Table of Contents INTRODUCTION................................................................................................................................3 MAIN BODY......................................................................................................................................3 Innovation theory.............................................................................................................................3 Application of theory to AirBnb.....................................................................................................5 CONCLUSION....................................................................................................................................9 REFERENCES.................................................................................................................................10
INTRODUCTION Innovation is the process of translating an idea or invention into products and services. In business, Innovation results when ideas are applied by the company in order to meet the demands of customers. In this assignment, AirBnb will be considered to perform the various task of this study. AirBnb is an online marketplace and hospitality service provider and it is accessible via its websites and mobile apps. It is involved in lodging industry and provide accommodation services to its customer. It receives commission as a broker from every booking which is made through this. This assignment will provide understanding of different innovation theories and there application to AirBnb for increasing their customer base and provide more accessible services to its customers. Moreover, it will include the critical analysis of development trajectory in order to identify the success of the products and services in the future. MAIN BODY Innovation theory Innovation is refers to an idea adopted by an organisation to improve their products and services in order to provide the customers with better services.Innovation theories consist of Schumpeter's theory of innovation which isin the line with other investment.According to this theory, innovation is changes in methods of production, developing new services, opening up of a new market etc (Schumpeter’s Theory of Innovation,2018). Innovation does not mean invention rather it refers to commercial application of new technologies, new methods etc. Schumpeter's have developed the stages which consist of first approximation and second approximation in order to explain the business cycle theory of innovation (Bahemia, Squire and Cousins, 2017).In the first Approximation the stage begins in equilibrium where there is no involuntary unemployment. Innovation assist in increasing the demands of their services provided by the company and increasing their customers base. Schumpeter's theory of innovation is faces various disadvantages because this theory is more based on sociological factors rather than economic factors. According to this theory innovation is related to introduction of new products or services which assist in gaining the new market through the new products and services to attract customers towards the products and services of the company (Biemans, 2018).Schumpeter provided S – curve to define the innovation for providing clear understanding to the different organisation regarding innovation. According to this innovation is defined as change in existing production system to increase the profitability and reduce the cost of organisation.The Schumpeter theory of innovation provided that the innovation opportunities are created on the basis of introduction of new product, entering into new market with new product etc.
S – curve represent the variation in the performance in function of time or efforts. This framework is more flexible in order to analyse the introduction, growth and maturation of innovation. Another theory of innovation includes the peter Drucker seven sources of innovation in which it provided with the different sources which can lead to innovation or changes in the method (Brulin and Svensson, 2016).According to peter Drucker, systematic innovation is related to monitoring of the seven sources for the innovative opportunity. The first four sources are within the organisation that lead to innovative opportunity : Unexpected :The best source of successful innovation is the form of unexpected success and failures. The organisation can have rise in their market share which may be unexpected. Incongruity :It is the discrepancy between what is and what should be. It is symptom of that which is already occurred. It identified that if the demand for the product or services grow steadily,itseconomicperformanceshouldbeimproved(Chandrasekaran,Lindermanand Schroeder, 2015). If there is lack of profitability then there is incongruity between the economic realities. Innovation based on process need :It means identifying the need of change through detecting error in the process which can helps the organisation in creating innovation opportunities for the business to attract more customer and increase the profitability of business. Changes in industry structure or market structure :It leads due to changes in the customers preferences, taste and needs. Disruptive technologies address lower market or the market that is not fully developed (Ćirić, Lalić and Gračanin, 2016). These technologies have the tendency to grow there market. With the change in industry and market structure provide the opportunity to organisation for innovation which may assist them in increasing their profitability. The below sources involve outside the enterprise of industry : Demographics or population changes :Changes in the population, income level and human capital provide the organisation with innovation opportunities. Gathering demographic data assist the organisation in meeting the demands of target market. Changes in perception, meaning and mood :it means change sin the perception of the people which provide the organisation to changes their products or services according to their need to attract customers toward their organisation (Peter Drucker on the Seven Sources of Systematic Innovation,2017). New knowledge :With the increase in the technologies there have been increasing tin the knowledge such as internet which has brought great innovation in the industry which has provided organisation to offer their products and services to the large customers around the globe. This two theories are the important in innovation which provide industries with various
