Service Innovation - Theory and Practice in The Hospitality Industry

INSTITUTE OF HOTEL MANAGEMENT, AURANGABAD
Service Innovation
Theory and Practice in the Hospitality Industry
Aarthi Ramani (H-1401)
Submitted in Fulfillment of the Requirement for BA (Hons.) in Hotel Management
THE UNIVERSITY OF HUDDERSFIELD, UNITED KINGDOM April, 2010
IHM-Aurangabad
Service Innovation: Theory and Practice in the Hospitality Industry
DECLARATION
I declare that this Dissertation is the result of my own individual efforts and that it conforms to University, departmental and course regulations regarding cheating and plagiarisms. No material contained within this project has been used in any other submissions, by the author, for an academic award.
Aarthi Ramani (H-1401) April, 2010
Ramani A. (H-1401)
IHM-Aurangabad
ACKNOWLEDGEMENTS
I take this opportunity to thank Mr. Satish Jayaram, Principal of the Institute of Hotel Management, Aurangabad for his never- ending support and help throughout the duration of this work. I would like to acknowledge Mr. Rushad Kavina, my dissertation guide for his support and perseverance and without whos constant and critique the dissertation would have not take this topic. Mr. Malay Biswas and Mr. Anand Iyengar for their expertise and guidance in the course of research methodology stage of dissertation. I would also like to thank the librarians Ms. Rupa Matthew, Ms. Bhagwati Bhainsora. I would like to thank all the colleagues fro the University of Huddesfield, U.K., Institute of Hotel Management, Aurangabad and elsewhere for their help and assistance in the compilation of this work.
Ramani A. (H-1401)
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SYNOPSIS
It is common knowledge that the service industry contributes to a great extent to a countries economy. However, what is unknown is the financial benefits of innovating services inherently come with their four characteristics namely, intangibility, inseparability, heterogeneity and perishability. These four characteristics pose various challenges in innovating services. Also due to these characteristics various risks are posed which may have, financial implications that are unmeasurable. Therefore service firms have avoided innovating services. Research on service innovation too is in its infancy, however services can be innovated using some theories and models that have been developed based on the new product development process as well as keeping in mind the various key elements, challenges and risks involved in service innovation. This research aims at finding out the degree of disparity between these theories and models and what is being done in the hospitality industry currently. In order to achieve this the researcher has firstly outlined the aims, objectives, scope, limitations and structure of the research paper. Further the researcher has outlines theories and models on innovation, its various aspects and how they impact an organization. This has been carried out by extensively analysing various research papers done by experts in the field. Moving on the researcher has concentrated on the difference between products and services and their respective development processes. The limitations of new product development help in understanding the process for new service development. Various challenges posed by the service innovation process are market, environment, technology, etc. have been analysed to see their extent of impact on the success of new services. Key elements of the service innovation process are customer preferences, product, employees and stakeholder interests which need to be kept in mind and fulfilled while reinnovating services or developing services. Lastly the researcher has analysed case studies from the hospitality industry to verify if these theories and models are being practiced as they are. The researcher has given a brief on the
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service which has been developed, how they are executed and what the outcomes are for this purpose. Overall, the researcher gives a fair view of the theories and practices of service innovation in the hospitality industry.
Ramani A. (H-1401)
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Table of Contents
DECLARATION .................................................................................................................. 1 ACKNOWLEDGEMENTS................................................................................................... 2 SYNOPSIS ........................................................................................................................... 3 Table of Contents .................................................................................................................. 5 Table of Figures .................................................................................................................... 8 Chapter 1: ISSUE IDENTIFICATION .................................................................................. 9 1.1 Introduction ................................................................................................................. 9 1.2 Issue Identification....................................................................................................... 9 1.3 Aim and Objectives ................................................................................................... 10 1.4 Scope ......................................................................................................................... 10 1.5 Limitations ................................................................................................................ 10 1.6 Structure .................................................................................................................... 10 1.7 Conclusion................................................................................................................. 11 Chapter 2: LITERATURE REVIEW ................................................................................... 12 2.1 Innovation ................................................................................................................. 12 2.2 Need for Innovation ................................................................................................... 12 2.3 Traditional Innovation ............................................................................................... 13 2.4 Innovation Now ......................................................................................................... 13 2.5 Types of Innovation ................................................................................................... 14 2.5.1 Product Innovation: ............................................................................................. 14 2.5.2 Process Innovation: ............................................................................................. 14 2.5.3 Market Innovation: .............................................................................................. 14 2.4 Service Innovation ..................................................................................................... 15 2.4.1 Introduction ......................................................................................................... 15 2.4.2 Importance .......................................................................................................... 16 2.5 Products vs. Service ................................................................................................... 17 2.5.1 Testing ................................................................................................................ 17 2.5.2 Imitation .............................................................................................................. 17 2.5.3 Planning & Development .................................................................................... 17 2.5.4 Employee Empowerment..................................................................................... 18
