Innovation

Bruce Poon Tip: Growth guru

Written by Rick Spence

Growth guru |   Top management tips

The summer sun shines above the ruins of Machu Picchu, high in the Peruvian Andes. In Thailand, the moon is rising as American, Canadian and Aussie tourists vie for bargains at Chiang Rai’s bustling night bazaar. Both locations are among the favourite destinations of Bruce Poon Tip, founder of G.A.P Adventures Inc., the world’s biggest adventure-travel firm. But on this cold day in mid-December, Poon Tip might prefer to be anywhere other than in his exposed-brick Toronto headquarters, negotiating with a tough Russian shipping line to lease an icebreaker to fulfill a commitment to his partners and customers half a world away.

In the 17 years since he founded G.A.P Adventures, the world has been Poon Tip’s oyster. But now geography was working against him. Three weeks earlier, on Nov. 23, 2007, G.A.P’s $10-million icebreaker, the MS Explorer, sprung a leak as it squeezed through pack ice just off the northernmost tip of Antarctica. Some 150 passengers and crew abandoned ship as it slowly listed to starboard. The passengers and crew drifted five hours in open lifeboats before being scooped up by three passenger vessels that had steamed to the rescue. The bone-chilling sea had been blessedly calm, so some passengers called it the best adventure they’d ever had.

Still, the world’s media hammered at the story for days — questioning deficiencies in Explorer‘s maintenance logs and staking out Poon Tip’s Toronto home in their breathless search for news.In the end, all the passengers arrived home amid promises of compensation and seats on future trips. But G.A.P’s problems weren’t over. Customers booked on upcoming Antarctic cruises were demanding to know what G.A.P was doing for them.

As a champion of customer experiences, Poon Tip can’t stand disappointing passengers. He sent a few team members to look over the Polaris, a Danish-built icebreaker sitting out the winter in frosty Murmansk, 1,500 km northwest of Moscow. Since Polaris carries only 65 passengers compared with Explorer‘s 99, operating the new icebreaker would cost G.A.P more money than simply cancelling the Antarctic season. But Poon Tip and his management team agreed it was the right thing to do — for the customers and booking agencies who depend on them.

Still, hiring Polaris was another story. The owner, Murmansk Shipping Co., treats the Arctic expedition vessel like a favourite child. When Poon Tip offered to charter the ship, Murmansk officials dragged their heels. They wanted more money, they needed more time. With January passengers anxiously awaiting news, Poon Tip sent an e-mail requesting the ship leave as soon as possible. The two sides finally reached agreement, but the next day Murmansk demanded more money. “This negotiation is so tough. I don’t know if we’re going to get anything out of these guys,” a weary Poon Tip said at a G.A.P managers’ meeting. While he was willing to lose some money on this grand gesture, there had to be a limit. So he told the Russians to forget it. The next day, Murmansk backed down on the price and offered to ship out in three days.

Bruce Poon-Tip has come a long way from naïve young backpacker to hardball negotiator. But he is still the determined person who rejected a motorcoach tour of Thailand in favour of a healthier hike along the back roads to remote villages. Poon Tip’s love for local cultures, and his commitment to change the way people vacation, have helped him negotiate his way to the top of the fast-growing adventure-travel business. From a startup company faxing out brochures in a Toronto garage, launched on $10,000 in savings and a $5,000 advance from VISA, G.A.P Adventures has become a $120-million-a-year colossus. Offering 1,000 tours on seven continents, it serves 70,000 customers a year. Last fall, National Geographic Adventure magazine ranked G.A.P as the world’s No. 1 “do it all” tour outfitter. But as the sinking of the Explorer suggests, G.A.P’s journey hasn’t been easy. And now that it sits atop its niche, things aren’t getting any easier.

“There’s no precedent for a company of our size in this industry,” says Poon Tip. And he’s learning that “it’s always more difficult to be the one being chased than the one doing the chasing. It’s something I’ve worked very hard for, but it still takes a lot of adjustment.”

