It's a Harvard Business Review case study in the making: In a cost-cutting exercise, a global conglomerate with $20.3 billion in exports, one that had successfully grown sales year over year for more than a decade, decides to eliminate its centralized marketing, sales and branding budgets. It reassigns one existing employee in each of its offices abroad to take on the additional responsibility of marketing the full range of products, even though that staff member had not previously had any marketing experience.
All other marketing would have to be planned, funded and executed by individual product managers. They would have to figure out by themselves how to grow sales.
This seemingly unlikely scenario is analogous to what is going on now in Mexico after its tourism board was dissolved. A new federal strategy is heavily reliant on delegating responsibility for tourism promotion to embassies and consulates around the world, in each of which one employee will be responsible for promoting not just tourism but all of Mexico's industries.
In the three months since the tourism board was eliminated, state, regional and private-sector promoters have not been idle. As soon as it was clear the nation's new president was not going to back down, they began working on new ways forward, and several have proactively reached out to media to share their ideas.
In the past three weeks, I have been visited by four representatives from different parts of Mexico, from both the public and private sectors, to discuss how they will be driving business.
Dario Flota, director general of Caribe Mexicano, the tourism promotion board for Quintana Roo state, said that in some ways, he has more freedom than ever. Money from the defunct national tourism board had always come with restrictions on how it could be used. Previously, for example, campaigns could support a maximum of three entities: the country, the state and one partner, such as a U.S. wholesaler. No individual resorts or attractions could be added to this tripartite arrangement.
But today, he is on one hand working on bilateral promotions between the state and individual hotels, resort areas, wholesalers or attractions, while also working on promotions that combine all 11 of the tourism subregions in Quintana Roo (which includes Cancun and Riviera Maya) and individual attractions and resorts. Flota is also tapping potential partners for money to participate in these coordinated programs.
Visit Los Cabos has always been semi-independent of federal support, funding itself with receipts from bed taxes imposed by the state of Baja California Sur. It has also traditionally coordinated planning directly with the private sector, but by law, it could not receive any funding directly from hotels, resorts or attractions. Once federal support evaporated, the tourism board, led by managing director Rodrigo Esponda, wasted little time in creating an entity that could receive private funding and help coordinate the spending of public and private money for state promotional efforts.
The high-end, privately developed and owned minidestination Punta Mita, which lies within the broader Riviera Nayarit resort area, recently reprioritized its budget. In doing so, director of operations and marketing Carl Emberson said, it began implementing changes with urgency that likely would otherwise have taken place over a long period of time.
As an example, he cited reducing print promotions in favor of digital solutions and funding road trips, such as the one he was undertaking when we spoke.
The Harvard Business Review hasn't yet analyzed what's going on in Mexico specifically, but it has addressed the situation conceptually. In its March-April issue, the article "Strategy Needs Creativity" by New York University professor Adam Brandenburger contains a section on the benefits of constraints.
Although Brandenburger hypothesizes that self-imposed constraints can actually be a strategic path to innovation, it's also true that when involuntary constraints are imposed, businesses face a stark choice: Innovate or die.
There has been, short term, a dip in international arrivals overall in Mexico. Without speedy adaptation to the new reality, it could get much worse. If viewed as a crisis (which it is by some in the private sector), it's very possible that what will occur next will follow a pattern similar to post-disaster recovery efforts in tourism.
Those efforts often have led to the development of models that accelerate long-term growth. For example, prior to 9/11, the vast majority of U.S. cruises sailed out of Florida. But for a couple of years after the attacks, a significant number of people were afraid to get on an airplane. Emerging from this very substantial challenge was the concept of homeporting. Today, it's difficult to imagine the cruise industry without dozens of homeports around the world.
Skeptics of the Mexican president's approach abound. The dip in international arrivals might continue, but I suspect that if it does, it will not be true for every destination. In fact, there's a good chance that the most creative adaptations Mexican promoters devise this year will eventually become identified as destination marketing best practices, widely imitated not only in Mexico but worldwide.