Just eighteen months ago, the first floor of a gray building in Doral — where cruise company Carnival Corp. is incubating an idea with seismic potential — was nothing but concrete floor adorned in blue painters’ tape.
Often, very big ideas have to start very small.
And Carnival’s idea is big. The current state of its Innovation and Experience Center, as that area of the nondescript building is now called, offers the clues: On a recent Thursday morning, from a single vantage point, one could see workers laying out dry wall to build bathrooms, electricians running ethernet cables, the software team gathered behind computer screens and team members packaging stateroom doors into wooden crates for shipment to the Consumer Electronics Show in Las Vegas last week.
At the show, Carnival unveiled what it has been concocting in secret.
Experts call it “true” innovation: a full re-imagining of how Carnival, as a massive cruise company with 10 cruise lines, approaches the guest experience on its 101 ships by focusing on the software — not the hardware — that could make a cruise vacation memorable, seamless and, most importantly, personalized.
I love when people take a look at an industry and say, ‘How can we improve it?’ Once something like this happens and people see it, you almost can’t go back.
Doreen Lorenzo, adviser to Fortune 100 companies on design and innovation.
“I love when people take a look at an industry and say, ‘How can we improve it?’ ” said Doreen Lorenzo, the director of the Center for Integrated Design at the University of Texas at Austin and an adviser to Fortune 100 companies on design and innovation. “Once something like this happens and people see it, you almost can’t go back.”
The journey to developing a truly novel idea requires the willingness to invest in a radical concept, a dedicated team working with creative freedom and an end product impressive enough to win over CEOs in a 10-brand company. But how did Carnival do that in only a year and a half, a mere nanosecond in traditionally sluggish Corporate America time?
The idea came from Carnival Corp. president and CEO Arnold Donald, who took the company’s top post in 2013. His directive: to identify the individual or team best in the world at exceeding guest expectations, then hire them to take the cruising experience to a new level.
That search led Carnival to John Padgett, the creator of Walt Disney Parks and Resorts’ MagicBand, a personalized wristband that unlocks features at Disney parks. Padgett was hired in 2014; Michael Jungen, also involved with the MagicBand, joined the team in 2015.
Their mandate: to create something unprecedented and guest-centric.
The team realized the best way to do that was to take the experiential features that travelers like about luxury offerings — a personal touch, crew members who know them by name and little hassle — and make them attainable to everyday cruisers on a budget.
“What we are trying to do is democratize elite-level guest service to broader populations,” said Padgett, now Carnival’s chief experience and innovation officer.
Then you have to develop something that can’t be duplicated, Padgett said, like a bottle of Coke. Others may have the ingredients, but they won’t know how to put them together.
What we are trying to do is democratize elite-level guest service to broader populations.
John Padgett, Carnival Corp.’s chief experience and innovation officer
Carnival’s “chefs,” led by Padgett and Jungen, now vice president of design and technology, worked with no time line, no scheduled meetings and a self-designed budget in that desolate room in Doral. Without the pressure of shareholder meetings and CEO presentations, the ideas started to take form — quickly.
The result was the Ocean Medallion, a super-smart and light disc that will replace each traveler’s key card. The medallion’s location technology lets the ship and its crew know where passengers are at all times so they can bring services to them; it also performs simple tasks like opening room doors and paying for goods.
The medallion is a reservoir of passenger information populated by the Ocean Compass, an electronic profile that travelers can quickly fill out and is accessible via smartphones, computers, tablets, thousands of interactive screens around the ship and crew member tablets. That way, the crew knows who each cruiser is as they approach and what their interests are.
The concept is so sophisticated, it can differentiate between each traveler’s goal for a certain trip.
Through the Compass, guests can also book excursions, request drinks (delivered wherever on board they may have roamed), order dinner ahead of time (so it’s ready when they arrive at the dining room) and book a time slot to disembark from the ship — effectively eliminating any time spent waiting or in line.
The more cruisers do, the more the medallion learns about them, allowing it to offer more relevant suggestions.
“Most people in the world are focused on what’s the newest, coolest show — how much more fancy can fancy be? I call that the ‘what.’ Everyone in the world is focusing on the ‘whats,’ ” Padgett said. “To me, it’s the ‘how.’ If you can modify the ‘how,’ you can improve the value of the ‘whats’ without needing more ‘whats.’ ”
The “how” in this case is how travelers can maximize the value of their dollar on a cruise vacation.
The technology also brings with it a degree of intrusion as it tracks a cruiser’s every move, leading to potential privacy concerns. But experts say it is similar to other tech, such as Amazon Prime and Uber, which collect passenger information but then use it to improve the experience, not necessarily the company.
