Increasing Local Tourism through Network Organizations

Increasing Local Tourism through Network Organizations

JOANNE C. PRESTON

Professor Doctoral Dean of Management Colorado Technical University USA

Abstract: This paper looks at the use of network organizations as an intervention in a highly competitive tourist industry in New Orleans, LA (NOLA). The larger hotels and well known restaurants generally served the convention tourists during the hot summer months while the smaller family business restaurants, hotels and bed and breakfasts often got very little business during that time. The paper describes what a network organization is, how you develop one, why this was so important to this group of small business, how the NOLA network organization was established and worked together, the results of this intervention and finally how this technique can be applied in other situations other than tourism.

Key Words: tourism, network organizations, small business, trans-organization change

1. INTRODUCTION

Network organization have been used in organiza- tion and development change for increasing productiv- ity and effectiveness of several organizations as they worked together to obtain A new goal [1]. The author has been an OD&C professional both as an academic and as a consultant for years and has seen the useful- ness of these networks in many situations both domes- tically and internationally. The goal of this paper is to explain what a network organization is and how they function. Then the paper will explain to the readers how to develop such an organization. When I arrived in New Orleans, Louisiana (NOLA), there was a very different situation around attracting tourist for small business owners as opposed to the large chain hotels and the better known restaurants. This situation will be described and why in 2002 and 03 there would be an advantage for these owners for developing a formal network. Then the case will explain how the NOLA network organization was initiated and established. The effect of this network on tourism for small busi- ness in the local area compared to before the existence of the network and end with a conclusion about how network organizations are useful in other situations.

2. WHAT IS A NETWORK ORGANIZATION?

A network organization is formed with independent organizations that have separate strategies and inde- pendent organization goals. Normally, these organiza- tions would not be working together. They could even be competitors. The goal is to create a superordinate goal [2] that could bring these independent organiza- tions together and enable them to cooperate with each other. A superordinate goal is one that all the organiza- tions find attractive and will buy into because they feel like it is appropriate for their organizational strategy. The definition of a network organization according to Chisholm is a set of autonomous organizations that come together to reach goals that none of them can reach the goal separately [3]. So the organizer of a network organization first identifies a project, then determines the appropriate organizations that might be interested in working on that goal, and then has to come up with the logic that will sell the organizations that it is important for them to be included on this project. The main thing is to analyze the costs and benefits for each organization and make sure that the benefits out way the costs of joining. So for a project around increasing local tourism, the organizer might consider hotels, bed & breakfasts, restaurants, tour guides and possibly the chamber of commerce. All of these care about attracting tourists to their businesses but they are competitors so joining a network may work both for and against them. So the organizer has to determine what solution to a common problem may help these organizations to work together and with the larger number of tourists all would increase business.

3. HOW TO ESTABLISH A NETWORK ORGANIZATION?:

Because Network Organizations are loosely con- nected and often are competitors, the development of a semi-permanent group goes through several stages [4]. The concept of network organizations really comes out of the trans-organizational change literature because of the separateness of the parties and they are underorganized systems. L.D. Brown who is one of the early researchers in trans-organizational change identifies four stages for underorganized systems, which are Identification, Convention, Organization and Evaluation [4].

Figure 1 [5] Application Stages for Transorganizational Development

JOANNE_C._PRESTON_figure1

These stages are extremely important for the devel- opment of a network organization because this is an underorganized system [6]. An underorganized system is a loosely integrated. The organizer must provide clarification for leadership roles, providing structure for communication between the individuals from the separate organizations involved, and specifying job responsibilities among its membership. There for the facilitator must carefully go through all of these stages to provide the buy-in and commitment needed to make the network organization functions so it is efficient and can achieve its goals or the membership organizations.

Identification Stage [4]

Here is where the organizer/facilitator identifies the potential members. Some of these members may already be involved while others need to be identified from new organizations that make sense to be active in the network. This can be challenging because some people may not see the need for their organization to become involved in this activity especially if they see themselves as competitors. For example in this case, a small family business hotel may see other small hotels as competitors and wonder why should I join with oth- ers who I am trying to compete for tourists? Therefore the relationships may very loose or non-existent [4].

Generally the responsibility for making the argu- ment to others lies with the organization to which the organizer belongs. The organizer then has to explore produce or technology exchange, learning or market access, and be fully aware of how this benefits the other organizations even though they are giving up independence to belong to the network [6]. One important element is to clarify what important char- acteristics that the potential members need to possess and identify those organizations that meet those criteria and the people within these organizations that need to be included in the design team. The facilitator must think about the skills and knowledge that each of these people bring to the group. If there is more than one organizer, one difficulty to address is the leadership. Here the organization development (OD) professional may have to be more of an activist in forming the group then he or she would normally do. This small organiz- ing or leadership group will begin making decisions for not only the organizations that originally form the group but for those who join in the future.