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2.5.5 Measurement of Financial Impact ........................................................................ 18 2.5.6 Funding ............................................................................................................... 18 2.5.7 Measurement of emotional impact ....................................................................... 19 2.6 Limitation to New Product Innovation ....................................................................... 19 2.7 Service Vacuum ......................................................................................................... 20 2.8 Theoretical Framework .............................................................................................. 21 2.9 Innovating Services.................................................................................................... 24 2.10 Service Process Innovation ...................................................................................... 25 2.10.1 Practising Service Innovation ............................................................................ 27 2.10.2 New Service Development (NSD) ..................................................................... 27 2.11 Challenges ............................................................................................................... 28 2.12 Key Elements in Service Innovation ........................................................................ 29 2.12.1 Customer Focus ................................................................................................. 30 2.12.2 Innovation Process ............................................................................................ 31 2.12.3 Continuous Improvement .................................................................................. 31 2.12.4 Hotel Type ........................................................................................................ 31 2.12.5 Use of IT ........................................................................................................... 32 2.12.6 Customization of Services ................................................................................. 32 2.13 Conclusion ............................................................................................................... 33 Chapter 3: RESEARCH METHODOLOGY ....................................................................... 34 3.1. Introduction .............................................................................................................. 34 3.2 Research Purpose ....................................................................................................... 34 3.2.1 Exploratory Research .......................................................................................... 34 3.2.2 Descriptive Research ........................................................................................... 34 3.2.3 Explanatory Research .......................................................................................... 34 3.3 Research Process ....................................................................................................... 35 3.3.1 Observation ......................................................................................................... 36 3.3.2 Initial Information Gathering ............................................................................... 37 3.3.3 Review of Literature ............................................................................................ 38 3.3.4 Analysis & Interpretation of Data ........................................................................ 38 3.3.5 Case Study .......................................................................................................... 39 3.3.5 Conclusion & Recommendations ......................................................................... 39 Chapter 4: CASE ANALYSIS............................................................................................. 40
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4.1 Introduction ............................................................................................................... 40 4.2 CAPELLA HOTELS AND RESORTS: 24-HOUR CHECK-IN AND CHECK-OUT POLICY (Enz et. al., 2009).............................................................................................. 40 4.2.1 Execution ............................................................................................................ 40 4.2.2 Outcome .............................................................................................................. 41 4.2.3 Insights................................................................................................................ 41 4.2.4 Analysis .............................................................................................................. 41 4.3 ROYAL PLAZA ON SCOTTS: SUCCESSFUL BRANDING OF CUSTOMER SERVICE (Enz, et. al., 2009) .......................................................................................... 45 4.3.1 Execution ............................................................................................................ 45 4.3.2 Outcome .............................................................................................................. 46 4.3.3 Insights................................................................................................................ 47 4.3.4 Analysis .............................................................................................................. 47 4.4 Conclusion................................................................................................................. 52 Chapter 5: CONCLUSION AND RECOMMENDATIONS ................................................ 54 5.1 Introduction ............................................................................................................... 54 5.2 Discussion ................................................................................................................. 54 5.3 Recommendations...................................................................................................... 56 5.5 Scope for Further Research ........................................................................................ 57 REFERENCES ................................................................................................................... 58
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Table of Figures
Fig. 1: The vertical process used in this dissertation. ........................................................... 11 Fig. 2: New Product Innovation Process (Knox, 2002) ........................................................ 19 Fig. 3: Categorizing New Product & Service Innovation According to Risk (Knox, 2002)... 23 Fig. 4: Examples of Service Process Innovation (Verma, et. al., 2008) ................................ 25 Fig. 5: Key Elements of Service Innovation (Verma, et. al., 2008) ....................................... 30
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Chapter 1: ISSUE IDENTIFICATION

