You plant a flag, you say, “This is the direction that we’re heading”, and then you have to allow creativity to take over. – Expedia's Dana Khosrowshahi on empowering employees
Expedia’s Dara Khosrowshahi says failure made him a better CEO
DARA Khosrowshahi is president and chief executive of Expedia, the online travel-booking company. In Sydney recently, the 46-year-old Iranian-American talked about how he learnt to be a better CEO and why failure is useful.
How do you get creativity and entrepreneurial spirit into a big company such as Expedia with 18,000 employees?
As companies get big you slow down, so we’re actively breaking up the company as we grow. The various brands that we run are organised as very separate independent business units. They have presidents. They make their own marketing decisions. They have their own technology teams. They control their own fate without having to come to the [top level] for approval. They understand general rules of thumb and then they go out and really run their business. And I think with that empowerment comes the ability to take risk, the ability to take shots.
As CEO did you have to adjust your style to accommodate that democracy?
You do have to give up control. One of the early lessons I had when I was first a CEO, this young product manager came to my room and said, ‘You know, can I give you a bit of unsolicited advice – I think it would help if you stopped telling us what to do, but you start telling us where to go. If you tell us where to go we’ll figure out what to do to get there.’ So there is a different kind of behaviour – you plant a flag, ‘You say this is the direction that we’re heading’, and then you have to allow creativity to take over. You have to empower your employees to make their own choices and trust that they will make the right choices. Sometimes they make mistakes but, more often than not, those mistakes allow you to learn and that learning allows you to get smarter and execute better.
How long did it take to become the kind of boss you are now?
I think I had a rough first two years of the job and then I realised that I had to let go.
Do you miss the more creative element of your work that you can’t get as a boss?
We’re moving so fast and taking so many shots, I feel all of us have the opportunity to be creative.
You have talked about the value of failure. What do you mean?
Failure is a part of our everyday life and for us it comes down to math. We ship about 120 to 150 tests per month, and it turns out that a third of the time you’re right, a third of the time the result is neutral and a third of the time it fails. So two thirds of the time the stuff that we’re coding doesn’t work. So when two thirds of what you’re shipping is failing you, as an organisation, get familiar with it. Failure can teach you something and as long as you’re moving very, very quickly you’re going to start piling up the wins. Speed gives you the luxury to be able to fail.
Is there a lot of pressure on people to perform in a company like yours?
We’re pretty proud of our environment and the tenure of our employees has improved very significantly. I think it’s a great place to work for a couple of reasons. One is, nothing against shoes, but we’re not selling shoes. We’re marketing travel! Like this is the best product in the universe to market. Google is a really tough player to go against in the talent market but we’re able to tell engineers, listen we’re a big company where if you ship something, millions of consumers in the world are going to see it, but we’re small enough so you can make a difference. You can go join one of these giant companies and you’ll be surrounded by smart people but no one’s ever going to see what you do. You come to Expedia, you can ship something, you can make a difference with this company.
Does it worry you that you are seen as an old tech company?
It used to worry me but I think some of the stuff that we’re shipping is super cool. I put our technologists up against anybody and I think we’re going to surprise the world.
How important to your success was your background as an immigrant?
We were a very successful family (but) we lost everything when we came to the US and that does drive a certain ambition. My father basically took everything that he had and he used it to pay for my and my brother’s school. When you see the sacrifices your parents make, you want to do well for them. I think the second point is to be grateful and not take things for granted. I think a lot of Americans don’t understand what an unbelievably great country they live in.
Who are your role models?
One role model for me is the chairman of our company, Barry Diller. One of the things that I really admire about Barry is that his ego is based on getting to the right answer, not to be right. He thrives on the process of getting to the right answer. He doesn’t thrive on just being right.
You graduated from Brown University in engineering? What advice would you give to an engineer coming out of Brown today?
Surround yourself with people who you think are super smart and who you like. I think it’s really important to come to work and work with people you like. The second piece of advice is not to plan their lives too aggressively. I see people saying: I need to have a promotion in three years or I need to make a certain amount of money in five years. The best thing you can do is work for someone super smart because the world may change incredibly fast in three or five years but smart people always stay smart.
Should school kids learn coding?
I was an engineer by training and I think engineering and coding teach you to break down problems. Coding can create very complex behaviours but you have to build those complex behaviours through very simple steps and the skill of taking a complex problem, breaking it down into its component parts, so that you can start analysing that problem and acting on it or understanding that problem, is quite fundamental and a really important business skill. Coding teaches you that. Engineering teaches you that.
What do you think the hotel market will look like in 10 years?
In a sharing economy, the definition of what you call a hotel will change and the experience hoteliers deliver to customers really has to change and become much more enabled by technology. I think there’s this attitude that there’s either technology or there’s service. I think the winners will be those who realise it’s technology and service.