Innovation Management Case Study

Innovation Management Case Study

Question 1

• You need to investigate HOW they gained a competitive advantage.

CitizenM has employed many approaches to gain some competitive advantage in the hotel industry. The investors tried to be innovative enough to exploit the opportunities presented by the “stagnant” creativity in the hotel industry (Schilling, 2017). One of CitizenM’s significant innovations is the introduction of direct booking.

They took all the processes online (Schilling, 2017), a factor that could enable customers to access adequate information about the hotel from any part of the world, and make the bookings. The idea was based on the fact that almost every traveller would like booking experiences that are easy and quick enough to save time for the significantly busy world. The organization also made the booking process relatively convenient and simple enough for customers to use. (Schilling, 2017) The innovation is one of the factors that could help the investors achieve the goal of creating a stylish and improved hotel system. Taking hotel activities online presents another significant advantage to the hotel owners (Tang, Wang, & Tang, 2015). It could also enable them to connect with the event planners and related parties before they meet at the hotel. They could also use the online platforms to inform customers about the events that may be happening at the hotel during their stay (Tang, Wang, & Tang, 2015). They could also use the same channel to inform clients about offers such as the provision of additional nights/days to particular clients. The investors also tried to make CitizenM stand out in a hotel industry that is full of ‘copy and paste.’ They decided to go above and beyond to create an extraordinary experience (Schilling, 2017). Among the unique changes are the elimination of porters and the introduction of self-service check-in machines. The stated changes significantly reduced the waiting time and costs of running the hotel. It seems that most of the significant changes introduced by the investors were meant to make value addition significantly meaningful. They understood that the traditional provision of premium services to customers inside the hotels has become ‘too normal.’ People have become more interested in outdoor services (Molina-Azorín et al., 2015). To achieve that, they needed significantly vast space that could accommodate as many customers, possible. The clients could also help themselves with fast foods by use of their credit cards (Schilling, 2017). The investors also introduced other features commonly present in the homes of most free travellers such as free internet. According to Molina-Azorín et al. (2015), the introduction of well-implemented extras can have significant changes in organizational performance (Molina-Azorín et al., 2015). The provision of free internet by CitizenM may appear simple, but its effects are significant. However, ‘free’ can sometimes cause adverse events, especially when the free product or services does not accurately relate to the customer’s status and sense of class. The investors of CitizenM seem to have conducted adequate research to know that most of their clients are used to free internet and therefore have a better perception of the same (Schilling, 2017). Generally, CitizenM’s competitive advantage is based mainly on things that the investors introduced to bring some change in the “stagnant” innovation in the hotel industry.

• Identify the firm’s core competencies

Core competencies can be defined as whatever an organization does best. They include the things which an organization’s key competitors can hardly copy. For that reason, those tasks or fields significantly differentiate an organization from other companies in the same industry (Syarifuddin & Internasional, 2017). Several factors can act as CitizenM’s critical competencies. The investors introduced some features which could make it stand out among the other hotels in the industry. According to Syarifuddin, and Internasional (2017), establishing core competencies significantly depends on the organization’s knowledge about the advantages of their competitors (Syarifuddin & Internasional, 2017). Organizations with adequate knowledge about that can easily create unique features which the competitors can hardly mimic. It seems that the investors of CitizenM’s hotel understood that mirroring the strategies of the competitors could not help on that. They came up with operational ideas that were significantly cheap, such as the introduction of self-service check-in machines that minimized the cost of labour, building or relatively smaller rooms to save on the cost of construction, and the use of online services for bookings to replace the traditional reservation teams (Schilling, 2017). The stated savings enabled the organization to offer its services at significantly lower prices compared to other companies in the same industry. Many of CitizenM’s could hardly lower the cost of their services to overcome the effect because they had relatively higher running costs. They needed to pay the reservation teams and a higher number of employees. They also needed to recover the expenses incurred during the construction and development of the relatively bigger rooms. If they mimicked CitizenM’s ideas, they would have lowered their net income or operate at a loss, things that all businesses try to avoid.