1.1 Introduction
This research attempts to investigate the difference in theory and application of service innovation hospitality and related services. Whilst highlighting the reasons for identifying the above issue in the hospitality sector, this chapter also deals with the aim and objectives that will be achieved in due course of completion. Scope for further research has been listed along with the limitations of this study. On a whole, this chapter deals with the antecedents involved in choosing this particular topic for research, what it aims to achieve, the scope it has for further research as well as the limitations that will be faced along the course of the paper.
1.2 Issue Identification

Hildebrand and Forcada (2009) have reported that focus for the last few decades has been on innovations related to technological artefacts or products whereas sparse knowledge has been gained regarding the innovation process which occurs during the development of new services which has resulted in the fact that current theory and understanding of the strategies and tactics for developing new services is inadequate (Drejer, 2004) Gallouj and Weinstein (1997) in their research showed that not only was innovation in services recognised on both the empirical and theoretical levels but that service activities played an increasingly prominent role in productive systems. Their research states that innovation in services is difficult in theory as well as in the activities. Service innovation based theory has been developed essentially on the basis of analysis of technological innovation in manufacturing activities. Also, the specific properties of service activities, especially the analytically vague nature of the output of services, make it tougher to measure them by traditional economic methods or their productivity and to detect improvement or change, on a qualitative level. (Gallouj and Weinstein, 1997) Models that relate to product innovations cannot be applied to services. Services are predominantly intangible, heterogeneous, perishable and simultaneously produced and served. (Khan and Khan, 2009)
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1.3 Aim and Objectives

Aim: To observe the degree of discrepancies between theoretical service innovation strategies and their practical implementation in hospitality and related services through case studies Objectives: To gain theoretical knowledge on implementing service innovation in the hospitality industry To study the practical application of service innovation in the hospitality industry through case studies Analysing the above data to find the difference in them
1.4 Scope
This dissertation has tried to give the reader a review of the innovations in the services for the hospitality industry. The researcher has explored the role of developing new services and various strategies being used by the hospitality industry in new service development have been documented in order to map current trends. Various literature and case study have been reviewed for this purpose.
1.5 Limitations
The review of the case studies considers particular destinations and environments and thus cannot be considered universal. Having gained academic significance rather late, research in this field is in its infancy. Being a desktop research the author had access to limited electronic resources
1.6 Structure
A structured systematic format has been used for this dissertation. Chapter one deals with informing the reader of the issue being researched along with the aims, objectives, scope and limitations of the dissertation. Chapter two contains the literature review which deals with data that has been obtained from published sources including journals, books, electronic database as well as other web sources. The review begins with the concept of innovation in services especially for new service development. Key elements that play a role in service innovation too have been reviewed.
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Chapter three has the method used for the research and the procedure for carrying out the research. The researcher has conducted a desktop research by reviewing literature that has been done. Then case studies of hotels that are implementing various service innovation and its results has been covered in chapter four. The concluding chapter five has recommendations for implementation and scope for future research made by the author.
Issue Identification
Statement of aim and objectives and outline structure
Review of previous literature
Methodology used for research
Analysis of case study
Conslusion and Recommendations

Fig. 1: The vertical process used in this dissertation.
1.7 Conclusion
Service innovation has recently come to light as its economic benefits have gained importance. The researcher intends to study theories and literature on this subject in order to make recommendations for more effective implementation. A systematic desktop research has been conducted to give the reader a three dimensional view of the subject. The researcher tries to study the development of new services in the current hospitality industry using case studies.
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Chapter 2: LITERATURE REVIEW

2.1 Innovation
According to one definition innovation is defined as the intentional introduction and application within a role, group or organization of ideas, processes, products or procedures, new to the relevant unit of adoption, designed to significantly benefit the individual, the group, organization or wider society (West and Farr, 1990, pp. 8-10). Their paper suggested a modified version of this definition based on the nature of services: Services innovation is the intentional introduction and application within a ro le, group or organization of ideas, processes, procedures, or products related to services, designed to significantly benefit the individual, the group, organization, or region; considering the distinguished characteristics of services and consumer satisfa ction. Sundbo (1997) presented three different theoretical approaches to explaining and understanding innovation: the technological paradigm which sees technological development as being at the centre of the innovation process the entrepreneur paradigm which assumes that an entrepreneurial act is at the core of the innovation process the strategic innovation paradigm which emphasizes the organizations strategy as the main driver for innovations
2.2 Need for Innovation

