Open Innovation as a Growing Trend in the Hotel and Tourism Industry

Town and Country Resort-San Diego

Innovation is increasingly seen as one method of improving upon the economic fundamentals within industries. As businesses develop new products and services they become more competitive and able to succeed in a highly competitive global environment. Research by Artic (2013) helps shed light on the potential for open innovation and economic improvement of the hard hit hotel industry in Slovenia. Their findings highlight potential uses of open innovation in meeting customer needs and expectations.

The author separates innovative societies from non-innovative societies. Innovative societies are those that seek to enhance their markets by developing new products and services that in turn can influence jobs and economics. Routine societies try and maintain existing systems without creative destruction whereby economic growth become stagnant. Stagnation means eventual decline as other countries zoom to fill market gaps.

Open innovation is defined by Chesbrough (2003, pg. 12) as, “a model that assumes that companies can improve their business to use external and internal ideas, and the internal and external paths to market, which will contribute to their development”.  This process occurs when participants, whether corporate or individual, brings forward ideas and technology to increase the value added nature of products/services. These improved products/services make companies more competitive in the global marketplace. 

According to Sloane (2011), open innovation reduces costs, improves productivity, generates innovative ideas and reduces the time it takes to put new products on the market. In the hotel industry, open innovation solicits ideas from both customers as well as other industry stakeholders to improve upon the overall development of the industry. The ideas and suggestions are used to develop better services and service management to raise the value of the hotel experience.

The author contends that open innovation seeks to foster synergy of stakeholders, resources, and competitive advantage. Stakeholders are seen as suppliers, related businesses, inventors, etc. while resources are generally seen as knowledge and information. Competitive advantage is fostered as new products and services hit the market at a faster rate thereby maximizing profits. 

The researcher used 35 Slovenian hotels in an attempt to understand the hotels understandings of their demographics, the macroeconomic environment and open innovation. The found that 63% of participants believe that entrepreneurship and globalization dictate trends of development, 75% that innovation is a major developmental force and 75% believe that it will be even more important in the future to understand the needs of guests. Only 38% of hotel administrators heard of the concept of open innovation but more than half were sure they were using it. 

The author’s study focused on open innovation awareness and use in the Slovenian hotel industry. The study was limited to customers alone. There are other factors of open innovation which could include cross-industry use for major product/service development, supplier collaboration for transactional efficiency, governmental usage for community building in addition to customer usage. The study does highlight how open innovation can increase the competitive stance of companies by encouraging new product/service development as well as reduce time to bring those products/services to market. 

Artic, N. (2013). Open innovation as a chance to overcome economic crisis in hotel industry. Tourism in South East Europe, 2.

 

Chesbrough, H. (2003). The era of open innovation.  MIT Sloan Management Review,  44 (3). pp. 35-41.

Sloane, P. (2011). The brave new world of open innovation. Strategic Direction, 27 (5), pp. 3-4.

Call for Papers: Foreign Direct Investment in the Aftermath of the Current Global Economic Crisis

Submission Deadline: May 2014

The level of globalisation in the contemporary business environment is indicated by the transmission and impact of the recent global financial, economic and sovereign debt crisis. International trade and foreign direct investment (FDI) are still the most important driving factors of globalization, and the latter has become more important than the former in the aftermath of the crisis.

 UNCTAD statistics indicate that in 2008 – when the crisis was a global phenomenon – world FDI stock was approximately 26 percent of world gross domestic product (GDP), at the same time as the value of merchandise and services trade was approximately 33 percent of world GDP. The most recent data available from UNCTAD statistics indicates that world FDI stock was approximately 30 percent of world GDP in 2011, while the value of merchandise and services trade was approximately 23 percent of world GDP.

 The aim of the special issue is to reveal the determinants, strategy and impact of internationalisation through FDI in the aftermath of the current global crisis. 

You may see a list of current topics and submission information HERE

The Accuracy of Developing Feedback Loops in Strategy

In strategy, it is necessary to develop not only the action but also the feedback loop to ensure effectiveness. Research by Newell, et. al (2013) using dice rolls indicates that top-down strategies are quickly developed while the changing of poor strategic choices through bottom-up discoveries in feedback is much slower. It helps decision makers understand they may be quick to accept optimizing strategies but slow in adjusting course once those strategies are enacted. An unyielding strategy could potentially lead to poor results.

People often use probability matching when determining a strategy which is based on the probability of outcome.  In essence, if people believe they will have a payoff 70% of the time they are likely to choose that option 70% of the time even it could be chosen 100% of the time for more effectiveness. Optimization requires the ability to understand the factors within the game.

When people are provided feedback of outcomes it is believed they would optimize at a greater level than those who did not receive feedback. It is also believed that optimization for maximum results are ingrained into strategic decision making with feedback being a key factor that fosters effective behavior. Likewise, it is also logical that people should be open to feedback for improvement. 

When participants were provided with hints, they were much more likely to find an optimizing strategy. They did this by focusing on the payoffs of each dice role. Even when information is available without hints a large portion of people were unable to come to an awareness of a proper strategy. Strategy is then seen as a function of awareness of information within the environment.

The researchers Newell, et. al (2011) used two dice games with 7 greens and 3 red sides.  Some participants were provided with hints while others were not. Likewise, some were provided with feedback and others were not. They designed the games to ensure that both the maximization and the matching strategies were available as potential choices to determine what method participants used.

Despite having all of the information available from the beginning of the game, it was the feedback with a hint that helped participants maximize their strategies. A majority of participants didn’t appear to make meaning from the feedback information without a hint.  Participants that did formulate strategies sought and tested new strategies over subsequent trials.  A large percentage of participants thought of a quick strategy and used it throughout the game without changing their behavior. A small group of individuals were found with superior cognitive abilities that optimized their strategies without feedback or hints. 