• How did they understand the needs of the customer? What signals came from the external environment? Who are their customers?

The introduction of new changes and ideas for the running of CitizenM was a response to several signals from the external environment. The most significant is the existence of “mobile citizens” (Schilling, 2017). That was the first indicator of the necessity to invest in the hotel industry. The investors also realized that the visitors had developed an identity of being stylish. Therefore, they wanted a kind of treatment that could reflect what they wanted the world to perceive them. The lack of significant innovations to catch up with the ever-changing world was another significant external indicator of an opportunity. There was a need for the introduction of modern solutions to deal with modern problems.

• What tools are mentioned in chapter 6? Porters 5 forces, Porters value chain, Balanced scorecard – which ones can you apply to support your answer

Some of Porters 5 forces are evident in CitizenM’s case study. Competition is among the significant elements. The investors of the hotel understood that the hotel industry is highly competitive (Pereira-Moliner et al., 2016), a factor that required them to implement various ideas that could enable them to achieve meaningful success. The hotel industry is a profitable sector. That factor always attracts new entrants. For that reason, CitizenM implemented several ideas that could help it overcome the possible changes that could come with a new entrant. One of the ideas is the use of unique ideas which many hotels can hardly mimic (Pereira-Moliner et al., 2016). However, the investors still need to always research about the changing world of the hotel industry and make changes where necessary.

• Explore the resource and capability fit

The managers of CitizenM implemented significant ideas that could enable them to match their capabilities and resources with the opportunities presenting in the hotel industry. One of the significant factors that will allow the organization to exploit many opportunities is its use of new technologies to perform some activities (Pereira-Moliner et al., 2016). The introduction of self-service check-in machines will help save significant amounts of time and money required to serve the serving clients (Schilling, 2017). That change will enable the organization to serve more customers compared to similar companies that use traditional methods.

• What did they use?

The strategies used by CitizenM hotel can have significant benefits in the long run. They can help the hotel overcome some of the challenges likely to emerge in the future. One of the significant impacts of the strategies is overcoming the challenge of the bargaining power of customers (Pereira-Moliner et al., 2016). The hotel offers its services at significantly low prices compared to their competitors. For that reason, many price-sensitive clients will be satisfied with the costs provided and will bargain less.

Question 2

• What are the strengths and challenges of using Innovation-related quantitative analysis in the Shaan project?

Several strengths and challenges of using innovation-related quantitative analysis are evident in the Shaan project. One of the significant advantages is that the information obtained through the analysis could help the organization to know the considerable needs of the consumers and some of the ways of meeting them (Cheung, 2015). It could also help the company see the number of people who would be interested in the change and allocate the right amount of resources to meet the need. However, several challenges could make it difficult for the company to use innovation-related quantitative analysis. First, the implementation of recommendations based on the findings could have some impact on the market performance of other types of tractors offered by the Mahindra & Mahindra Company (Schilling, 2017). If the results necessitated the introduction of dual-purpose tractors, the change could negatively impact the sale of single-purpose tractors offered by the company.

• Term to think about – capital rationing

Nayak had not conducted adequate research before implementing his ideas. For that reason, the organization was unsure about the customers’ reactions to the introduction of new tractor models (Schilling, 2017). The uncertainty associated with the change is beneficial because it forces the management of the Mahindra & Mahindra Company to think about ways of preventing losses and maximizing profits. In that case, capital rationing appears to be a good idea. Capital rationing can be defined as the imposition of restrictions on the amount of capital to be invested in new projects (KR, 2015). It is applicable in situations where the organization has more than one investment but unsure about the ones that require more resources. The company estimates the performance of various projects after allocating specific amounts of resources and chooses a combination of allocations likely to yield the highest amount of profit, possible.

• Strengths and weaknesses of quantitative analysis and how it can be applied in the situation of the case.

