Achieving Success Through Innovation

Glenn Withiam

• Publisher: Business Expert Press
• Year: 2016
• Print ISBN: 9781631570438
• eBook ISBN: 9781631570445
• Topic: Business
• Subtopic: Hospitality, Travel & Tourism Industry
• Index: Business

This book investigates the genesis and success of innovation in the hospitality industry as detailed in over four dozen case studies. In many of the cases studies, the innovators themselves provide the insights into their innovative inspiration and the lessons learned from the way they brought their innovative ideas to life. The cases include innovations for improved customer service, stronger human resources, and new food service and lodging concepts. While updated technology forms the basis for many of the innovations, some of the cases focus specifically on technology improvements, with a particular focus on the use of technology as a mediator in the service value chain. With the passage of several years, the book shares the outcome of the innovative concepts—most of which continue to operate. The lessons presented will provide you a valuable perspective on success through innovation, whether you are operating in the hospitality industry or another business.

CHAPTER 1

The Nature of Innovation

This book highlights 55 innovative ideas that have been implemented in the hospitality industry and its related businesses. For our purposes, an innovation can be defined as a new service, product, process, or idea. As distinct from invention, innovation may mean reapplying or adapting existing ideas in a novel way, but it also may involve coming up with a totally new concept. The early development of innovation theory by Joseph Schumpeter conceived of innovation as a source of value creation in which novel combinations of resources produced new products, production methods, markets, or supply sources.¹ In this study, we relied on the following definition: An innovator is a person or organization that has developed a new or distinctive practice or has devised a novel application of an existing practice, such that it has proven to be highly effective and profitable. Thus, the firms we profile are not necessarily the only example of a particular innovation, but we believe that they used the innovation in a most effective manner, and we see them as creating value, as Schumpeter suggested.

Innovation studies are one part of the vast body of research that has studied creativity as a source of innovation and focused on entrepreneurship as a downstream application of innovation. A substantial number of the innovation cases we present here do involve entrepreneurs, but many others could just as easily be described as “intrapreneurs,” where changes are being made in an existing organization. In the context of our case presentations, we address the issue of how innovation works and, more to the point, how to encourage innovation.

Our cases should put to rest the myth that organizations kill innovation. Instead, these cases demonstrate that some form of organizational team is needed in most cases to support the transition from creative idea to innovation. Innovation researcher Yoram Solomon expressly outlines a framework for innovation that begins with the creative idea, and that part of the process does depend on an individual’s cognitive ability and knowledge. The idea is followed by implementation, which is the application of resources to turn that idea into some type of output. This output, then, is the new and useful product or service. In this framework, Solomon sees three levels of innovation: the organizational climate, the team dynamics, and individual efforts.²

Anecdotally, of course, we can cite organizational policies that once were innovative but eventually proved fatal. For instance, the Howard Johnson restaurant chain famously kept a tight rein on menus and costs. This was a great innovation at a time when travelers sought consistent meals on the road, but such was not the case as time went by and the industry evolved to include many consistent restaurant chains that also changed with the times. In contrast, Carroll’s Corporation has done well for the past 50 years as one of the largest Burger King franchisees. This represents the outcome of a long-ago innovative strategic decision. In the 1960s, Carroll’s ran its own restaurants, and older residents of upstate New York will remember Carroll’s as the “Home of the Club Burger.” Doing business through the Burger King franchise gave Carroll’s greater brand scope and market clout, even though the club burger had been a successful and tasty item.

Intimate knowledge of a particular business (or practice) is a key element of innovation, since it’s difficult to apply realistic creative ideas purely on speculation.³ In this context, Heather Snyder refers to a fairly long-standing definition of creativity: “the interaction among aptitude, process, and environment by which an individual or group produces a perceptible product that is both novel and useful as defined within a social context.”⁴ For many years, researchers have focused on one or more of “four Ps” in conjunction with creativity and innovation: namely, person, process, press, and product.⁵ Snyder adds that each of these four areas has an entire research thread of its own. The study of the creative person includes personality traits, development, motivation, neuroscience, and biology; the study of the creative process includes the steps creators follow in their work; the study of the creative press includes the home, school, and work environments; and the study of the creative product includes determining whether and how a product is creative.⁶

In the cases presented in this book, we demonstrate how creativity becomes innovation. These cases demonstrate both types of innovation highlighted by Lucy Gilson and Nora Madjar.⁷ Some cases involve radical creativity, which is associated with intrinsic motivation, is problem driven, and comprises abstract theory-related creative ideas; others demonstrate incremental creativity, which involves extrinsic motivation and ideas that are solution driven and developed on the basis of concrete practices.

