Ep. 320 – Corporate Innovation in Uncertain Times with Lisa Lutoff-Perlo, Celebrity Cruises CEO

Ep. 320 – Corporate Innovation in Uncertain Times with Lisa Lutoff-Perlo, Celebrity Cruises CEO

On this week’s episode of Inside Outside Innovation, we sit down with Lisa Lutoff-Perlo, former CEO of Celebrity Cruises, and author of the new book Making Waves. Lisa and I talk about the world of innovation in a legacy industry, role of talent and teamwork, and the skills required to navigate the ups and downs of working in uncertain times.

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Transcript for Interview with Lisa Lutoff-Perlo, former CEO of Celebrity Cruises

Lisa Lutoff-PerlowBrian Ardinger: Welcome to another episode of Inside Outside Innovation. I’m your host, Brian Ardinger, and as always, we have another amazing guest. Today we have Lisa Lutoff-Perlo. She is the former CEO of Celebrity Cruises and author of the new book Making Waves: A Woman’s Rise to the Top, Using Smarts, Heart, and Courage. Welcome, Lisa.

Lisa Lutoff-Perlo: Thank you, Brian. Pleasure to be here.

Brian Ardinger: I’m excited to have you on board, so to speak. No pun intended. You’ve had an illustrious career in hospitality going from, I think you started out maybe selling cruise packages all the way to becoming CEO of a, a major cruise line and a non-linear journey along the way. So maybe give us a little bit of background on your non-linear journey to where you are today.

Lisa Lutoff-Perlo: Thank you. You captured it well. I did start selling door to door in New England where I’m from. Calling on travel agencies and promoting our brand so that they would sell more of us than anyone else. My first promotion with the company came four years later, 1989.

I will have been with the company 39 years this year. Crazy. Then yes, I did so many different things. I was in sales in many different roles for 17 years. I went over to Marketing for five, then I went into operations at Celebrity, one of our other brands for seven years. Then I went back into a bigger operational role at Royal Caribbean, and then finally in 2014 I came back to Celebrity in the position of President and CEO.

So it was a great journey and I learned so much along the way. Which really helped me with the innovation part of what our conversation will be. It was great experience to have done so many different things within our company and also seeing so many aspects of the industry.

Brian Ardinger: One of the interesting things and why I wanted to have you on the show is the cruise industry, it’s been around. It’s a legacy business. It’s been around since what, the 1800s or so moving passengers across the ocean.

And you’ve, in your role, both from the beginning to where you are now, moved the bar from what a traditional legacy business was to you know, you’re launching the Edge Series and new ships out there and really redefining what cruising looks like. The people that you brought on board, things like that. Can you talk a little bit about how did Celebrity look at innovation process?

Lisa Lutoff-Perlo: When I became president and CEO, the Edge series was on the drawing board, if you will. It was actually all drawn, and it was ready to go to the shipyard to be built. And I realized that when I came into this role that this new series of ships, there were five on order and it meant a 72% capacity increase over a five- or six-year period of time, which is a big capacity increase. Especially for a brand of our size that really wasn’t as well-known as it needed to be and didn’t have as much demand, consumer demand as it needed to.

It wasn’t enough of a brand to be reckoned with within our industry. So, I knew that we needed to transform the business. I knew we needed to transform the financial performance. We needed to transform the demand for the brand. And to do that, we needed to be very innovative and transform our brand and how people thought about cruising, especially within the affluent traveler market that we were looking to grow so significantly.

And our ships aren’t small. They’re not really large, but they’re 3000 person ships. So, you know, I really had to look at it through a completely different lens and say, what’s going to be different and innovative about Celebrity that’s going to draw people to our brand over others that were supposedly in our competitive set.

Brian Ardinger: You know, the process of launching a new ship takes a long time. And a lot of times it’s probably one of those things, like we talk to startups a lot of times and they talk about this iterative process and it’s very fast.

You know, it’s like I can quickly, you know, launch a new feature or something and test it with the marketplace. With something like a ship, you know, there’s a large lead time at, so it must be more difficult to innovate. So how do you look at innovation and having to be, you know, 10 years ahead of this schedule when you have, you know, a five-year build cycle, for example?

Lisa Lutoff-Perlo: And that’s exactly what it is. Sometimes six and sometimes seven, depending. And for Celebrity, at the time we were launching the Edge series, we wouldn’t have launched a new ship for 10 years. And that’s a long time. If you look at the environment that we’re in today, you know that Brian better than anybody.

