Analysis of AirBNB’s SuperGuest Program: A Case Study in Innovation

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Managing Innovation
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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
Conclusion.....................................................................................................................................12
Reference List................................................................................................................................13
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Introduction
Along with advancement of living and advent of globalization, several innovations have been
made, which have enriched and uplifted the way of living. Innovation can be defined as the
individuals’ ability and turning them into actions. In other words, innovation is the creation of
new concepts, products, and services. It can be stated that there is constant need for innovation
because it enables to make the life more easy and comfortable. This can be proved by observing
some of the major innovative products such as L’Oreal’s ‘Smart Hairbrush’, which can help to
detect the quality of hair and enable the users to resolve the hair related problems. Managing
Innovation refers to the handling of different tasks and activities, which is required for
innovating anything new. The range of activities includes the forming ideas, developing them,
prioritizing it, and implementing them along with putting it into practice or introducing it.
In this report, the organisation AirBNB’s ‘Superguest’ program, which is the innovation of the
company, shall be discussed in accordance to the innovation theory. The organisation is a
renowned hospitality service and online marketplace, which offers variety of services such as
home stays and tourism experiences. It provides luxury services to its customers and receiving
commissions from it (AirBNB Press Room., 2019).
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Discussion
1) To describe, in detail and in your own words, one or more innovation theories of your
choice (deep knowledge of one major innovation theory will be enough as a basis for a high
mark, and you should not choose more than two innovation theories)
The theory of innovation is based on three different aspects- foundation, types, and application of
it. Innovation is based on the foundation of revisiting of the strategy along with knowledge and
creativity. Further, the types of innovation are product innovation, process innovation, and
business model innovation. The application of innovation includes new business models, and
innovation in practice and then finally revising the innovation (Christensen et al., 2016). As
stated above, innovation is becoming a necessity and organisations are inclined towards making
constant innovation. Innovation is noted to add advantage to the companies by enabling them to
compete with its rivals. Moreover, innovation helps the firms to place itself in the market and
attain competitive advantage. Further, some businesses use innovation for its growth. The
exploitation of ideas and concepts is significant to the businesses, as it enables the firm to make
improvisations in the processes along with placing new products or services in the market
(Jensen et al., 2016).
The major advantages of innovation are that it allows the company to enhance its efficiency and
increase its profitability. However, the innovation in businesses is noted to improve the processes
of management in order to upgrade the efficiency in the productivity and increase the
effectiveness of the employees. Further, it helps the business to increase the range of products
and services and the new products being innovated are according to the needs and preferences of
the customers and with the aim of catering to the needs and demands of the consumers. Lastly,
innovation also enables the firm to increase the value of the existing products (Chatzoglou and
Chatzoudes, 2018). Therefore, it can be noted that innovation is crucial as well as the required
aspect in every organisation. There are different innovations theories, which the businesses
usually follow to ensure that the innovation made by the organisation is able to provide
advantages such as an increase in productivity and profitability. The two major innovation
theories are disruptive theory and Blue ocean theory.
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Disruptive theory of innovation
The disruptive theory is coined by Clayton Christensen and as he states that this theory is a
process in which a specific product or service is rooted to some simple applications present at the
lowest level of the operational market. It gradually moves up in the market and eventually
competing with the intense rivals of the organisation.
Disruptive innovation is preceded by sustaining innovations, which the organisation does by
tying up with the some of the major names of the market. Such innovations pave way for
disruptive innovation, usually begins with the companies innovating at a faster pace. The
organisations tend to innovate even faster than the changes in the needs of the customers. In this
case, the organisations usually innovates the products and services, which are too refined as well
as expensive. These products or services become unavailable for many customers because of its
price and it tends to target that section of customers, who are able to purchase such sophisticated
and expensive products and this makes them at the top of the market. On the other note, the
organisations making such innovations tend to charge more from these customers and generate
revenues and maximise profitability (Christensen et al., 2017).
However, this leads to disruptive innovations present at the lowest level of the market. The
difference between the disruptive innovation and sustaining innovation is that the products being
innovated as sustaining innovations gradually reaches the lowest level in the market, wherein it
enables the nominal customers to purchase it, as the price of these products comes down. It
becomes accessible to all other customers, which was earlier within the reach of only the
customers with money or possessed skills. Thus, it can be stated that disruptive innovations
begin with sustaining innovations. However, the major characteristics of disruptive innovations
are that in the businesses are marked by the initial stages, which are low gross margins, smaller
target markets, as well as simpler products and services that are indifferent and unattractive in
comparison to the existing solution or products and services. These unattractive products and
services are in comparison to the traditional performance metrics. Further, these products and
services formed by lower tiers of the market tend to offer lower gross margins, which make it
unattractive. This is in comparison to other firms that are going upwards the market by creating a
space in the lowest area of the market for the disruptive innovations (King and Baatartogtokh,
2015).
