Essay Sample on Innovation in AIRBNB

Paper Type:  Essay
Pages:  7
Wordcount:  1672 Words
Date:  2022-12-02

Introduction to Innovation

Innovation could get referred to as the intentional introduction and application within a job, work team, or organization of ideas, processes, products, or procedures, which are new to that job, work team, or organization (Farr & West, 1990) The new ideas, products, methods or processes are often an improvement of the pre-existing strategies and are therefore aimed at not only making work more manageable but also aiding in improving efficiency (Assink, 2006). AIRBNB is an American home rental platform based in San Francisco that lets people list, find, and rent short-term lodging in 65,000 cities and more than 191 countries across the globe (Fast Company, 2019). The company got established in the year 2008 by Brian Chesky, Joe Gebbia, and Nathan Blecharczyk and has done more than any other company to change the way people find places to stay away from home (Fast Company, 2019). Through the utilization of innovative principles and techniques, AIRBNB has managed to become one of the most known companies worldwide with an estimated clientele base of up to more than 500,0000 active subscribers.

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Leadership could be defined as the process of influencing others to understand and agree on what needs to get done and how it can get done effectively, and the method of facilitating individual and collective efforts to accomplish the shared objectives (Yukl, Gordon and Taber, 2002). Leadership is divided into two major categories i.e. leadership that drives a particular innovation, seeking to make progress with it through the various stages of its life cycle, enlisting the support of others, gathering resources, planning and monitoring progress leadership that encourages others to innovate, that provides encouragement and support (Yukl, Gordon & Taber, 2002). Innovation is an essential aspect in any business setting, and more resources should get allocated to the process to see to it that new and improved problem-solving techniques are developed and implemented at the workplace and also in our day to day livelihood activities.

Chosen Theory - The Disruptive Innovation Theory

Innovation Theories

Diffusion of Innovation (DOI) Theory got brought into the study by E.M. Rogers in 1962 is one of the oldest social science theories (Sphweb.bumc.bu.edu, 2019). The theory originated in communication to explain how, over time, an idea or product gains momentum and diffuses, i.e., spreads through a specific population or social system (Sphweb.bumc.bu.edu, 2019). The result of this diffusion is that people, as part of a social network adopt a new idea, behaviour, or product (Sphweb.bumc.bu.edu, 2019). Adoption means that an individual does something different than what they had previously, thus the key to adoption is that the person must perceive the idea, behaviour, or product as new or innovative (Sphweb.bumc.bu.edu, 2019). Through such undertakings, diffusion is made possible.

The Disruptive Innovation Theory

The disruptive innovation theory also referred to as the "Innovators Dilemma" refers to an innovation that disrupts the creation of new markets and value networks thereby leading to the eventual disruption of the formerly existing markets and value networks. For the disruptive innovation theory to occur, there are two conditions necessary. These include; First, the focal (incumbent) firm is treated as a collection of heterogeneous actors with different preferences, incentives, and competencies, whereas firms in the surrounding environment are treated as if they contained no such heterogeneity (Theory of Disruptive Innovation, 2019). Second, the theory of disruptive innovation describes incumbents as controlled by their environment, but has failed to recognize that the environment can also be influenced (Theory of Disruptive Innovation, 2019).

Product Innovation

Product innovation refers to the process of creating and consequently introducing a new product into the market that could either be new or an improved version of a previous model. Innovation could get categorized into three major categories, i.e., process innovation, business model innovation, and product innovation. The innovation process of change is essential for any given business enterprise given that, through business innovation, the enterprise can stand out against their competitors thereby enabling them to engage competitively in the market.

Blue Ocean Strategy

The blue ocean strategy in business refers to the process of the simultaneous search for low cost and differentiation to open up new market opportunities thereby creating demand that was non-existent initially. In other words, the blue ocean strategy could get defined as the application of innovative measures in ways that make your competition irrelevant. The process is aimed at the creation and capture of unique market opportunities, therefore, rendering the competition irrelevant (Tellis, 2006). For a particular institution or organization to shift into the blue ocean strategy, various components are necessary to facilitate this shift. These include; the possession of the required tools, and elaborate methodology for the creation of a new market and finally a humanistic process. With the above components, it is possible for a business enterprise to shift from the red ocean operational strategy into a blue ocean operational zone.