Besides staring down Russian shipping companies, the challenges on Poon Tip’s desk include finding new ways to hang onto G.A.P’s prime customers, fighting off a costly legal offensive by San Francisco-based clothing retailer Gap Inc. and outmaneuvring countless copycats plus TUI Travel PLC, a £12-billion-a-year travel giant that’s acquired numerous G.A.P rivals. Bigger yet is the task of perpetuating G.A.P’s spirit, creativity and core values as the firm becomes a sprawling global entity run by professional managers rather than entrepreneurial instinct.

With such a busy in-tray, you might think Poon Tip longs to grab a pith helmet and set out for Africa. But that’s not so. “I’m not done,” he says. “I’ve only just developed this company to a point where I can do what I want to do. I’m working hard, but I’m having more fun than ever.”

Indeed, Poon Tip was an entrepreneur long before he was a backpacker. Born in Trinidad to Spanish-Chinese parents who moved to Jamaica and then to Calgary to seek a better life for their seven children, Poon Tip grew up working hard. “I had three businesses before I was 16,” he says. “I think of G.A.P as my fourth company.”

While his father was building a chain of gas stations, 12-year-old Bruce was acquiring paper routes and subcontracting delivery to 10-year-olds too young for routes of their own. He later bred Dutch dwarf rabbits for sale to Calgary pet shops. And at 14 he won a Junior Achievement award after he organized local children to produce colour-changing bookmarks that he persuaded pharmacists to stock beside their cash registers. He sold more than 10,000, he says: “I couldn’t get them made fast enough.”

Studying business at Calgary’s Mount Royal College, Poon Tip indulged his love of travel with a tour of Thailand. He was disturbed by his experience. “I was quite young and very political,” he says. “It angered me the way these air-conditioned coaches and Western environments are created for tourists. You never really come in contact with the local people.” He much preferred solo travel, riding local buses, staying in family-run hotels and eating indigenous foods. Not everyone, he knew, was ready for such an uncertain adventure, but he sensed demand for low-cost, grassroots adventures that travellers don’t have to plan themselves.

Based on his childhood business successes, Poon Tip moved to Toronto and launched G.A.P Adventures in 1990. You think that’s confidence? His first brochure proudly warned, “If you’d like all the comforts of home, we suggest you stay home.”

Starting the company was easy, says Poon Tip: identify core destinations, then find young people who love exploring foreign lands to create and lead the tours in low-impact groups that never numbered more than 12 people. The company grew quickly by appealing to a new breed of traveller: single tourists, many of them women. Even today, G.A.P eschews the “singles supplements” that price many tours and cruises out of reach for lone travellers.

Marketing through live seminars and slide shows, within five years G.A.P was offering tours on five continents. Poon Tip’s “gap” had turned into a gusher. G.A.P’s brand of “responsible tourism” has emerged as the ideal solution for increasingly socially conscious travellers. Today, the market for adventure travel is thought to be growing by 20% a year, as more travellers seek out gorillas in Uganda, cooking classes in Peru or elephant rides in India. G.A.P has grown its revenue by at least 30% every year, not just by creating a new type of tourism but by branding it as its own. Poon Tip has become a high-profile proponent of ecotourism and social responsibility. He has worked with the World Bank to help impoverished Third-World villages finance new tourist lodges, while G.A.P was one of the first tour companies to pull out of Burma after the military junta forced G.A.P to use low-paid government contractors instead of letting the company make more generous deals with local suppliers.

Whether through high ideals, slide shows, travel agents or its ever-growing website, G.A.P has always been a marketing machine. “It doesn’t take a rocket scientist to run a good tour,” Poon Tip told PROFIT in 2003. “The skill is in the selling.”

Although G.A.P today has almost 600 employees and 20 offices around the world, the spirit of 1990 still rules. As president, CEO and keeper of the company’s Birkenstock culture, Poon Tip insists that G.A.P stays true to its entrepreneurial roots. Although he has hired more senior managers from outside in recent years, Poon Tip is careful to bring in people who match the business’s image as a “company of travellers.” And he makes sure potential executives know that they’ll have to adjust to his management style, which combines hands-off detachment with high expectations of service quality and a relentless appetite for innovation. “We know we work for a guy who has a new idea every time he gets out of the shower,” says one G.A.P manager.

