Game Theory, Biology, and the Future of Business Travel

Game Theory, Biology, and the Future of Business Travel

There is a thought experiment in game theory describing why competing businesses tend to “cluster.” They sometimes cluster physically, by locating close together—as in the case of gas stations, fast food restaurants or hotels—or else they cluster by attempting to neutralize the other’s differentiators by responding in kind. This is sometimes called the “gas station” or “hot dog stand” game.

The basic idea is that by moving closer to your competitor, you can take away some of their customers while keeping your own. This process tends to continue until everyone is in the same place: geographically, in terms of product offerings, or in terms of behaviors.

This leads me to believe that, post-COVID, business travel will rebound, and people will gradually return to offices.

Like many in my company and industry, I was a frequent business traveller pre-COVID, clocking a couple of hundred thousand miles annually. While not as many miles as some, my trips also tended to be of reasonably long duration because I was generally leading a multi-day workshop or some other hands-on activity with our clients, not just in-and-out for a quick meeting. This means that in addition to airplanes, I spent a lot of time in hotels, too.

Pre-COVID, I generally traveled every week. However, post-COVID, I haven’t been on a plane since the end of February—closing in on 5 months and counting. And like many who have found themselves “working from home” for prolonged periods of time due to COVID, I have—thankfully—found ways to do my job effectively (I like to think) without any travel at all.

So when the scourge of COVID is no longer forcing us to stay home, will we choose to work from home anyway? Many of us have proved conclusively that we can do the job without travel and without even a physical presence in an office building. So will we?

I don’t think so, and the reason is the “hotdog stand game.”

 

The Biology of the Business Meeting

The human organism evolved, obviously, prior to the invention of Zoom and other unified communication technologies. It turns out that the biology of physical meetings is much more involved than, as a “digital” guy, I ever would have supposed. In-person, our heart rates tend to synchronize as we establish trust. Our micro-expressions (facial expressions that last for a small fraction of a second) and other physical signals are noted and processed unconsciously. Our bodies unknowingly exchange chemical signals that express emotions, such as a willingness to co-operate. A face-to-face meeting is quite a complex “soup” of chemical and physical signals that goes far beyond the overt content of the meeting.

Some of these signals can of course be captured online, now or in an imaginable future. And we can make some behavior changes ourselves to adapt to the limitations of current technology. For example, we can learn to give some of the signals explicitly that we would normally give implicitly in a traditional face-to-face meeting, like, “I didn’t understand that—can you please talk more slowly?”

I find myself being more direct online sometimes than I typically would be in person; you might have found yourself making similar adaptations. However, it’s hard to claim our technology has surpassed 200k years of evolution (for us anatomically modern humans) in terms of basic human emotions, like establishing trust. I think we have to give the advantage here to the biology of physical meetings, now and for a long time to come.

This leads us back to our “hotdog stand game.”

 

Is In-Person Advantageous?

As COVID restrictions loosen, suppose you perceive a colleague or competitor as winning some advantage through spending time in the office, or by having a face-to-face conversation with a prospect. Perhaps it’s getting the green-light for a new initiative, getting a promotion, or making a sale. What is your next move? I think most of us would likely respond by spending more time in the office or seeking a face-to-face sales meeting if we believe this was an important factor in the other party’s success.

Note that the face-to-face contact doesn’t really need to be an important factor—we and the other party simply have to believe it is. The other party’s response to our response is then to amplify his or her own desire for more time in the physical office or more face-to-face sales meetings, and so on. Eventually, we “meet in the middle” until we either are back in the office full-time and traveling as much as we did before COVID—or until there is no perceived advantage in doing any more.

Social behaviors have tremendous momentum, underscored by biological processes and hundreds of thousands of years of evolution. Seeking face-to-face contact with those having power over our lives—whether they were tribal elders, religious figures, kings, executives, or potential partners—has probably been a driver in society at least since “mitochondrial Eve” emerged about 200,000 years ago.

Working in close proximity to others, and to those who have power over us, is a behavior that dates back tens of thousands of years, to the invention of agriculture and probably before. As long as people still perceive that face-to-face contact is key for developing collaborative working relationships, establishing mutual trust around shared objectives, or “closing the deal,” then face-to-face contact will resume at some level as soon as it again becomes possible. And, because of the “hotdog stand” paradigm, I believe all of us will revert to close to pre-COVID levels over time—because in a competitive environment, things converge to the middle.

 

I’m Choosing Virtual for 2020 (and Maybe 2021)

There’s no doubt in my mind that where we have learned that new technologies enable us to do things better than we could conventionally, those technologies will be whole-heartedly adopted post-COVID. For example, I have learned that “virtual” is a better means of technical information-gathering when architecting new products than most in-person discussions. I’ll use virtual for that post-COVID. I also think we’ll find more flexible ways of working and alternative means to do some of the things that used to require travel. However, there will be continuing pressure to locate our “hotdog stand” closer to our colleagues and competitors.

I don’t expect that I will qualify for my normal “frequent flyer” and “frequent guest” loyalty programs this year, at least evaluated against the mileage / nights stayed standards of previous years. I think in the year 2021 I might qualify again, though I expect I’ll be traveling less than I did pre-COVID. But I’m pretty sure that by 2022, I’ll be back to just about my previous levels, all things being equal. And back in the office as well.

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Dr. Jim Walsh

CTO

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