Process and Principles of The Disruptive Innovation Theory

The term Disruptive Innovation was brought about by Clayton Christensen that describes the process of a product or service that takes root and form in simple applications in the market (Bhasin, 2019). The process then eventually elevates up in the market and displaces the established competitors in the market carving a niche for itself gaining a competitive advantage (Bhasin, 2019). Companies often make moves to come up with the innovative products at a much faster pace than the evolving needs of the customers (Bhasin, 2019). Most of the companies end up offering the products or services that are too expensive or complicated in nature for many customers to understand and except in the market (Bhasin, 2019). The companies offer such sustaining and sophisticated innovations at the higher tiers of the markets (Bhasin, 2019). This strategy helps them to succeed by charging high prices to their customers who are always in the demand of such products and result in the high revenue generations and profits (Bhasin, 2019).

The model of Disruptive Innovation highlights that with the changing time and the evolving tastes of the customers (Bhasin, 2019). The customers' needs and demands also increase over the time (Bhasin, 2019). This consequently pushes the company to come up with something that is path-breaking and novel in terms of the ideation (Bhasin, 2019). This demands a shift in the trajectory of technological advancements (Bhasin, 2019). With the new set of products and services planned customers have a new set of features and value attributes that is far much better than the existing technology of the products and services (Bhasin, 2019). Disruption and commoditization always go hand in hand (Bhasin, 2019). The company that overshoots cannot win and go further in the long run either the commoditization will steal its profits or it will lose its market share with the high levels of disruption (Bhasin, 2019).

Pros and Cons of The Disruptive Innovation Theory

Disruptive innovation is a significant aspect of the business that has been observed to influence the market setting in a significant way. Although disruptive innovation does not affect the existing markets in any way, the methodology has been observed to be in close link and association with the sole proprietorship. Various pros and cons are associated with the theory and more often than not, and there has been observed to be more advantages than disadvantages in theory (Conole et al., 2008). It is necessary to understand the key drivers of disruptive innovation are the need and the availability of resources. Most businesses that apply the above theory in their establishment must possess the above two qualities (Shah and Tripsas, 2007).

Advantages of Disruptive Innovation

Through disruptive innovation, it is possible for other existent companies to make necessary adaptations in their way of service delivery which consequently leads to the innovation of new trends (Conole et al., 2008). Take for instance the case of AIRBNB the multimillion-dollar organization that decided to take their hospitality to the online platforms utilizing the world wide web and mobile phone applications (Guttentag, 2015). Through the establishment of the above company, numerous adaptations got observed in the hotel and hospitality sector. Other establishments also tried to make similar inclusions to their businesses which in turn significantly improved the service delivery in the hospitality sector (Conole et al., 2008).

Besides the innovation of new trends in the markets where disruptive innovation gets implemented, there is also the creation of new job opportunities for people with skills in the related field(s) of innovation (Guttentag, 2015). When AIRBNB decided to explore the online platform in the attempt to change the process of service delivery in the hospitality sector, there was the immediate creation of new job opportunities for individuals in the tech sector. To begin with, web designers, application developers, hardware and software technicians, hosts and servers are but a few of the new job openings that came up instantly (Guttentag, 2015). This, therefore, goes to show the vital role that disruptive innovation plays in the markets where it appears.

The businesses that are also built from the disruptive innovation theory have been observed to be highly profitable with returns that could be astounding (Eltoum, Alston & Roberson, 2012). Still, on the case of AIRBNB, the company serves as a broker or an intermediary between the clients and the actual service provider (Iyer, LaPlaca & Sharma, 2006). AIRBNB does not own any of the hospitality facilities, but instead, the company gets paid on a commission depending on the number of clients that make a booking of the hospitality services through the company's platform. AIRBNB is therefore in the hospitality industry but doesn't own a single property in the sector (Guttentag, 2015). The company instead build on other already established institutions thereby eliminating a significant amount of business huddles all which can get attributed to disruptive innovation.

Disadvantages of Disruptive Innovation

It is necessary to maintain an open mind and remember the fact that, innovations often come with change and as it has been observed, clients, i.e. consumers are always more reluctant to accepting change in their usual shopping or spending ways (Conole et al., 2008). It is therefore usually a complicated process in trying to convince consumers to change from their old consumerism behavior in f...

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