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Some examples of disruptive innovations are personalised computers being formed from
mainframe or mini computers used for industrial purposes, mini mills from the integrated steel
mills, cellular phones from the fixed line telephones, community colleges instead of four year of
colleges, discount retailers from the full-fledged service department stores and retail medical,
clinics formed from the traditional doctors’ offices.
Figure 1: Disruptive Innovation
(Source: Clayton Christensen. 2012)
Blue Ocean theory of innovation
The other innovation theory is Blue Ocean theory, which is related to the value innovation. W.
Chan Kim and Renee Mauborgne formulate this Blue Ocean strategy. It is regarded as the
cornerstone of market creating strategy. The value innovation, which is the underlining aspect of
the blue ocean strategy, is considered as the concurrent pursuit of differentiation as well as low
cost by creating a change in the value of products and services for both buyers and the
organisation. The determination of value for the customers and the organisation is different. For
the consumers, the determination of the value is through utility deducted from the price of the
products. On the contrary, for the organisations, the value is determined by the price of the
products and service minus the cost of manufacturing the products (Bouwer, 2017). Thus, it can
be stated that the value innovation depends on the system of utility, price, and cost of the
products and services.
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The blue ocean strategy can be defined as the innovation made by a company, which is a new
market space that is relevant to its competitors by making dismantling their position in the
market. Further, it creates a new consumer value by lowering the cost of the products. The
organisations can implement this strategy by following the certain specifications, which are
identifying the key dimensions that defines a particular product and services. After the
identification of the key elements of the products and services, the company must select its target
customers for the product. The customers can be the ones using lower substitutes or those, who
have the similar requirements. Moreover, another aspect, which must be followed, is that the
organisation must keep the quality of the products and services low to a certain extent and the
sell it at the set price. This will help the organisation to be less affected when the product value
depreciates. On the other hand, the organisation must also provide the products and services at
good quality at times in order to introduce it to the new target customers (Mi, 2015).
The Blue Ocean strategy is significant for businesses and it is in contrast to the “Red Ocean”
strategy, wherein the businesses compete intensively with one another in order to gain a strong
market place. This strategy is in complete juxtaposition to the Blue Ocean strategy, wherein the
companies indulge in innovating products and services through which it shall pave its place in
the market free from the rivals (Kim and Mauborgne, 2017). This strategy is effective and
suitable for the large and renowned companies like AIRBNB. These leading companies do not
fight competitors rather believe in the creation of new and unique products by targeting new
customers.
Thus, it can be stated that these two strategies shall be effective for businesses, as it helps them
to stand out from their competitors by their innovations.
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2) To apply each of your chosen theory or theories in explaining the historical development
of one or more products and/or services, and the possible future development pathways of
your products or services
AirBNB introduced an innovative idea, which is “SuperGuest” in the field of luxury service for
the top and loyal customers of the company’s service; the company has to establish different
strategies and theories in its operations. The concept is associated with the customer care
services. It will provide a better service to its top most customers. Blue Ocean theory and
Disruptive theory are the important theories that can be helpful for AirBNB in order to place the
idea successfully and gain higher popularity and advantage over other companies in the market.
Historical development:
In the middle of 2011, the company faced issues such as covers property damage due to theft and
vandalism. The company offered US$50,000 of secondary insurance which referred to its “Host
Guarantee”. In 2012, the amount was increased up to US$100,000 to deal with the factors in
better way. Apart from that, AirBNB introduced new concept named as “Social Connections” to
allow the customers and visitors to see the common friends in the company via Facebook. It
helped the customer the customers to know more details about the company. It helped the
company to gain more customers and provide better quality of service to them.
Blue Ocean theory is referred to as the market for a product where there is less number of
completions or without any competitions. The theory was proposed by W. Chan Kim and Renée
Mauborgne in their book Blue Ocean Strategy in 2004. They stated that the strategic moves
build a leap in value for the company itself and its customers and employees while capturing new
demands to gain competitions advantages while introducing new products and services with
higher features (Mebert and Lowe, 2017). Hence, AirBNB could be benefited while following
the Blue Ocean theory to direct the concept of the new idea SuperGuest programme related to
the provision of better customer care services. The objective of the theory is not to beat the
completions rather to make them irrelevant. In order to implement the theory in the operation of
the innovation, Kim and Mauborgne suggested that the company should focus on the four
essential approaches such as Raise, Reduce, Eliminate and Create.
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Raise is the approach that is related to the factors, which should be raised over the Company’s
standards. Reduce is about the factor that was faced by the company while competing with its
rivalries earlier and the impact of the factors. Focusing on that AirBNB should try to deal with
those factors and reduce them to control the profit of its business and direct the new idea in its
function (Karmanov et al., 2016). Eliminate is the approach in which the company should
eliminate the factors on which the company is competing to gain productivity and profitability
(Leavy, 2018). Finally, Create is related to the factors that the company has never offered earlier
to its customers. Hence, AIRBNB has to create the best strategy to implant the innovative,
SuperGuest to provide a luxury service to its top most and loyal customers.