You make it simple, you make it easy, [and] people will use it over and over again. It’s not creating something for the masses and this is how you fit in — this is ‘hey, they understand me, they know me.’
Doreen Lorenzo, adviser to Fortune 100 companies on design and innovation.
Amazon Prime users are loyal to it because it makes life easier with two-day shipping. The site logs users’ activity — so they can find something they once searched for or past orders — and suggests items based on what they browse through, Lorenzo said. Uber creates a similar feeling of personalization. Drivers address riders by name, and users return to it because it’s easy and almost eliminates all waiting.
“You make it simple, you make it easy, [and] people will use it over and over again,” Lorenzo said. “It’s not creating something for the masses and this is how you fit in — this is ‘hey, they understand me, they know me.’ ”
Changing the hospitality industry
In order to rethink the way Carnival approaches the passenger experience, Padgett spent about four months as a passenger.
He sailed various Carnival Corp. brands including Princess Cruises, where the new technology will be introduced in November, and he sailed the competition.
But rather than focus his trips on the newest ships, which is where cruise lines have historically placed their latest gadgets, Padgett started by traveling aboard one of Carnival Cruise Line’s oldest vessels, the 26-year-old Carnival Ecstasy (the ship was renovated in 2009).
“I wanted to experience the breadth of the product,” Padgett said. “If you have Carnival Cruise Line, for example, with 25 ships, and you just experience the new ship, that’s only a very small percentage of your total experience offering — and every guest matters. So whether a guest is on your oldest ship, your newest ship, your lowest-cost package or your highest-cost package, that entire spectrum is your product offering and your experience, not just the things you’re doing best.”
There is this myth in the cruise industry that cruising is complicated. The reality of the matter is it’s not really a myth, [especially] if you’re a first-time cruiser.
John Padgett, Carnival Corp.’s chief experience and innovation officer
On his voyages, Padgett started collecting paperwork. Embarkation and debarkation papers. Stateroom keys and wristbands. Daily activity schedules and port information.
All are the standard fare that most cruisers get when they sail. Every night, a stack of papers will be waiting for them in their cabins with extensive lists on the activities for the next day. The paperwork from one week of traveling alone now covers an entire room at the Doral innovation center.
“There is this myth in the cruise industry that cruising is complicated. The reality of the matter is it’s not really a myth, [especially] if you’re a first-time cruiser,” Padgett said. “When you are communicating this level of complication to them, they can have the greatest experience in the world. But if I didn’t consume all this information, I’m gonna say, ‘Maybe I missed out on something.’ And if I missed out on something, then I didn’t maximize my bang for the buck. If I didn’t maximize my bang for the buck, the No. 1 motivator on visitation has been compromised just by the way you communicate.”
According to the Cruise Lines International Association’s 2015 State of the Cruise Industry Report, value/price is the top reason a consumer chooses to take a cruise.
Those initial trips were the genesis of Padgett’s idea: to create a model that connects the guest to the product in a way that feels authentic to the cruiser and that eliminates any action that detracts from enjoying a vacation.
Padgett and his team started by laying out the ship experience with painters’ tape in Doral. For months, all that could be seen from outside were rainbow walls of Post-it notes through cracks in the plastic covering the windows.
The Ocean Medallion and Ocean Compass technology will debut onboard the Regal Princess from Fort Lauderdale in mid November. The tech will be available on the Royal Princess and Caribbean Princess next year.
It took eight months of work before the plans were shown to Donald, who was immediately taken by the idea. Over the next four months, Padgett and his team presented the project to senior leadership in the company, incorporating feedback. Jan Swartz, president of Princess Cruises, was an early fan of the concept, which is part of the reason why the medallion and Ocean Compass will debut on the Regal Princess when it sails from Fort Lauderdale in mid-November (The tech will be added to the Royal Princess and Caribbean Princess next year. Carnival plans to implement the medallion on other brands in the coming years).
“What we feel is we have a lot of responsibly with the guests,” Donald said in an interview. “And I think for us, we want the guests to experience what they want, and we want to help them do that.”
The team got the green light to start building. In about another eight months, the project would be done and ready for the showcase in Las Vegas.
“It is amazing because they have done this, but it’s not about the speed,” said Lorenzo, of the Center for Integrated Design. The key, she said, is buy-in from management. “The people at the top [have] to say it’s OK.”