Right. Everything changes at warp speed, and one of the things I say in the book, which our boss told us all the time, was if Henry Ford asked people what they wanted, they would’ve set a faster horse. Right? A lot of times you have to be ahead of consumer trends, and a lot of times people don’t know what they want until you put it in front of them and they say, oh, wow. What a wonderful idea.

So you have to be in touch with your brand. You have to be in touch with consumers. You have to be in touch with what’s going on in hospitality in general. And you have to take advantage of the things that you have as an industry that no one else has. So being at sea. Consumers always say, we want a bigger connection with the ocean.

So we transformed how people could connect with the ocean. We transformed the culinary experience. We transform design because people always look at ship design as ehhh, you know, nothing special. Why would I who traveled this way and go to these types of places, want to take a cruise because it’s so pedestrian, right?

And so my desire and goal was to completely change the perception of how people thought about cruising and use the celebrity brand as a way to break into a whole new different consumer mindset and feel. And that takes a lot of time, energy, effort, and a lot of understanding about consumer trends in hospitality.

Brian Ardinger: So, are there particular things that you really dove into or, or looked at to help give you that insight or guidance as you were building these things out?

Lisa Lutoff-Perlo: So, we did a lot of research with our customers, not only our customers, but then we cloned them and said, show me other people that look like our customers. Show me other people that look like the consumer we’re going after, and what are the things that they are really looking for.

So, one of the things that I will talk about that I think was really transformational was what we call the Infinite Veranda State Room. So, for as long as I have been in this industry, and I just told you how long that is, it’s a really long time, almost four decades. People have been saying they want more space in their state rooms.

Well, as you probably can imagine, you have a steel structure where you have limited real estate. You need certain density to achieve the profitability that you’re looking to achieve. And yet consumers want a larger state room. So we thought about how do we do that in a completely transformational way?

And that’s how we came up with the infinite veranda. And what that did is it blurred the line between inside and outside. The veranda became part of the state room, which gave us 20% more space in the state room. It allowed us to make the bathrooms 28% larger, and then it allowed the balcony, if you will, to become multi-use.

You could either close the Bifold French door and make it part of a balcony, or you could open them and make it part of the state room. Now that window that goes up and down, for lack of a better word, so that people would really, will really understand. It had only been down on river cruising. It had never been down on oceangoing vessels because as you can imagine, conditions in the sea are much different than cruising up and down the river.

And we had to completely re-engineer the ship. We had to bring in a company that could do this for us. We went from an exoskeleton to an endoskeleton profile of the ship, which actually really made the ship much more beautiful. And it was an engineering feat that we were able to do this and we were the first one to do it.

And what’s interesting is not everyone loved them. Some of your traditional cruisers didn’t. But I think as many others who would be on your show would say sometimes there’s risk in innovation. Not everyone loves it at first, but now they are widely accepted and heralded, as you know, one of the most innovative things to ever happen in the cruise industry.

Brian Ardinger: And you did a lot of things around the customer experience, I know in Celebrity to change the game and change the way people thought of your brand and the crew’s experience there versus maybe a traditional family focused or something like that.

Lisa Lutoff-Perlo: Yes. You know, we hired a Michelin star chef to be our head of culinary. And we partnered with Danielle Ballou, who not only consulted with us on menus in our suite restaurants and other restaurants, but also opened his first restaurant at sea on a Celebrity ship because again we wanted to up the game and change the perception of cruising.

And especially on along the dimensions that were really important to Celebrity. Culinary design, destination, how people experience the destination, service accommodations, what their rooms were like in the appointments of the rooms. You know, even in the state rooms where the mirror in the bathroom opened up so you would get a view of the ocean. Again, because everybody wanted a closer connection to the ocean. So, we looked at every opportunity to do that.

Brian Ardinger: You’ve also been very innovative from how you have built the company. So, in your book, you start off about your experience with International Women’s Day, the tour that you were planning for that. Can you talk a little bit about that and how that ran into the uncertainty of Covid and things like that?

Lisa Lutoff-Perlo: Oh goodness, yes. You know, one of the things that I learned as a woman ascending within this industry is that in certain parts of our industry, it’s very male dominated. I guess we’re not too much unlike other companies, but as you can imagine in the maritime industry, a very old and traditional industry, it was mostly men.

