Innovation Assessment of Airbnb: Disruptive Theory and Three Horizon Model

BUSINESS MANAGEMENT 0
Business management
Innovation assessment
System04116
2/28/2019

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Contents
INTRODUCTION...........................................................................................................................2
Discussion 1.....................................................................................................................................2
Disruptive theory of innovation:..................................................................................................3
3-three horizon model:.................................................................................................................3
Diagrams of innovation theories:.................................................................................................4
Critical analysis:...........................................................................................................................6
Discussion 2 application to Airbnb..................................................................................................9
Conclusion.....................................................................................................................................17
References......................................................................................................................................19

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INTRODUCTION
Innovation refers to the process of converting the new inventions and ideas into a products or
services and processes or methods of operation that creates value for which customers will pay.
The Airbnb Company is chosen for completing this assessment of innovation. Airbnb stands for
Airbed and breakfast. Airbnb is a privately owned global company. The headquartered of Airbnb
is in San Francisco, which operates a virtual marketplace, and guest ship service that is available
through its mobile apps and websites (Jasper, 2015).
The following report is about the innovation. Every company requires being innovative for
achieving higher success in their respective areas or industries. The two innovation theories are
used such as disruptive innovation and 3-three horizons model. These theories are used for
analysis how large industries are disrupted and how a small industries can guarantees success
when they faced with a larger competitors. It also used when for looking into the future scenarios
of market to adjust the strategies of the industries and to balance its portfolio for innovation
according to it. The applicability of innovation theories on Airbnb, history of Airbnb related to
innovation and future pathways for innovation is discussed with the help of diagrams. The
business model is discussed in respect to the Airbnb how they do business what techniques and
tools they used for the business in competitors markets.
Discussion 1
Innovation theories is also known as diffusion of innovation theory, it defines how advancements
such as new ideas, behaviors, technology or products to gain traction and over time spread, or
diffuse, throughout a specific population. An innovation is concerned with new things moves
from creation to usage. The main point of the innovation is an idea that differs in types of the
people who take on new ideas or goods on varied timelines.
There are two innovation theories that applicable on Airbnb such as:
1. Disruptive theory of innovation
2. 3-three horizon model

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Disruptive theory of innovation:
Disruptive theory is one of the important theories of innovation but it is one of the theory that is
completely misunderstood. This theory explains that why big or established organizations
eventually are overtaken by smaller organization. In this theory, the market of large companies is
disrupted by the markets of small companies by introducing a new version of an offering that
request more to a subset of the clients or customers. In many cases, a small company introduces
new technologies that are inferior in performance and quality of products compared to the big
companies. However, it makes up for it in different way like lowering the price or convenience.
Over the time and repetition, new technologies will start improving to handle various other
demanding uses (Christensen, 2011).
3-three horizon model:
The three horizons model of innovation is grounded on McKinsey’s three horizons of growth. It
is applied to identify, in what way good the company’s offerings of business will be competent
to provide value and suit to their overall strategies as time takeoff.
The horizons in an invention framework are as follows:
 H 1: exploitation of existing offerings
 H 2: extend the business with new offerings that provides new value
 H 3: explore new offerings for future, which can transform the organization but are not
prepared yet.
As time takeoff, the companies noticed that customer tastes, preferences, competition,
technology and the whole market need to be change. They often make their present offerings as
of less value and require more offerings that are innovative to take their place. When it is
happened, one horizon is replaced by another horizon that is called disrupted point.
This theory is basically applicable to the discussion at CXO or executive level within an
organization to clear that leadership have an complete view of the need for several types of
activities related to innovation. Therefore, it allows the leadership of company to become aware
of the need to ready for the future changes and invest in a multiplicity of innovations that may
not recently be feasible. But It could become the main offerings for the companies in future. It is