Ferry. She compares the threat posed by outdated technological infrastructure to that of a data breach: “Everyone’s at risk of it happening to them,” she says.
But the speed of change isn’t the only reason for technical debt. Cost is one obvious reason firms are falling behind—the capital investment required can impact earnings for years. That often leads to a patchwork or triage approach to spread out the costs of updates. Acquisitions pose a similar problem, as getting systems integrated and aligned often leads to “lots of starts and stops and reversing course,” says Seth Steinberg, a senior client partner in Korn Ferry’s Supply Chain Center of Expertise. Steinberg cites another factor contributing to technical debt: the challenge is daunting for many leaders. “There is personal, career, and political risk of ‘getting it wrong,’” he says, adding technical debt—beyond vision and strategy—requires massive courage and organizational sponsorship.”
For airlines and other consumer-facing industries like retail and hospitality, the cost of technical debt is compounded by the worker shortage. Jamen Graves, global co-leader of Korn Ferry’s CEO and Enterprise Leadership Development practice, says leaders are having trouble balancing tasks that require human customer-service agents with those that can be automated. “Most companies still don’t have this right,” says Graves. The temptation to reduce costs through apps often leaves companies scrambling to find real people when things go wrong, he says. Companies need different workers and technological infrastructure to adequately service escalating customer needs. That goes double for industries built on providing a superior customer experience, like travel, says Graves.
While some experts have proposed more government regulation and investment, Papandreou says competition will ultimately force companies to pay attention to technical debt. Consumers are demanding a frictionless experience, she says, and leaders recognize that losing thousands of them to a poor experience could be more costly than investing in needed software upgrades. At the same time, boards are adding directors with technological expertise who are taking a more active role in making digital advancement part of leadership’s frontline strategy. “Boards and leaders understand that it isn’t only the technology companies that are responsible for good technology,” says Papandreou.