When I got into operations, I really saw the imbalance of men and women, and as the first president and CEO of one of our brands in our company, I really looked at my role as an opportunity to improve the gender balance. So I worked with amazing men who also believed in more gender balance just like I did, and they went out and recruited amazing women that were mariners and who were really good at what they did.

And one of the ideas that we had, an innovative idea, we called it history making and barrier breaking, was wouldn’t it be wonderful to have 100% of the bridge manned by women? Our Head of Marine at the time, I thought it was going to take three years to be able to go out with that big idea, but he said we could do it now.

And as focused as I was, I didn’t realize we had made so much progress. And we did. Nine months later we sailed on International Women’s Day, March 8th, 2020, with a 100% women crew on the bridge, and every leader on the entire ship, regardless of the department, was a woman. It was a historic event. It was one of my proudest moments in another way that no one still has even come close to Celebrity in creating the gender balance that we did and also the culture and environment that made them feel welcome.

And then of course, as you know, when I gave you the date, March 8th, 2020. On March 15th, 2020, we shut down operations for 15 months. So right after that, amazing career high. It was really a mic drop moment. I have to tell you, we had transformed Celebrity, we had Edge out. The financial performance was transformed, and we had made all of this progress on gender equality. We shut down at the end of the week of that cruise and we were shut down for 15 months. So, I went from the biggest high to the biggest low of my career within a span of probably 72 hours.

Brian Ardinger: That’s incredible. And it’s much more like being on a sea, right? Sometimes you have a really great day and sometimes you’re in trouble.

You talk about, in the book some of the key, I guess, characteristics of leadership that you learned and that. And one of it, and probably through experiences like this, you know, perseverance and resilience and tenacity are critical to achieving success. Can you talk a little bit about some of those experiences and how did you get through the highs and the lows?

Lisa Lutoff-Perlo: It was tough, you know, I have to admit that that’s the truth. It was really tough, and you did need to be resilient. We all did need to persevere. There was so much work going on behind the scenes, working with government officials all over the world, especially here in the United States. With the CDC and trying to get back into business.

And every time we thought, you know, in March we thought it would be June and June. We thought it would be in December. December, we thought it would be first quarter, and then it wasn’t until June of 2021 we got back into business. And I think one of the things that I learned during that time as a leader is you really have to pivot, and you have to develop and strengthen different muscles and the way you lead and the things you focus on and how you get people through it.

So in addition to perseverance and resilience, I really needed to be inspirational. I needed to generate and instill a tremendous amount of confidence and hope in the 20,000 people that worked for me at Celebrity, that we were coming back and we were going to be okay. And I also looked at an opportunity to focus on some positive things because I’ve been described as a relentless optimist, and I wanted to focus the team on coming back.

I wanted to focus them on what the brand would look like and some of the changes we could make. I wanted them to look at this 15 month pause as something that was a benefit that we never, ever would’ve been able to do, and to rethink a lot of the things that we were doing if it were not for covid. So I always tried to also look for the silver lining in the COVID-19 cloud and provide again this beacon of hope that so many people were counting on me for.

Brian Ardinger: That’s a great point. You know, it’s not just any one person that can, you know, turn a ship and, and make things happen. Talent is obviously a key component to this. Running a cruise line must be like running a series of moving global cities around the world. What’s your take on, how do you find and cultivate talent and, and build it out?

Lisa Lutoff-Perlo: Well, you need to be intentional about what you’re looking for. There are a lot of people who have a lot of competencies and a lot of experience that would be a great asset to any organization. Depending on what your focus is and your need. But I always looked for talent and based the type of people that I wanted to bring into Celebrity from a cultural fit. I believe, and it’s in the book, you know, it’s culture, culture, culture. It’s culture that gets you through those awful times.

It’s culture that brings back 15 ships in 12 months. And it’s people being aligned around a common vision. It’s people looking at the team as the most important thing and the brand as the most important thing versus themselves and their own individual success. And so I always hired for culture so that I could build a strong team, a strong brand. And all of us wanting the same thing. Even though we were very different people, we were all aligned in what we cared about and what we wanted to do for Celebrity.

Brian Ardinger: Are there things that you see differently in the, kinda the cruise industry? It’s much more global, like the people that work on a cruise line are from all over the world. It’s much more diverse from, I guess, your traditional office building kind of industry out there.