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opportunities to increase their customers base and develop their product of services to gain more market share through managing the innovation in systematic way. The theories of innovation were propounded to provide understanding to different organisation and knowledge regarding the innovationandunderstandingaboutthesourceswhichcreateopportunitiesfordeveloping innovation in organisation. The theories of innovation are applicable to different organisation which are going through different innovation in their process or products or services. Innovation helps the organisation in improving the brand image of companies and creating new market for their products and services to meet the demands of customers in order to gain more profits and increase their market share by providing there products and services in different regions through use of innovation (Davies and Brady,2016).Managing innovation assist in developing effective invention for the company which will helps the firm in gaining new market for their products and services. Application of theory to AirBnb The AirBnb is online market place which is operating in the lodging industry and provide booking facilities to the customers through use of their websites and mobile apps to provide them which accommodation, food etc. services during their stay. The historical development of AirBnb includes the entry of AirBnb in the market with service innovation. The organisation provided the services that were not present in the traditional hospitality industry. The company has use the modern technology to provide the customers with easy access to the services and provide them options to books there services for accommodation etc. during their stay. When the AirBnb was started it provided airbed and breakfast on the basis of which this name of the company was selected. The Company was first product oriented after realizing the service market is more beneficial for the firm and for this it developed a website for providing the booking facilities ton customers. The historical development of AirBnb includes the development of its services after offing the products such as Air bed and breakfasts. AirBnb is transforming the entire industry by facilitating true social networking. The Schumpeter theory of innovation is applicable to AirBnb because as per this theory the innovation includes introduction of new product or services which was adopted by this organisation. The AirBnb introduced a services market in the hospitality industry which created a market which offer unique travel experience to the customers. This company focused on development of its services in order to create a market. It is a home rental company which provide accommodation facilities to the guests (Webb, 2017). The innovation history of AirBnb includes trips which were launched by AirBnb in 2016, It is a service that provide the travellers to have local tours and adventures during their stay in rentals. Moreover, it launches an Open Home program in 2017 which allowed the host to offer housing to refugees and those seeking shelter from disaster (Airbnb,
2019). According to theory of Peter Drucker, the innovation opportunities created for organisation due to the seven sources and AirBnb adopted this source of innovation theory of Peter Drucker. AirBnb by undertaking the sources of changes in industry and market structures changes developed its innovation history by identifying the needs to its target customers in the hospitality industry which provide the company with different ways of creating opportunities to increase the market share and their profitability by providing the services according to the demands of its customers and it started to provide the rental lodging and booking for them in different countries through their website and mobile apps. AirBnb is changing the way people interact for the booking for their accommodation in different countries. AirBnb has provided a thousand of people to rent their homes. The future development pathways of Airbnb include providing the travellers to book the homes anywhere. The future of AirBnb includes hiring of new property types of the rental purpose. Moreover, for the future development the AirBnb can create partnership with Hooper, which the leading mobile travel app for flight search and bookings. AirBnb through developing its services can provide the customers with better experience during their stay in rentals and assist in retaining them for their future stay at different locations around the globe. The theory propounded by Peter Drucker involved the sources which create innovation opportunities for the organisation. AirBnb in order to identify the innovation opportunities to increase its market share and provide better services and more facilities to its customers can use this sources for identifying various opportunities. The future development pathways includes developing its services other than providing accommodation to