| Travelocity's CEO: Stick With What You Do Best Investor's Business Daily Mar-26-2007 Morey Stettner In 1999, Michelle Peluso joined a team that was developing a Web site for last-minute travel deals. Called Site59, it was named for the 59th minute. As chief executive, Peluso pushed managers to consider parallel businesses beyond last-minute travel such as last-minute gift buying, dry cleaning and even baby-sitting. "We got carried away by our enthusiasm," admitted Peluso, 35, now president and CEO of Dallas-based Travelocity, which is owned by Sabre Holdings . In the six months after Site59's 2000 launch, Peluso and her team met with potential suppliers who could help expand the site's product and service offerings. But Peluso began to realize something was wrong: The notion of delving into other businesses was diverting them from what mattered most: making Site59 a successful tool for last-minute travelers. "With a startup, the tolerance for mistakes is smaller than if you're running a large company," Peluso said. "We were so hugely excited about the technology we were building that we spent too much time and intellectual firepower on applications we could do rather than our core application that we had to do." Peluso had secured a fixed pool of funding. Given the finite amount of cash on hand, she lacked the financial capacity to branch out into other businesses. After concluding that the firm's best return on investment was to focus on its main business, Peluso redirected her team's attention. Rather than prodding them to dream up new projects, she made sure they ran a top online travel site. "I learned we needed to focus on doing one thing incredibly well before exploring other business models," she said. "We could have got out of the gate faster had we concentrated on our core business from the start." Yet Site59 survived and was eventually acquired by Travelocity. Peluso then became Travelocity's chief in December 2003. "Now I spend a lot of my time on the issue of focus," she said. If an employee suggests a promising idea such as expanding into adventure or luxury travel, Peluso knows better than to say "Sounds good. Explore it and write a business plan." Instead, she might respond: "We don't have the bandwidth for that now. Let's double down on our core business and revisit your idea in six months." Because there's glory in creating "the next big thing," Peluso wants workers to bask in psychic rewards simply for doing their job well. That's why she recognizes employees who excel in low-glamour but critical roles. "Our systems engineers keep the site up and running, so I'll take them to lunch and find points of celebration," she said. Peluso is onto something. Travelocity booked $10.1 billion in gross travel in 2006, a 35% increase from 2005. Annual revenue grew 31% to $1.1 billion. |
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