The quantitative analysis could enable the company to know if the customers will choose them over their competitors. It could also help them know if there was a need to select a different population (Cheung, 2015). One can also use quantitative analysis to tell if the clients are satisfied with the company’s workers. One weakness of quantitative analysis is that it is time-consuming and significantly expensive (Cheung, 2015). One needs the assistance of a qualified researcher to get better results, something that forces the company to incur extra costs.

• What would be a better approach?

The Mahindra & Mahindra Company could conduct quantitative analysis with the help of a qualified researcher. Together they could create surveys and distribute them to the targeted population (Cheung, 2015). They could then analyze responses which they could use as answers to the study questions. With the answers, the company can then develop the strategies to create the intended products or services.

• Discuss the typical challenges associated with taking the innovation from the inception to the market.

Several challenges are associated with the process of taking innovations from inception to implementation. Some of the problems are evident in the case of Mahindra & Mahindra Company. Poor planning is a significant factor. According to Appelbaum et al. (20170, many organizations which implement new ideas without proper planning end up experiencing more problems than benefits (Appelbaum et al., 2017). Planning, in this case, refers to looking at the changes that are likely to occur and how they will happen. The organization then applies various strategies that will help it exploit the opportunities and minimize the impacts of adverse events (Appelbaum et al., 2017). For the case of the Mahindra & Mahindra Company, the managers did not have a good plan for the idea of introducing new tractor models. For that reason, they could not predict the changes that could happen and how they could occur. That is one of the reasons why Nayak left the company due to frustration because he did not expect the change to occur the way it did (Schilling, 2017). The changes can also affect customers in some way. They will be forced to make some adjustments in their perceptions of the organization and its products or services. For the case of Mahindra & Mahindra Company, there was a likelihood for the organization to experience rejection of its new tractor models for various reasons. That factor calls for companies to do thorough research to know the possible reactions of the clients after introducing the new idea (Cheung, 2015). Sometimes the people who created the idea may think that it meets the needs of the clients. However, people can still resist positive change for many reasons. If the change reduces the number of sales, the effect will be felt by the suppliers as well because the organization will reduce its purchases. For that reason, organizations should try to include the opinions of suppliers and clients when developing new ideas.

 

 

References

Appelbaum, S. H., Calla, R., Desautels, D., & Hasan, L. (2017). The challenges of organizational agility (part 1). Industrial and Commercial Training.

Cheung, L. (2015). Quantitative Techniques for Competition Analysis. https://leanz.org.nz/media/resources/LydiaCheung_LEANZ_150909_Final.pdf

KR, A. (2015). Capital rationing under perfect information. http://www.accessecon.com/Pubs/EB/2015/Volume35/EB-15-V35-I2-P91.pdf

Molina-Azorín, J. F., Tarí, J. J., Pereira-Moliner, J., Lopez-Gamero, M. D., & Pertusa-Ortega, E. M. (2015). The effects of quality and environmental management on competitive advantage: A mixed methods study in the hotel industry. Tourism Management, 50, 41-54. https://www.sciencedirect.com/science/article/abs/pii/S0261517715000114

Pereira-Moliner, J., Pertusa-Ortega, E. M., Tarí, J. J., López-Gamero, M. D., & Molina-Azorin, J. F. (2016). Organizational design, quality management and competitive advantage in hotels. International Journal of Contemporary Hospitality Management. https://rua.ua.es/dspace/bitstream/10045/55945/2/2016_Pereira_etal_IJCHM_preprint.pdf

Syarifuddin, D., & Internasional, S. A. (2017). Competitive Advantage on Hotel Industry in Pekanbaru Indonesia. Internasional Business Management, 11(2), 397-406. http://docsdrive.com/pdfs/medwelljournals/ibm/2017/397-406.pdf

Tang, T. W., Wang, M. C. H., & Tang, Y. Y. (2015). Developing service innovation capability in the hotel industry. Service Business, 9(1), 97-113. https://www.researchgate.net/profile/Michael_Wang26/publication/259636160_Developing_service_innovation_capability_in_the_hotel_industry/links/5902b722a6fdcc8ed5119e91/Developing-service-innovation-capability-in-the-hotel-industry.pdf