Most of all, Poon Tip demands growth. “I’m a builder,” he says. “As long as I’m here, I’m going to continue to push.” A bigger G.A.P, he insists, has the opportunity to become a better company, with the resources and customer numbers to push innovation and expand tours into areas no one else can — in West Africa, for instance, or Iran. “With size, we can do more.”

Poon Tip has his admirers. Benson Cowan, CEO of Toronto’s Butterfield & Robinson, a luxury tour operator, says he has been watching G.A.P’s boss for years: “I think he’s one of the rare Canadian entrepreneurs who really has a sense of how to build a brand and build a company, and what he has done is impressive.” Noting that the typical price of a G.A.P trip ($900) is equivalent to the single supplement on a Butterfield & Robinson holiday, Cowan praises G.A.P’s ability to turn a profit on lean margins. “They run a tight ship,” he says. “The high-volume, low-margin makes for a hard fight, so you have to be really good at it.”

But Poon Tip bristles at suggestions that G.A.P’s margins are substandard. “Our margins are the same or better than anyone’s,” he says. “Our price points are less because of our volume.” He says G.A.P’s profit this year should be between 6% and 10%.

So how does G.A.P maintain its growth pace? Here are five key strategies:

»Expanding product lines

Since its first hiking trip, G.A.P has consistently branched into new destinations, means of transport (boats! bikes!) and travel “styles.” It now has 12 classes of experience, from “Roam” for no-frills 20-somethings to special-interest tours for photographers and gourmets, among others.

(Poon Tip complains that as fast as G.A.P develops new trips, other companies copy them. Still, no competitor can hope to match its volumes: in 2007, G.A.P developed 250 new trips.

»Deeper relationships with other travel marketers. For instance, G.A.P has preferred relationships with certain air-flight specialists such as Flight Centre, and recently signed a marketing deal with Expedia.ca, which G.A.P hopes will lead to deals with Expedia operations in other countries.

»Acquisitions

Early on, G.A.P had no ability to sell airfares, and the airlines weren’t willing to deal with new, small players. In 2002, G.A.P bought Global Connections, a Vancouver-based flight consolidator specializing in low-cost airfares to Latin America, to get its hands on a critical mass of wholesale seat licenses. In five years, it tripled that initial volume. Similarly, Poon Tip created a new line of business when he bought the Explorer out of dry dock. Antarctic tours were expected to produce almost 10% of G.A.P’s sales this year, revenue that G.A.P is hoping to regain next season with another ship.

»Innovative marketing

The Great Adventure People TV show, which chronicles some of G.A.P’s most exciting trips, is now shooting a new season of shows for CTV’s travel channel and other broadcasters. And at a time when travel bookings are massively migrating online, Poon Tip has opened profitable storefront outlets in Toronto, Vancouver, Calgary, New York and Melbourne. “No one but me would invest in bricks and mortar these days,” he says, “but it proves our market leadership.”

»Target marketing

G.A.P prides itself on staying in touch with its market. Under marketing VP Susan Hayes, a former Workopolis.com executive who joined G.A.P last May, the firm has focused its ad campaign on supplier relationships, and is revamping its website to create more of a community for adventurers. “I have a boss who lets me run,” says Hayes, “so the sky’s the limit.”

With last fall’s merger of U.K.-based First Choice and the tourism division of Germany’s TUI AG into TUI Travel PLC, Poon Tip and the rest of the industry face a formidable competitor with 30 million clients in 180 countries. The new TUI houses more than 100 brands of travel agencies, airlines and tour operators, including more than 30 G.A.P rivals. The threat is that TUI will use integrated operations and marketing to reduce costs and tie up customers forever. But Poon Tip says companies bought by TUI rarely live up to their billing, perhaps because their former owners rarely hang around long. “We eventually eclipse those companies because we’re able to be more nimble and creative,” he says.

When asked the source of G.A.P’s competitive advantage, Poon Tip is quick to credit his people. His company has one product: service. And it has to provide that product to small groups all over the world, week after week. If it can’t provide flawless logistics and unique experiences, customers will never return.

Poon Tip rarely gets involved in hiring (or other day-to-day operations) anymore. His role is to hatch ideas, plan for the future and jump in when he can make a difference (as in the negotiations with Murmansk). Although Poon Tip interviews only top management candidates now, he says his attitude-based hiring formula permeates the company, separating the doers from the dreamers:

»Hire people who are passionate about the product

If they aren’t so now, how will they motivate themselves or others later? (All G.A.P staff get four weeks’ holidays and a free trip per year.)