the travellers. It can increase the service offering such as car sharing, meal sharing, local tours etc. Hotel have to compete with AirBnb ton attract guest by developing their service quality because AirBnb through its innovation have created a market where the people are provided with high quality facilities and home rentals around the different places. On the critical note, Airbnb services are affected due to the emergence of competitor which is provided by its various competitors by following the same innovation of Airbnb and providing the home rental in different countries. The future development of Airbnb includes trend of global nomads. They don't have home and cars but have smartphones and laptop and Airbnb will provide them accommodation to satisfy their requirement and fulfil their needs. Moreover, Airbnb provide peer- to – peer accommodation and the hosts are also available to promote the accommodation of Airbnb through use of technological tools (vom Brocke and Lippe, 2015). Furthermore, Airbnb is disruptive because it appeals to the low – end market and offering a low cost for the rentals. There are various factors
which contributed to the growth of Airbnb such as unique selling proposition of Airbnb in which they access to local vendors in a variety of industries. The Company provides the travellers to live like local which is a success factors that leads to the growth of Airbnb. The factors that are responsible for the success of the business of Airbnb is their unique strategy and their way of reaching their customers through use of modern technology. It focuses on the stable economy and fulfilling the demands of the tourists by providing the accommodation on the basis of their demands by renting the home in different countries to provide their services in different countries. The sharing economy by the Airbnb started by creating probably two of the biggest assets of people that is homes and their cars. The biggest competitors of AirBnb are trip advisor, Home away etc. but they have different business models. Airbnb have the most innovative strategy. The success factor create a value proposition for the Airbnb in the industry by providing the company with competitive advantage against the other firms in the same industry. The competitive advantage framework of porter which includes cost , focus and differentiation. All these factors have contributed to the value proposition of Airbnb. The cost advantage is the biggest factor that is responsible for the success of its business. The invention at the Airbnb includes the service innovation. While developing the mobile application and website the focus was on the service provision. Service innovation is the final product that emerges from efforts of both crowdfunding and user involvement. The business model of Airbnb is based on sharing economy mechanism which enables it to generate its income. On the critical note there were various problems what are faced by Airbnb in developing its services and entering the new market with innovation. The biggest problem that Airbnb faced was to make the people accept their business model (Van Lancker, Wauters and Van Huylenbroeck, 2016). Airbnb in order to gain the market and attract customers used the guerilla promotional strategy to capture the audience through social media. The Airbnb focus on developing its services through use of technological tools available in the market to provide customers with better service experiences and facilities. The organisation faced problem in the development trajectory of the invention due to lack of market knowledge and their customers.Moreover, there is lack of trust in the people which affect the business development and invention of the services for Airbnb. But Airbnb by using the Peter Drucker theory can improve their customers experience and develop its innovation opportunities by customizing their services according to the requirement of its clients (Scozzi, Bellantuono and Pontrandolfo, 2017). This Schumpeter theory provide them the innovation is based on the development of new product or entering the new market. Through use of this theory organisation is able to solve the problems relating to their invention through use of the innovation theories as it provide them organisation with various ways through which they can enter
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the market and attract customers for their services. Airbnb through use of Theory of innovation by peter Drucker can develop its products and services which will helps them in increasing their profitability. Organisation through use of theories can identify the ways and improve their knowledge regarding innovation and ways which can help in developing their invention in the products and services. Airbnb by using this theory can identify the ways through which it can develop innovation opportunities. Airbnb is focusing on service invention but for future development it can use product invention and can provide different products such as food etc. to attract more customers towards their products and services (Salerno And et.al., 2015). Airbnb through use of technology can develop its services to gain more customer attract and provide more facilities other than accommodation order to provide more facilities to its clients which will helps the firm in gaining competitive advantage towards the other organisation. The users of the services of Airbnb are provided more importance as they are the people that are responsible for the success of AirBnb in around different regions. Moreover, Development of invention of services of Airbnb will help them in creating a lucrative market for the hospitality industry and providing the clients with better services over different places. Airbnb