The team grew according to the project’s demands with dozens of engineers, designers and analytics experts. Carnival adopted the Google practice of feeding its employees on-site as protection against Doral’s traffic vortex. The concrete floor was replaced, at least in one area, with a replica of the marble Piazza atriums that are central to Princess ships. At one point, Carnival blasted a hole into one side of the building (which also houses the Miami Herald) to make room for a block of prefabricated Princess cabins.
The team spent eight months conceptualizing the project before spending four months showing it to senior manegement. It took about another eight months to fully develop the concept.
The team replicated the entire experience as it would be for a guest, from the scene at the cruise terminal to the seats on the motor coach from the airport to the exact space available on the ships to house the hardware that powers the technology. Two staffers acted as passengers in four-hour walk-through demonstrations that led media and industry experts through the intricacies of the project by demonstrating how a cruiser would interact with each part of the medallion experience.
“Simulating that live environment is really what ensures that it’s going to work and that everyone is going to buy in. Why? Because they experience it themselves,” said Joe Pine, co-author of “The Experience Economy,” which suggested as early as 1998 that consumers truly valued personalized experiences over goods. “It’s not unlike the very first Apple Store. They created inside of a warehouse an entire working Apple Store that they worked on for almost an entire year.”
The comparisons to Apple abound at Carnival.
Padgett said the project is similar to the iPhone: The ship is the physical phone, and the medallion and Compass are the iOS.
While Carnival would not divulge how much the project is costing the cruise company, some educated guesses would put it in the hundred-million-dollar range. Deploying the full MagicBand system at Disney cost that company $1 billion.
Padgett and the team expect the medallion to deliver a return on the investment.
He calls it “the math of experiences.” While it may seem complicated — Carnival even created an algorithm for the process on a white board in the innovation center that factors in values such as time spent in the experience and guest rating — the idea is simple.
If travelers are spending less time in line or waiting for a service, they are spending more time actually spending.
While Carnival would not divulge how much the project is costing the cruise company, some educated guesses would put it in the hundred-million-dollar range.
And, says the team, they’ll keep coming back, as with Amazon Prime and Uber, because the company already knows what they like and knows how to help someone have a seamless experience.
While most of the elements in the new technology focus on how guests obtain services — for instance, onboard casino games can be played on smart phones, as well as in the casino — Carnival has also built in some new revenue streams.
With the Compass setup process, cruisers are instructed to build their tag-along, a digital animal buddy that will appear on screens across the ship when a traveler is near a portal. And when cruisers approach the digital photo wall (which features their photos from the trip), they will also see options among the photos to purchase items with an image of their tag-along on it, such as a shower curtain, a T-shirt or a print. Purchases will be delivered to their home.
But once a cruiser buys something, he or she won’t be prompted to buy it again, said Jungen, the vice president of design and technology.
Carnival is still taking a gamble that travelers will be game to interact with a technology that, in order to function properly, involves a Big Brother-like component. (Cruisers will still have the option to not use the medallion.)
“Some people may feel it may be intrusive. They are going to be have questions as to what information is being tracked,” said Stewart Chiron, a cruise industry expert. “The initial question is, ‘What they are going to use that information for?’ ”
Some people may feel it may be intrusive. They are going to be have questions as to what information is being tracked. The initial question is, ‘What they are going to use that information for?’
Stewart Chiron, cruise industry expert
Padgett is confident that cruisers will buy in because the information is being processed in real time and is used most directly to benefit the traveler during their vacation — rather than analyzed later to improve the experience for the next cruiser or as a revenue stream for the cruise company.
The data collected also helps the medallion identify with more precision the kind of person that traveler wants to be on a certain vacation, allowing it to note whether the cruiser is on a family vacation, a couples retreat or a work trip, for example.
“We make the experience responsive to who you want to be at that point in time,” Padgett said. “No one in the world is doing this.”
Pine, of “The Experience Economy,” said the concept is “revolutionary” and expects that it will change the way the entire hospitality industry approaches guest services. Competitor Royal Caribbean Cruises, for example, is already planning to launch a new app by the summer with capabilities including e-commerce, itinerary planning and conflict management. Royal Caribbean has said it is dabbling in artificial intelligence for future ships.
“Over the next decade — and it may take that long — other companies will be looking to this to first be wowed by it, second be amazed and third to copy it,” Pine said.
It has already happened in the past. Look at iTunes, said Padgett.
“When iTunes was originally created, all of a sudden there was zero hassle and frustration or sacrifice associated with acquiring a new piece of music,” he said. “It was $1 and instantaneous. Of course, that restructured the industry, but the consumer ultimately won because they were able to acquire more musical experiences at a lower cost.”
“And everyone was better for it.”