It is important to realize that innovation is integral to hospitality firms’ strategy and their approach to the competitive environment. Thus, one consideration for determining what is innovative relates to the strategic choices a firm makes and the setting in which the firm operates. One could argue that innovation is an essential component of a firm’s strategy because it provides direction for the firm’s evolution. That was true at the time of our study and remains true today. Moreover, this view is supported by a variety of studies that have found innovative firms to be higher performers.

Other researchers have found that those firms that are first to introduce new goods or services (first movers) are able to gain benefits until competitors imitate an invention. However, second movers (the nominal imitators) can also be considered innovative within their competitive environment, because they are adapting an invention in a novel manner. Hence, a key component of this study is the exploration of how an innovative idea, service, or practice has contributed over time to a firm’s profitability and operating success.

Although the creative step of developing a new product or process is essential, that inspiration is not sufficient to be considered innovative in and of itself. Innovation requires converting an idea into a service or product that will improve operations or meet new or existing customer needs, often through the application of a new business model. At minimum, innovation requires behavioral change, and so our case descriptions frequently outline the process of change and the techniques for putting ideas into action. Those processes and techniques demonstrate the institutional support that Yoram Solomon sees as essential to innovation.

The innovations we profile include business models, products, services, processes, and marketing channels. While we chronicle a diverse array of innovations, the focus of our featured cases is practices that have resulted in strong improvements in profitability or, for those innovative ideas in early stages, those that have the potential for yielding superior performance for the firm. Most important, in many cases, we are able to assess the implications of the innovative practice.

With this volume, we now have the advantage of time to assess the staying power of the innovations. At the time of our study, the world economy was still reeling from the financial crisis of 2008–2009. As we explain in this book, even truly innovative concepts struggled to survive the Great Recession—and some succumbed to economic weakness, as we outline in the final chapter. Moreover, the structural economic changes that have occurred since we conducted this study have deeply affected some of the innovations that seemed at the time to have a bright future. That said, a wide variety of the innovations chronicled in this book have taken root. In some cases, the innovation itself is the source of a concept’s longevity. Thus, survival may have been a function of whether the business plan built on the innovation essentially relied on the bubbling economy that preceded the recession or whether that plan could either weather economic challenges or provide a service that was at least somewhat insulated from economic turbulence.

We have generally divided these cases into seven categories, even though we recognize that no innovation exists in isolation. Our categories are customer service innovation, human resources innovation, technical innovation, sustainability innovation, food-service concepts, lodging concepts, and strategic intermediary innovations. In reality, many of our cases straddle more than one of these categories, and we have made every effort to characterize the case’s major area of interest.

In particular, although we have created a separate chapter on technology, it’s impossible to ignore the way that technology is transforming the world of hospitality across all categories—both in terms of the way in which hospitality firms do business and, more critically, in changing guests’ expectations for how hospitality firms should be doing business. Thus, innovations in all chapters rely on technology. In that regard, technology, when used appropriately, can provide customers with increased convenience and control, while it also can allow hospitality companies to increase their speed of service, reduce their processing costs, increase their volume and revenue, and improve service and product quality. We discuss these ideas further in our chapter on technology.

All the hospitality trendsetters highlighted in the cases we present here recognized the importance of developing an innovation that clearly offered improved customer value. Placing customer needs at the forefront of product or service development and implementation has allowed many of these firms to prosper. A few of these case studies are aimed only at internal operations, while the vast majority stated or implied that the customer experience, as delivered by the concept and the employee service, is what drove initial consumer visits and what will determine any repeat visits.