The study does relate to business strategy development. Executives may use a particular strategy and continue with that strategy (top down) and ignore feedback (bottom up) that would help them adjust and improve their strategy. These strategic choices are often made in the earliest part of the game before information is readily available making them likely inaccurate.  This can lead to disastrous results when an environmental scan and feedback loop are not included to ensure direction adjusts to increase strategic accuracy. Even worse, if a poor strategy is used to its natural conclusion it may be far off of the mark.  A small percentage of people may be able to look at the factors involved, and develop their own strategies and have the cognitive flexibility to continue the adjustment of their approaches as information becomes available.  Openness to information equates to success in strategic management.

Newell, B, et. al. (2013). Probability matching in risky choice: the interplay of feedback and strategy availability. Memory and Cognition, 41 (3).

Call for Papers: Global Conference on Education

The Global Conference on Education is an international refereed conference dedicated to the advancement of the theory and practices in education. The Global Conference on Education promotes collaborative excellence between academicians and professionals from Education.

The aim of Global Conference on Education is to provide an opportunity for academicians and professionals from various educational fields with cross-disciplinary interests to bridge the knowledge gap, promote research esteem and the evolution of pedagogy. The Global Conference on Education invites research papers that encompass conceptual analysis, design implementation and performance evaluation.

Paper Deadline: November 8^th, 2013

Submission: edconference@uofriverside.com

Website: http://www.uofriverside.com/conferences/global-education-conference/2013-fall-global-conference-on-education/

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Four Factors of Unconscious Marketing

Subconscious goals = how we see the world.

As competition between products and services rises, marketers seek new methods of promoting products beyond the cultural borders that often limit sales potential. The paper by Woodside and Brasel (2011) provides an overview of unconscious branding as well as its four major methodological approaches.  Understanding what researchers have already found and where large gaps in the literature exists help in highlighting the need for additional research.

Unconscious marketing deals greatly with the concept of behavior, action and beliefs (BAB) toward products. At its core is the belief that behavior proceeds action, which in term fosters particular beliefs in products (Wilson, 2002). Thus, most thinking is on an unconscious level and behavior typically occurs before conscious thinking. If so, marketing can be effective at an unconscious level.

To understand the unconscious it is often beneficial to see an example in ancient history. When Socrates went to the oracle of Delphi it was relayed that his greatest task and that of mankind was to seek truth and know thyself (Pettinger, 2011). As the mind seeks to know itself, it has developed two mental processes that are called the conscious and the unconscious. The conscious is the limited, but available information, while the unconscious is the stronger processor but is difficult for people to reach (Wilson, 2009).

In terms of branding, the unconscious may be extremely important in influencing branding and purchasing behavior. The problem faced by researchers is that the unconscious is multi-dimensional and may have four factors that include lack of awareness, lack of intent, efficiency, and lack of control (Bargh, 1994). This makes the unconscious a wild horse with its own processes that represent the true nature of man.

Unconscious branding is a relatively new field built off Frued’s psychoanalysis. Despite his approaches, it has taken decades to move into new theories and approaches. Researchers have a number of opinions and limited research to back up their claims. Despite these successes, understanding the phenomenon means to look beyond traditional approaches to new ways of analysis.

There are generally four major research studies and ways of looking at unconscious branding:

-Non-conscious visual drivers: The visual processing mechanisms are unconscious and goals influence what we will see before becoming consciously aware.

-Priming Ads: Internet ads can make more forced ads (i.e. television) more effective through priming.

-Social motivations for conforming or escaping: Advertisements that focus on either helping people identify with particular groups of people or escape to form a self-identity can be effective. 

-Internal consumer autopilot: It is believed that non-conscious behavior, routine, schema and habit affect our choices.

Woodside and Brasel (2011) argue that new and more comprehensive models are needed to make findings practical. The report helps us think about how underdeveloped this field is as well as the potential possibilities for companies that want to use new models and methods to improve their brand awareness. By understanding how to sequence advertisements and use internal motivations, marketers can increase their response rates as well as their financial effectiveness.

The processing of most environmental cues is subconscious and most people cannot tap that source of information to pull it into their conscious. This means that it is these powerful processing tools, based in our need for survival, where brands can create the most effectiveness. This is why brands often offer either social acceptance (i.e. jewelry) or they offer solutions to problems (i.e. automobiles). Sometimes they come together (i.e. Mercedes). Attachment to any particular brand is based in its social advantages,  neuro-economic resource choices, and solutions to unconscious conflicts.

Bargh , J . A . ( 1994 ) The four horsemen of automaticity: Awareness, intention, efficiency, and control in social cognition . In: R.S. Wyer and T.K. Srull (eds.) Handbook of Social Cognition , Vol. 1, 2nd edn. Hillsdale, NJ: Erlbaum , pp. 1 – 40 .

Pettinger , T . ( 2011 ) Radical thinking: What you can learn from the timeless philosophy of socrates, Retrieved October 20^th, 2013 from http://www.pickthebrain.com/blog/radical-thinking-what-you-can-learn-from-the-timeless-philosophy-of-socrates/ 

Wilson , T . D . ( 2002 ) Strangers to Ourselves: Discovering the Adaptive Unconscious . Cambridge, MA: Harvard University Press .

Woodside, A. & Brasel, S. (2011). Unconscious thinking, feeling and behavior toward products and brands: introduction to a Journal of Brand Management special issue. Journal of Brand Management, 18, (7).