Managing Innovation: Airbnb's Historical and Future Pathways

This report explores innovation theories, particularly the Diffusion of Innovation (DOI) Theory, and applies them to analyze the historical development, current market position, and potential future pathways of Airbnb. It discusses how Airbnb, founded in 2008, disrupted the hospitality industry by connecting travelers with local hosts offering unique accommodations. The report examines Airbnb's evolution from providing basic rental services to integrating advanced tech tools for hosts, enhancing listing management, and facilitating competitive pricing. It also highlights Airbnb's challenges, such as legal and ethical concerns, and its efforts to balance growth with positive community impact. By applying innovation theories, the report provides insights into Airbnb's success factors, including cost savings, local experiences, and user-friendly platforms, and suggests that continuous innovation is crucial for maintaining a competitive edge in the future.

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Innovation Theory

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Contents
Introduction......................................................................................................................................3
Part 1 Innovation theory..................................................................................................................3
Part 2 Application to Airbnb............................................................................................................6
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

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Introduction
The purpose of his assignment is to highlight the factors that contribute in innovation. To define
the process of innovation, it is necessary for the company to go through the needs of the
customer. Innovation is the process that depicts the development of customer value by taking
consideration of solutions that meet unarticulated needs in different manner. An innovative
employee has potential to increase productivity by developing and initiating new processes
which in turn can amplify competitive benefits and give meaningful differentiation (Shao-dong,
2009). Diffusion of innovation theory is developed by Rogers in 1962. It developed in statement
to define how, over time, an idea get momentum and diffuses by precise population. Airbnb Inc.
is a secretly held global company in San Francisco that handles an online hospitality services and
marketplace which is available via its mobile application and websites.
The following report will analyse the innovation theories by taking consideration of Airbnb Inc.
along with application to Airbnb regarding innovation will be elaborated in the assignment. The
discussion will be made related to historical innovation and future innovation pathways. This
paper will highlight the business model of the company. At last, the conclusion will made to
emphasis what has been done in the assignment for the company of Airbnb regarding innovation.
Part 1 Innovation theory
Diffusion of Innovation (DOI) Theory is the model that depicts how an innovation can expand
idea in a large manner and communicate over time, an idea to gain diffuses and momentum
through population and social system. The end result of this theory is that the people focus on
new idea or product. The term of adoption depicts that a person does something in a different

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manner than what they had done previously (Kuili and Shuhua, 2010). According to this theory,
it is necessary for the company to keep focus on such factors that the individual must perceive
the idea and behaviour as new or innovative. Adoption of a new idea in the context of innovation
does not occur similar time in a social system; somewhat it is a procedure whereby some people
are more suitable to accept the innovation in comparison of others (YUAN and LI, 2009). It has
been found through research that people who assume an innovation early have various features in
comparison who adopt an innovation later. This model is helpful in endorsing an innovation to a
targeted people and it is necessary to comprehend the features of the target population that would
facilitate to hamper adoption of the innovation (Noel, Sovacool, Kester and de Rubens, 2018).
To promote an innovation, there are various strategies developed to appeal to the various adopter
categories.
Innovators: These are people who has desire to be the first to endeavour the innovation. They
are having great interest in new ideas. These people are eager to take risks in order to innovate
new things for the company.
Early Adopters: These are people who portray opinion leaders. They know the value of the
change within the business and adopt the leadership opportunities. Engagement needs little
influence as they are accessible to amendment.
Early Majority: these are the person who adopts latest idea before the average person. These
kinds of people has tendency to focus on evidence before starting on work.
Late Majority: These cover those people who are doubtful of amendment, and will only focus
on modernism after it has been endeavoured by the majority (Lovejoy, Demireva, Grayson and

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McNamara, 2009). Strategies to demand to this population involve information on number of
people who try the innovation and have adopted it successfully.
Laggards: These kinds of people are so conservative and research. These people are doubtful
for amendment and are the huge group to carry on the board. Strategies to application to this
population involve fear appeals and statistic.
Critical analysis of this innovation theory
This theory has relevancy in the present age and will not consider lose its relevance thousand
years to come. It is done because new ideas or innovation are daily amount and off course will
constantly be diffused so that people can focus on them (Wani and Ali, 2015). The role of this
model in the organization is huge as it facilitates to get better understanding regarding the
behaviour of buyer to adopt and engage with new products or technologies over time. The use of
this model in the organisation is to comprehend how a buyer adopts and links with new
technologies and products over time. The model is being used by the company at the time of
producing new product or service, commencing a remaining product into a new market.