»Probe an applicant’s mindset with specific questions

“I want to know how people handle certain situations, what problems they’ve worked on, how they pitch ideas, how they would describe their work ethic.” If a candidate sounds too smooth, ask how someone else — say, a colleague or subordinate — would describe their work style. “Within five minutes I can tell if you’re a winner.”

»Interview for culture fit

At G.A.P, second interviews for senior positions are attended by the full management team, who later voice their opinions. Poon Tip admits that running his choices by that team has prevented him from making several hiring mistakes.

»Maintain a culture that encourages effort yet acknowledges individualism

“Ninety percent of our success comes from building a winning culture,” says Poon Tip. “As long as we’re true to our company culture, we’ll get people wanting to fly the flag for us.”

Still, sometimes G.A.P’s service slips up. Some clients complain of trips cancelled without explanation. Others question their tour leaders’ commitments to their group. But some of the harshest criticisms have emerged from the Explorer sinking. While some passengers praised the care they received from the ship’s crew and G.A.P’s staff on the ground, others are complaining of negligence and worse: they say the launching of the lifeboats was sloppily handled, and that the lifeboats were overcrowded and inadequately supplied. Once the passengers were safe on the ground, they say, their need for new clothes or information on how to get home was largely ignored. “I was very unhappy with the treatment we received and the lack of follow-through,” says one unhappy passenger who waited days to find a pair of shoes his size to replace those left behind on the ship.

G.A.P, which sent several senior managers to South America to work with the stranded survivors, insists that most passengers were happy with the way things worked out — and that some even booked passage on the Polaris to finish their tour. The truth will undoubtedly emerge from investigations now under way. But G.A.P’s executive team got top marks from most observers for their handling of logistics, the media and communications with family throughout the crisis. “They’re obviously a well-run company to get through that,” notes Butterfield & Robinson’s Cowan. “On our trips, if our bike seats are too hard, we hear about it.”

The disaster “was a test for us,” says Poon Tip. “You rehearse these things all the time, but you never really know if you’ll be ready.” He admits he had little to do with handling the crisis. Each member of his critical-incident management team (basically, his top executives) worked in his or her own area, doing what they do best, with little need for guidance or direction. In a way, it was a vindication of the G.A.P management model, says Sol Mandel, the firm’s COO. A part-timer who mainly oversees financial and legal affairs, but not trip operations, Mandel helped set up the company’s management structure. He believes the fact that Poon Tip is so hands-off has encouraged development of a whole team of leaders — entrepreneurs, in effect, who take full responsibility for their departments and their results. That willingness to take the initiative meant no one needed to be told what to do on Nov. 23.

But that’s hardly the end of G.A.P’s adventures. In January, Poon Tip spent two days being examined by lawyers for Gap as part of the retail giant’s trademark-protecting lawsuit, which coincided with the opening of his retail stores. Poon Tip claims not to understand what Gap is after: “There is nothing more unattractive to me than being associated with that brand.” He says hundreds of firms in North America have “Gap” in their name. He considers the lawsuit a crude attempt by a giant company to intimidate his firm: “The court date is years and millions of dollars away.” Couldn’t he end it by changing the company’s name? Maybe, says Poon Tip, “But why would I do that? Our name isn’t the same. There are periods in our name. There’s €˜Adventures’ on the end.” He doesn’t seem to be giving an inch.

In fact, Poon Tip seems pretty sure about how the future looks. He says the company will continue to grow, through both expansion and acquisition. Maybe he’ll buy some more companies, get into book publishing or possibly open some exotically themed (but authentic) restaurants. The one certainty is that he expects G.A.P to be a $500-million company in five years. Despite numerous offers to sell the company, he doesn’t expect to exit G.A.P any time soon. “I used to have this idea that I wanted to do something different — to prove that I wasn’t just a one-trick pony,” he says. “But that was in my youth. Maybe I am just a one-trick pony, and I’ll have to be satisfied with that.

“It’s a pretty good trick, after all.”

Originally appeared on PROFITguide.com
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