These approaches force the AirBNB Company to analyse every issue such as competition,
gaining leadership in the field of the customer care services and introducing a new strategic plan
in its operations. According to the concept of the SuperGuest, AirBNB has to rethink and
reconstruct its business operations and improve its pattern of mechanisms.
The disruptive theory is another important theory that AirBNB Company must practice in the
operation of the concept of “SuperGuest”. In the theory, disruptive innovation is a type of
innovation that builds new market and value network and eventually eliminates the previous
market and network to construct market-leading industry, products, and alliances. The American
scholar Clayton M. Christensen and his teammates proposed the Disruptive Theory in early 1995
(King and Baatartogtokh, 2015). The theory became the influential business strategy for the
companies in the 21st century. Clayton Christensen stated that the disruptive innovation is
described as a process through which a product or service originated at the beginning in plain
applications at the bottom and successfully grows up the business displacing the competitors.
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Figure 2: Disruptive Innovation Theory
(Source: King and Baatartogtokh, 2015)
In order to implant the new concept of “SuperGuest”, the AirBNB Company has to make
effective decision to progressively reach the objectives of its. Hence, the company’s manager
and staffs have to give higher efforts in order to establish the “SuperGuest” in the company’s
customer care services. Hence, the implementation of the concept will be successful only when
the operation will be controlled from the beginning. In order to introduce the innovation, the
AirBNB Company must focus on several issues related to the disruption innovation in its
business. According to the concepts of the Disruption theory, AirBNB Company must be
focused on acquiring opportunities rather focused on improved identifying the working patterns.
The AirBNB Company should focus on the structure of the innovation idea, “SuperGuest” rather
designing products and services as the innovation may affect the business and operations in a
negative way. Hence, AirBNB is required to direct effectively the concept of the SuperGuest in
its functions. Employees are the main factors to introduce the objectives of the idea, as the idea is
associated with customer care service. Customers are the main factor to expand the business and
gain high profit (Agrawal and Rahman, 2015). They are the people who control the revenue of
the company and hence, its improvement in the business.
AirBNB Company has introduced the concept of SuperGuest to provide better service to its top
customers. The disruptive innovation model can be most essential to introduce a new strategy in
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the field of customer services. The company can expand its customer service business with its
new and existing services (Guttentag, 2015). The current operations will also be developed with
the help of the concept, as it will be operated in the entire functions of the business. The
approaches of the new concept will be helpful for the employees as they will be motivated to
complete the responsibilities related to the SuperGuest. The managers of the company must be
allocated different responsibilities to the right employees to work effortlessly. In that context,
any required training should provide to the employees as this will create an effective and
efficient workforce and it will provide higher confidence within the workforce to give their best
performance and work with commitment and loyalty towards their responsibilities.
Apart from that, the AirBNB Company is required to focus on the structure of its previous
operations related to the customer care services and accordingly needed to change the
mechanisms to complete the promotion of the approaches of the idea, SuperGuest. The company
will operate with higher performance only whet the employees will be well trained and they will
be provided proper tools related to the customer services. Most importantly, AirBNB Company
should focus on its organisational culture as cultural activities play an essential role in the
introduction and operation of any innovative concept.
In order to maintain a better quality of customer services, the AirBNB Company has to focus on
the different issues such as customers’ satisfaction, demands and complaints on the poor
customer services and its maintenance (Ju et al., 2019). The company has to operate based on the
customers’ satisfaction. The company has to provide all facilities such as training, development
opportunities, rewards based on the performance and safe and healthy environment. These will
provide higher motivation and confidence in the workforce to give higher efforts in their
performance and increase efficiency in their responsibilities. Apart from that, the company
should create a proper organisational structure in order to maintain proper procedures in the
functions of the business related to the new concept. The company must include different
cultural activities in its operations to work in different environment and in teamwork as culture
builds a strong and effective interrelationship among the employees and helps to work to higher
motivation. Hence, the company is needed to focus on different aspects in order to introduce new
concept in its operation and expand its business in the global market.
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Conclusion
The study concludes that a company should establish different strategies to expand its business
and gain a high number of customers. Customers are the main people for any organisation as a
high number of customers provide higher profit and increase its revenue. Hence, the organisation
must fulfil the needs of the customers. The organisation should be focused to meet the
customers’ demands and complains about the products and services. As a result, it is necessary to
operate according to the customers’ expectations. In order to handle the demands, the
organisation must follow different strategies and theories in its operations. Innovation is the most
important factor that can be used to deal with the issues such as competitions, internal factors,
and improvement in the customer services and operations of the company (Meissner et al.,
2017). Different theories related to innovations are there that can help the organisation in
improving its functions and business and gain a competitive advantage over the market.
Therefore, the organisation must use the different innovative concept in its operations to avail the
benefits for the business.
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