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Source: (Ayodele, 2012).
It has been critically analysed that there are five main factors that impact adoption of an
innovation. These are mentioned below:
Relative Advantage: The level to which an innovation is pretended as effective in comparison
of idea, product or program it replaces.
Compatibility: the consistency of the innovation with the values needs and experiences of the
potential adopters.
Complexity: difficulties in understanding regarding innovation to use for further purpose.
Triability: the scope to which the innovation can be examined or tested with before
commitment.
Observability: the level to which the innovation gives tangible outcomes.
Market position
This innovation theory is helpful in getting ongoing condition of the market so that the company
can remain in the competitive advantages for a long time (Martin, 2012). It has been critically
reviewed that to maintain the good market position, companies appear to sell their products to
the five groups. The risks of the companies will increase in case of offering same kind of
products to various groups (Cansoy and Schor, 2016). There is an example of Philips Company
in the Netherlands. The company does same with their coffee machines. The old fashioned
coffee machine is still carried out by the company for Laggards. The Senseo coffee machine is
the invention of the company and this machine has meant with its adaptations for the “late” and

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“early majority” groups. The company has Luxury Espresso coffee machine objectives at the
“innovators”. This machine is taking in use for making coffee exciting and pleasurable.

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Part 2 Application to Airbnb
Airbnb is an American home rental platform on the basis of San Francisco that lets people list,
search out and rent short term lodging in around 65,000 cities and more than 191 countries
across the globe. This company is founded in 2008 by Brian Chesky, Nathan Blecharczyk a Joy
Gebbia. A recent condition of the company is enormous as it has evolved its peer-to-peer model
to provide hosts the tech tools they require to run a seamless, effective operation. It provides the
facility of website to the marketplace service where most of the travellers can link with local
hosts of destinations who are providing unique facilities for accommodations. In total, Airbnb is
providing offer accommodations in around33000 cities and 192 countries around the world. On a
typical night, around 150,000 Airbnb guests connect and stay with various hosts around the
world.
Historical discussion of innovation
The company has started its business to provide hospitality services and rental services to people
through its websites. It permits the hosts to post their homes and apartments on their site. Renters
are allowed to take home on rent. It is the company that has not own houses, it works as a broker
and takes commission on every house that is rented. Previous, the main target of the company
was providing rental services to the low customer. In the context of historical discussion, it can
be seemed that the idea for Airbnb did not come in an outstanding term- it was come in mind out
of necessity. The founders of this company were endeavouring to resolve the issue of how to pay
the rent on their San Francisco loft when they realised that a main design conference was coming
to San Francisco, and all hotels were booked up (Feini, 2018). The company had decided to
airbeds on their living room floor and providing a service of bed-and-breakfast, they handled to

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both reimburse their rent and hit it off with their guests, that is the different innovation and
provide local experience to the travellers. By validating their idea before they even had one, they
identified that renting out homes was not just the mode to be remember to expensive San
Francisco at definite times of year- it could be applicable at any time.
Originating a new business model brought number of difficulties to Airbnb. Discussions have
been made on legal and ethical consequences of renting and sub-letting, new laws have been
developed, and the industry of hotel has not accepted new competition. Another apartment had
decided to set up for rent on Airbnb that are major subject to heavy fines in some cities, like
Paris. Airbnb team was active in providing a positive impact on people and places alike and help
cities to search a balance, and to limit the consequences on the house prices (Biber, Light, Ruhl
and Salzman, 2017). Airbnb fuses a great deal of current web innovations in its day to day
activities. The appeal of Airbnb to the clients is likewise particular. It tends to the clients as;
utilizing Airbnb will prompt the cost investment funds, nearby experience just as family offices.
Utilizing Airbnb administrations is seen to be an advantageous choice for renters just as hosts. It
made another market wherein hosts can utilize the mechanical framework of Airbnb to promote
the homes, houses and apartments in an extremely effective way.
The cloud based platform of Airbnb is being used in order to collect the payments for the
accommodations. For renters, the services of the company cost less in comparison of the hotels.
Because of the local experience and less cost, it is attaining advantages since 2007 (Varma,
Jukic, Pestek, Shultz and Nestorov, 2016).
The founders of Airbnb endeavoured to put themselves in the leaseholder's shoes. They
understood that pictures of the facilities assume a critical job in urging the renters to rent the