Convention Stage [4]

Once the organizations are identified by this leader- ship group, then a discussion needs to be centered on whether or not the group needs to be formalized and is this feasible [6]. Just like the Identification state, the Convention stage needs a great deal of facilita- tion by the OD practitioner or the organizer. In this phase, the organizer must be perceived as neutral and encouraging all positions to be addressed within all the organizations. If the OD professional is viewed as representing everyone, then challenges, informa- tion and concerns will come out in the open. This is the absolute basis for making a network organization work. Here the role of the facilitator is to mediate conflicts among the members and come to reason- able solutions that will work for all parties involved. Remember the organizations that joined this network have their own reasons and motivation to belong and some of these may be beneficial and others may not be beneficial to the network. This puts a great deal of pressure on the organizer/facilitators skills and their perceived power among the network members. The key here is building trust.

Organization Stage [4]

After the members make the decision to form a network, then the members move from the convention stage to the organization stage [6]. Now the members must develop the structures needed for easy interaction and decision making. Now the network has to establish the specific roles within the network, how these roles will interact, the control systems and how they will measure the results to show that the network is or is not benefiting the membership [4]. The organizing group will determine the type of meeting that will help the network have representation and convene that meet- ing allowing the voices of all member organizations to be heard.

The Evaluation Stage [4]

The final and most essential stage is that of evalu- ation. It is assessing whether the network is reaching the goals for the organizations both individually and collectively [6]. The members need to know what is working and what is not so they can make adjustments. It is both performance and satisfaction of the members. Keep in mind those involved in the network are getting benefits but they are giving up independence to be a part of this network and that is a cost to the separate entities. The benefits have to outweigh the costs. In order to determine this, the network must collect the data that will provide that information. The facilitator, the leadership and the design team, which turns into the leadership committee, need to periodically inter- view or survey the membership organizations about performance outcomes and features that are important to the network. This information comes back to the structured leadership so appropriate interventions can be planned and implemented. These data could be a signal to return to a previous stage and that is why there are arrows going back in the modal. This is an absolute must in the life of the organization because without membership satisfaction and buy-in the network will dissolve. Keep in mind that these are independent or- ganizations that stand alone and if the network benefits each in some way, the individual organizations will stay but if it cost more to an organization than what they get in return, then there is no reason to remain aligned with the group.

4. THE SITUATION FOR SMALL BUSINESSES IN NEW ORLEANS IN 2002:

In 2002, the large hotels were booked both in the winter which was the “in season” and the summer “the low season” because they attracted the convention business. They would schedule through the New Or- leans Chamber of Commerce conventions and then the Chamber would lead these tourists to the major hotels. Along with the hotels, the restaurants with worldwide recognition had not trouble filling their tables every night of the week with these convention guests to the city. While the smaller hotels, the family business hotels, the Bed and Breakfasts, and the smaller neigh- bor restaurants would have very little businessduring the summer. Many of these smaller businesses would scramble for patrons knowing that every other business in their particular industry was their fierce competi- tor for guests and income. Some would even close during the summer and take vacations. None of these smaller businesses had anything to do with the others. For example, if one Bed and Breakfast was full for a weekend, they would never think of calling another one and say that they had guests to give away. So the smaller fish were fighting with each other to keep the income that they could during this lean time of the year. The situation needed an intervention. I bought a Bed & Breakfast and since I was an OD consultant with lots of experience in large scale change, it seemed like the perfect opportunity to make a difference not only for myself but for the smaller businesses in town as well as the economy of New Orleans.

5. HOW THE NOLA NETWORK ORGANIZATION WAS BUILT:

Since I owned a Bed and Breakfast, I first ap- proached several of the local B&Bs in the French Quarter, the Garden District and the Faubourg Mari- gny areas of New Orleans since these were the main tourist areas. The French Quarter with all of the bars and small shops, the Garden District with the major restaurants and cemeteries and the Marigny, which has become the new home for jazz.

The owners of the B&Bs in these districts became very enthusiastic about organizing and working to- gether when they had never done so in the past. They began meeting weekly to talk about how we could bring the neighborhood restaurants into the network. They felt that in order to become more legitimate that they wanted to form an organization of licensed B&B in these major tourist areas. So in 2002, the Bed and Breakfasts of New Orleans, Louisiana (BBNOLA) was formed. This group became the basis for the design team. The group met weekly at first and only licensed B&Bs were allowed to become members. This was to protect tourists from those who informally rented out rooms within their homes and did not meet city requirements or fire codes.

The second major thing this group accomplished was to set up a web site called BBNOLA. This web site showed a map of all licensed B&Bs in all these major areas, pictures of the rooms, prices for each room and a way that tourists could check dates, make reservations and place room deposits for the preferred dates. This increased reservations sign up because of the convenience of doing this all online rather than using traditional marketing and the tourists calling around to several B&Bs to find the location of the city that they wanted and the price that they wanted to pay.