What are some of the things that, maybe the nuances or differences that you saw in your industry and how that applies to maybe other folks who are trying to I guess diversify their talent base.

Lisa Lutoff-Perlo: We have over, I think, 72 countries represented on any ship at any given time. I always look at the cruise industry as a beacon for people who should look at how diverse cultures can come together in a positive and productive way. When you think about what goes on in the world and how cultures are colliding all the time, and people think they’re all so different. I think what I learned over time is we’re all the same.

It doesn’t matter what color you are, where you come from, what language you speak, if you’re a man, if you’re a woman, if you’re gay, if you’re straight, if you’re Jewish, if you’re Catholic. If you’re, you know, it doesn’t matter. You know? We are all human beings looking for the same thing. We’re looking for a caring environment. We’re looking for an environment that we can all develop and grow and prosper.

Crew members would come on our ships as strangers and they would quickly become family taking care of each other and our crew, and I always marvel at that. And I think the cruise industry is a case study in lessons on how to build strong diverse cultures and how diversity really creates strength and better business and better brands.

Brian Ardinger: We’ve talked a couple topics already about the the book, but the book Making Waves. Tell us a little bit about how you decided to write a book and some of the core concepts that you want people to learn from it.

Lisa Lutoff-Perlo: Thank you for asking. It’s called Making Waves, and it’s available on amazon.com. Barnes and Noble, local bookstores, and also if anyone is looking to buy multiple books through porchlight.com, they’ve been just terrific for people that want to buy multiple books.

I wrote it because so many people told me I should write a book. You know, I accomplished a lot of things in my career that I never thought I would accomplish, and being an author is one of them. It’s really kind of cool, I have to admit. I wrote it though, really to help people. Because I went from the bottom to the top, and if I can do it, anyone can.

I came from a small town in Massachusetts, and I want people to know that. I want people to persevere and I want them to dream big. And I wanted to share some of the lessons I learned an along the way because I find that a lot of leadership books are prescriptive, and they paint this rosy picture, and it isn’t. It’s messy, you know?

You have to work hard. It takes time, and some people don’t give it time. You know, they run out of patience. I wrote it for my nieces. They’re in their early twenties and they are my hope and my inspiration, and I was hoping that my book would help people, you know, thinking through what they want and want to accomplish, and hopefully it will do that in some small or big way.

Brian Ardinger: I love the book. Again, encourage people to pick up a copy. You know, I love the fact that innovation happens and there’s not a linear path to a lot of this stuff. And being able and, and finding the skill sets, the mindsets, the tool sets to be able to navigate in this uncertain world. And that’s only going to increase.

You know, some of the things that you represented in the book and the stories that you’ve told are very helpful in figuring that out. And so I appreciate you coming on the show and being a part of that. What’s next for you? What’s on the horizon as they say?

Lisa Lutoff-Perlo: That’s a great question. I am literally and figuratively writing my next chapter, Brian. After 39 years, I’m stepping away from the corporation, after an amazing, wonderful career. But I’m of the age that it’s about time to start thinking of my next chapter, and I’m leaving myself open to the universe.

I have a few different things. Keynote speaking is certainly one of them. Executive coaching is one of them. Joining a couple of more corporate boards is one of them. I’m currently on a publicly traded board, and then we’ll see what else is next. I have a couple of other things that I’m not at liberty to talk about yet but stay tuned because I know I might be done in the cruise industry, but I know I’m not done.

For More Information

Brian Ardinger: Lisa, again, thank you very much for coming on Inside Outside Innovation. If people want to find out more about the book or about yourself or Celebrity and that, what are some of the best ways to reach you or connect with you?

Lisa Lutoff-Perlo: LisaLutoffperlo.com.

Brian Ardinger: Thank you for coming on the show. I really appreciate it and looking forward to, you know, the next horizon of what’s going on in your world and the in the world of cruises and everything else in this world of innovation. So, appreciate you being on the show.

Lisa Lutoff-Perlo: Thank you. Thank you so much, Brian. It was a pleasure being with you today. Thanks so much.

Brian Ardinger: That’s it for another episode of Inside Outside Innovation. If you want to learn more about our team, our content, our services, check out InsideOutside.io or follow us on Twitter @theIOpodcast or @Ardinger. Until next time, go out and innovate.


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Ep. 320 – Corporate Inno...