by setting the performance goals is able to identify the performance level in the industry to determine its performance in the whole industry. Development of service invention by Airbnb was affected due to lack of knowledge in the market about this invention before has created a challenge for the company to provide the clients with trust regarding the services provided by them. The service invention by Airbnb created a social impact on the audience because its provided accommodation to the refugees to provide them shelter. Moreover, it provides traveller it lives at homes which assist in giving them homely feeling at any place of Airbnb (Parida and et.al., 2017). This created positive image of AirBnb in the society and supported the firm in implementing their innovative idea. The invention was beyond the novel invention because it focuses of clients needs rather than profitability as main factor which lead to the success of this organisation. Peter Drucker theory of innovation can be applied to Airbnb for development of its future invention through use of different sources which can help the company in identifying different innovative opportunities. The seven sources include unexpected, incongruity, changes in market and industry structure, changes in demographics, new knowledge, changes in perception, meaning and mood and innovation based on process need (Fernandez and Chiambaretto, 2016). The Airbnb through any of this sources can develop its invention in the services offered by the company to provide the customer with more facilities according to their requirement. The organization does not own any lodging space but its main agenda is to connect the client
with hospitality industry all around the globe. The factors that have contributed to the success of Airbnb include convenience, customization, affordability, unique stay experience etc (Eriksson And et. al., 2016). Airbnb while development of its service intention can be affected by various factors such as competitors, less focus on clients based on income group etc. Airbnb have to make proper strategy and provide in depth knowledge and advantage of the service's ton customers to provide them knowledge about their services. CONCLUSION From the above assignment it has concluded about two theories of innovation which consist of Schumpeter theory and Peter Drucker theory of seven sources which are applicable to AirBnb and provide understanding about the innovative strategy used by AirBnb to provide better experience to tourist by providing them facilities to live at homes. Moreover, this assignment has included the different historical development of Airbnb such as Airbed etc. the study has also included about the future development of invention by Airbnb in order to provide the clients with more services other than accommodation such as car rental for local tour, food facilities etc. Also, the assignment has provided the factors that have contributed in the success of AirBnb such as their cost, convenience facilities, customisation and their unique stay experience provided to clients has helps the company in their growth and success.
REFERENCES Books and Journals Bahemia, H., Squire, B. and Cousins, P., 2017. A multi-dimensional approach for managing open innovationinNPD.InternationalJournalofOperations&Production Management.37(10). pp.1366-1385. Biemans, W., 2018.Managing innovation within networks. Routledge. Brulin, G. and Svensson, L., 2016.Managing sustainable development programmes: A learning approach to change. Routledge. Chandrasekaran, A., Linderman, K. and Schroeder, R., 2015. The role of project and organizational contextinmanaginghigh‐techR&Dprojects.ProductionandOperations Management.24(4). pp.560-586. Ćirić, D., Lalić, B. and Gračanin, D., 2016. Managing innovation: Are project management methods enemies or allies.International Journal of Industrial Engineering and Management (IJIEM).7.pp.31-41. Davies, A. and Brady, T., 2016. Explicating the dynamics of project capabilities.International Journal of Project Management.34(2). pp.314-327. Eriksson, P. E. And et. al.,2016. Managing interorganizational innovation projects: Mitigating the negative effects of equivocality through knowledge search strategies.Long Range Planning.49(6). pp.691-705. Fernandez, A. S. and Chiambaretto, P., 2016. Managing tensions related to information in coopetition.Industrial Marketing Management.53.pp.66-76. Parida, V. and et.al., 2017. Managing the front-end phase of process innovation under conditions of high uncertainty.Quality & Quantity.51(5). pp.1983-2000. Salerno, M.S. And et.al., 2015. Innovation processes: Which process for which project?.Technovation.35.pp.59-70. Scozzi, B., Bellantuono, N. and Pontrandolfo, P., 2017. Managing open innovation in urban labs.Group Decision and Negotiation.26(5). pp.857-874. Van Lancker, J., Wauters, E. and Van Huylenbroeck, G., 2016. Managing innovation in the bioeconomy: An open innovation perspective.Biomass and Bioenergy.90. pp.60-69. vom Brocke, J. and Lippe, S., 2015. Managing collaborative research projects: A synthesis of project management literature and directives for future research.International Journal of Project Management.33(5). pp.1022-1039. Webb, A., 2017.Project management for successful product innovation. Routledge. Online Airbnb.2019. [Online]. Available through :<https://www.fastcompany.com/company/airbnb> Peter Drucker on the Seven Sources of Systematic Innovation.2017. [Online]. Available through:<https://teten.com/blog/2010/01/13/peter-drucker-on-the-seven-sources-of- systematic-innovation-2/> Schumpeter’s Theory of Innovation.2018.[Online]. Available through :<https://businessjargons.com/schumpeters-theory-of-innovation.html>
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