After a few months, B&Bs began sharing custom- ers when one was filled and they had a demand that they could not handle. At this point, I felt that it was time to begin branching out to form the actual network with other similar and related small businesses in these tourist areas. The design team of B&B leadership got together in late 2002 and determined other local small businesses that needed to be included in this network. The group determined that small family business hotels and neighborhood restaurants needed to belong. Each of us on the design team approached these businesses in our respective neighborhoods and asked the key leadership of these businesses to attend the next meeting of the design team.

By the end of 2002, we had managed to establish a design team that did in fact meet the underlying prin- ciples such as the identification of the organizations to invite, the establishment of the informal and formal leaders, the content goal, the processes and structures of running the group and logistics [3]. Now the design team needed a way to get all members of the network to working together. After a great deal of discussion, and analyzing the pros and cons of different large scale techniques, the design team decided on a Strategic Planning Conference. This technique for large scale intervention was used by Rupe Chisholm in some of his community work in the greater Pittsburgh area.

1. Basically the organization of the meeting is to [3]:

2. Explore the Environment

3. Identify Current Community Structure

4. Visioning a desirable Future

5. Planning Broad Action Steps

6. Follow through with Post Conference Work

The network in early 2003 right after the Mardi Gras tourist rush and spent two days going through the five steps. All membership organizations came with as many significant employees as possible or at least representation. It was clear that the focus of the network was centered around the lean summer months and the goal was to improve tourism during this time for the smaller hotels, bed and breakfasts and neigh- borhood restaurants in the three major tourist areas.

The network envisioned a package for tourists dur- ing the summer months that would be called “A Taste of New Orleans.” This package would include a four day reduced rate during the week for rooms at the

Bed and Breakfast location of the tourists’ choice and a series of reduced cost dinners featuring specialties of New Orleans that would allow these participants to get a feel for the variety of cuisines available across these areas of the city. The network decided to first advertise these packages on the BBNOLA web site to see if this method of marketing would be successful.

After the two day meeting several committees were formed to get the tickets for meals all over the city and get the web site current with this new idea. Everything was ready by March 2003. This gave plenty of web exposure for the idea to attract tourists for the June summer start.

6. SUCCESS OF THE NOLA NETWORK ORGANIZATION:

The measurements that were taken during the sum- mer of 2003 were 1) traffic on the web site, 2) number of families or couples that used the packages, 3) num- ber of guests during June-Sept for both neighborhood restaurants and B&B and 4) satisfaction of guest with the package. The results showed increases in traffic on the web site from the previous summer with many of the guests choosing the package. The restaurants and B&Bs saw more income during those months than the previous summer and a number of the B&Bs that normally would close during that time did not close. Finally, the guests who did not come to New Orleans with the package wished that they had done so and verbally said that to the B&B owners. This happened so often that we made special arrangements with the restaurants to give them the Taste of New Orleans tickets at a reduced rate but not at the package rate. All guests were highly satisfied with their experience with this package.

In general, the network felt this was a highly suc- cessful experience for the group and continued to plan additional events for the 2004 season. The network grew very close and cooperated more with each other because the benefits out weighted the costs of los- ing their independence. All parties involved in the network improved income and profit during the slow summer months.

7. CONCLUSIONS:

The conclusion to this case is that forming network organizations among competing or closely associated industries can be extremely valuable for everyone. The important issue here is finding a superordinate goal that every organization in the network can buy into, having a facilitator that is neutral and can facili- tate conflict and competition and turn it into coopera- tion and having a design team that can provide the large scale meeting that will unit this underorganized group [6] with the strategies and action plans that will accomplish the united goal. I encourage those of you reading this article to think about some goal that your organization wishes to accomplish and see if forming a network organization with others might help you achieve this aim with the help of others that your organization could not do alone.

8. REFERENCES:

1. Chisholm, R.Developing network organizations: Learning from practice and theory. Reading,MA: Addison-Wesley, 1998.

2. Preston, J.C. and Armstrong, T. R. Team-building in South Africa: Cross cultural Synergy in Action. Public Administration Quarterly, 15(l),1991, pp. 65-82.

3. Chisholm, R. Developing network organizations: Learning from practice and theory. Reading,MA: Addison-Wesley, 1998.

4. Brown, L.D. Planned change in underorganized systems in T. Cummings (ed.) Systems Theory in Organization Development, Chichester, England: John Wiley & Sons, 1980, pp. 181-201.

5. Cummings, T.G. & Worley, C.G.Organization Development and Change, 9th edition, Mason, OH: South-Western, 2009, p. 575

6. Cummings, T.G. Transorganization development. In B. Staw and L. Cummings (eds) Research in Or- ganizational Behavior, vol. 6, Greenwich, CN:JAI Press, 1984, pp367-422.

JOANNE C. PRESTON Doctoral Dean of Management Colorado Technical University 4435 North Chestnut Street Colorado Springs, CO 80907 USA jpreston@coloradotech.edu

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