Our cases appear in two different formats. In one format, we simply summarize the innovation, and in the other format, we go into considerable depth, explaining the development, execution, and implications of the case. At the end of this book, we present a brief summary of some of the overall implications that have been presented. We also take advantage of the intervening time to report on the fate of the innovation and the firm that developed it.

Some of the detailed case write-ups demonstrate the significance of having the right people on the internal team and the right external partners. Appropriately matched associates are those who share the same enthusiasm, motivation, and zeal to work rapidly and in synchronization. Such cohorts facilitate critical internal and external communication and strongly improve the chances that the innovation will succeed. Other cases show the importance of trusting instincts and remaining flexible. In that regard, several ideas grew or were transformed as the innovation took hold. Another theme that emerges from the cases is the importance of good service design. A number of operators used lean production techniques to streamline their service delivery system and enhance the customer experience, while others carefully studied the customer experience to design their service.

Finally, although measurement was directly mentioned by just a few innovators (and measurements were premature in many situations), it is clear that empirical measures would be valuable so that innovations can be rigorously assessed. Dubé et al. encouraged the development of metrics that link a best practice to the subjective experience of the customer.⁸ Similar metrics must be forged for innovations. Objective measures of the results produced by innovations allow the organization to be more effective in directing its limited resources.

References

Dubé, L., C.A. Enz, L.M. Renaghan, and J. Siguaw. 1999. “Best Practices in the U.S. Lodging Industry: Overview, Methods, and Champions.” Cornell Hotel and Restaurant Administration Quarterly 40, no. 4, pp. 14–27.

Gilson, L.L., and N. Madjar. 2011. “Radical and Incremental Creativity: Antecedents and Processes.” Psychology of Aesthetics, Creativity, and the Arts 5, no. 1, pp. 21–28.

Plucker, J.A., R.A. Beghetto, and T. Gayle. 2004. “Dow, Why Isn’t Creativity More Important to Educational Psychologists? Potentials, Pitfalls, and Future Directions in Creativity Research.” Educational Psychologist 39, no. 2, p. 90.

Rhodes, M. 1961. “An Analysis of Creativity.” In Phi Delta Kappan 42, no. 7, pp. 306–7.

Sawyer, R.K. 2012. Explaining Creativity: The Science of Human Innovation. 2nd ed. New York: Oxford University Press.

Schumpeter, J.A. 1942. Capitalism, Socialism and Democracy. New York: Harper.

Snyder, H. 2016. Psychology of Creativity. www.div10.org/creativity#sthash.a2p0eWdp.dpuf, as viewed August 2016.

Solomon, Y. 2016. “Innovation Needs All 3 Levels of Support, so What Happens if You Miss One?” www.innovationexcellence.com/blog/2016/04/06/innovation-needs-all-3-levels-of-support-so-what-happens-if-you-miss-one/#sthash.DE00sy05.dpuf; and www.innovationexcellence.com/blog/author/ysolomon/

¹ Schumpeter (1942).

² Solomon (2016).

³ Baer (2016).

⁴ Plucker, Beghetto, and Gayle (2004, 90).

⁵ Rhodes (1961); Sawyer (2012).

⁶ Snyder (2016).

⁷ Gilson and Madjar (2011).

⁸ Dubé et al. (1999).

CHAPTER 2

Improving the Customer Experience

Regardless of how fancy the building or how marvelous the meal, the core transaction in the hospitality industry remains the interaction of a professional staff member and a guest. Even though that service transaction is incr...

Table of contents

• Cover
• Title
• Copyright
• Foreword
• Acknowledgments
• Chapter 1. The Nature of Innovation
• Chapter 2. Improving the Customer Experience
• Chapter 3. Better Human Resources for Improved Operations
• Chapter 4. Sustainability Innovation
• Chapter 5. Applying Technology for Corporate Success
• Chapter 6. Innovative Restaurant Concepts
• Chapter 7. Lodging Concept Innovation
• Chapter 8. Strategic Intermediation
• Chapter 9. Achieving Success through Innovation
• About the Authors
• Index
• Adpage