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settlement. Earlier, the images of facilities at Airbnb site were not interesting to the renters. They
collaborated with the hosts and replaced their non-engaging pictures with the high goals and
wonderful pictures (Guttentag and Smith, 2017). These activities help out the company to attract
a lot of renters and profits of Airbnb went up within a week. The financial results get
advantageous due to the move of the founders for the company. Airbnb empowers the hosts to
set the costs of their accommodation. Airbnb incorporates most recent innovation in their
framework that enables the hosts to set focused costs and acquire more. Hosts can set the costs
utilizing two techniques on the stage of Airbnb. To begin with, they can utilize Airbnb value
adding machine (Roh, 2016).
In the present era, the growth of the company is quite good enough as it provides number of
facilities it its customers. It has enhanced listing management in which it has developed
searching and sorting delivers amplified effectiveness and increased editing functionality permits
hosts to rapidly make updates across number of listings for things such as additional fees,
cancellation policies and rules for houses (Guttentag, 2015). There is a pro marketing page that
has been developed by the company in which hosts with number of listing can promote their
business as well as their properties on Airbnb by using their website.
Future innovation pathways
Airbnb is working a lot in making good future pathways and it will remain replace the hotels in
the hospitality sector. It would be done because hotels are not able to beat the innovative
products and practices followed by Airbnb. To remain in the competitive industry, continuous
innovation is required by the company to survive. There are many hotels in the industry that
withdraw from the competition just because of the existence of Airbnb. Another issue in front of

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the hotels is that they need to focus on various laws and complexities. Airbnb do not fulfil
complex rules and regulations and it is considered as the positive point for the company that pose
restrictions on hotels (Oskam and Boswijk, 2016).
The company is decided to make something different in future and for this, they are planning to
work on roadmaps. The roadmap includes four kind of property types such as Unique, Vacation
home, Boutiques and B&B apart from that private room, existing entire room and shared space
(Accommodation News, 2018). The company is planning to keep focus on new tiers which
includes Airbnb plus. Airbnb collections refer homes perfectly based on every occasion (Downes
and Nunes, 2014). The co-founder of Airbnb and head of community, Brain Cheskey said, “We
have never dreamt about the success of the company”. In fact, it is strange and unique to stay in
each other’s home in effectively. Today, millions of people do the same at every night. But the
aim of the company is go beyond the ongoing project and expand the community so that one
billion people per year will get experienced the advantages of magical travel on Airbnb.
Business model discussion
The growth of Airbnb focuses on the actual reality that it resolved the issue of safely booking a
place to stay while travelling. It developed a place for people to search the best places they can
handle to make their experience of travelling that much easier and better (Kakar, Franco, Voelz,
and Wu, 2016). The business model of the company is different from each other in which instead
of staying in the hotel, the company is providing the facility to have option for gorgeous houses
which make a difference.
Referrals: Airbnb motivates verbal exchange since they offer an extraordinary service, but since
they compensate the customer for it. When customer attempts it, there are numerous methods for

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offering the stage to your companions and customer get not just the fulfilment of improving
somebody's movement experience.
Solid value proposition: the meaning of value proposition is to develop value for a specific
customer (Saxena, 2018). The value proposition of Airbnb include customize the research,
finding unique places, booking with locals, monetization of the house and many others. In a
brief, the aim of the company is to being a loyal marketplace where people can find and list
unique housing around the world.
Customer relationships: the company has better understanding regarding the importance of the
safety and reliable platform along with customer experience not only for sellers but also for
buyers. The main focus of the company is on having upper level of performance websites.
Key resources: the main focus of the company is on the value proposition and for that Airbnb
have the right resources to allow for it to occur.
The major and require resources to their digital platform. It would have been impossible for the
company to bring owners and renters together in a perfect manner. The roles of physical
resources have allowed them to develop by having occurrence in more than 190 countries
(Business model, 2017).
Key activities and partners: the activities are involved in the value proposition that will carry
them to life. The activities involve continuing in development of their interface and handling;
problem solving, community management and platform and networking. The role of the
partnerships of Airbnb has developed great boost for their development and growth.