The deeper meaning of being a customer-led organization is the ability to create superior customer value. Superior means their abilities are judged by reference to the best in class competitor and customer value is about being obsessive over the things customers value most highly and seeking to find better solutions. (Knox, 2002) Knox, (2002) explains that the organizations top management must nurture and embed the distinctive behaviours and organizational capabilities which deliver innovation solutions. It is the combination of many factors which together make the innovative organization. The work categorized these factors into 4 broad categories which help sustaining innovation: Culture and climate, Assets and capabilities of the management, Organizational structure and controls, new product, service and process development.
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The organizations board plays a key role in innovation as they intervene and maintain a balance between these factors. The senior management team must foster the market-led approach, and empower employees to think innovatively about meeting customer needs at all times. Many researches have emphasized process (Hammer and Champy, 1993), technology (Day and Schoemaker, 2000) and first mover advantage or time-to-market (Stalk and Hout, 1990). However, relying too much on any one of these could lead to disaster. Over these factors, Knox (2002) said that market understanding was most important. This involved understanding the customers purchasing environment, the way they perceive value, and how the customer will respond to the proposed innovation. However, there is a certain degree of variability that makes it difficult, if not impossible, to assess the success or failure of an innovation. Recently there is an increased interest in the service innovation research (Drejer, 2004 and Sundbo, 1997). There is also a suggestion of combining of approaches to innovation between the manufacturing and the service sector (Drejer, 2004).
2.3 Traditional Innovation

Innovation and invention are often confused. Invention is the bringing out of new product and technologies to the market, whereas innovation is about providing new solutions that offer value to customers. Knox quoted American management guru Peter Drucker, exploiting change as an opportunity Drucker also made the famous distinction between efficiency doing things right; and effectiveness - Doing the right things. The former involving cost reduction, while the latter implying innovation. Cutting on cost will undoubtedly lead to short-term performance improvements, but many of them do not generate long-term shareholder value.
2.4 Innovation Now

By definition innovation is about solutions that offer better value to customers. Developing new products and services fulfils these requirements, but even a renewal of the innovation process if it brings new products and services to the market more quickly.
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According to Knox (2002), the most effective way to build a reputation as an innovative company is through a comprehensive market-led approach, which focuses on building valuegenerating relationships with customers through the core processes by committed people within the organization as well as introducing new products and services.
2.5 Types of Innovation

Johne (1999) was of the view that a business serious about competing in a fast changing market with fast changing technology must innovate. Lack of innovation could facilitate competitors to succeed better than it is. New entrants in an industry have used market innovation to achieve groundbreaking results. However, prior to market innovation, it is useful to consider the other two types of innovation which contribute to organic business development product innovation, process innovation and market innovation (Johne, 1999). 2.5.1 Product Innovation: Product innovation provides the most obvious means for generating revenues. Process innovation, on the other hand, provides the means for safeguarding and improving quality and also for saving costs. Improved and radically changed products are regarded as particularly important for long term business growth (Hart, 1996). 2.5.2 Process Innovation: Process innovation embraces quality function deployment and business process reengineering (Cumming, 1998). Although harder to execute, its purpose is now easily understood. Many companies are currently working at reducing operating costs and also to increase service quality through process innovation. It plays an important role in both the supply of the core product and it supports other parts of the offer, both of which require quality standards to be met and maintained (Johne, 1999). In the case of services, which by their very nature rely on personal interactions to achieve results, the management of process innovation is a particularly challenging activity (Johne and Storey, 1998). 2.5.3 Market Innovation: Market innovation is concerned with improving the mix of target markets and how chosen markets are best served. Its purpose is to identify better (new) potential markets; and better (new) ways to serve target markets. We deal first with the identification of potential markets. Identification is achieved through skilful market segmentation. Market segmentation, which
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involves dividing a total potential market into smaller more manageable parts, is critically important if the aim is to develop the profitability of a business to the full. Incomplete market segmentation will result in a less than optimal mix of target markets, meaning that revenues which might have been earned are misread.
2.4 Service Innovation

Hildebrand and Forcada (2009) have reported that focus for the last few decades has been on innovations related to technological artefacts or products whereas sparse knowledge has been gained regarding the innovation process which occurs during the development of new services which has resulted in the fact that current theory and understanding of the strategies and tactics for developing new services is inadequate (Drejer, 2004) A research by Khan and Khan (2009) also suggests that most of the innovations as well as the theories related to innovation have been predominantly in the area of products when compared to services, whereas now with services playing a major role in the economy of any country, the current focus is on the development and study of innovation in services. Another reason stated by them was the tremendous competition in business that differentiating services from products and studying innovation in services became required for success. Development of new technologies has tremendously accelerated this need. 2.4.1 Introduction Past research and anecdotal evidence suggest that service innovation, in general, has a positive impact on customers choice and can result in increased revenues for a firm. IBMs innovative service program is just one example of the financial benefits that can be realized from implementing service innovation. At the Cornell Rountable Hospitality Proceedings reported by Verma, et. al. (2008), participants lamented that there was a lack of innovative organizations in the service industries. Almost 80 percent of the United States gross domestic product (GDP) and about the same percentage of the labour force are involved in services, but service firms constitute only 30 percent of the worlds most innovative companies, as recording in the survey of the twenty-five most innovative companies by the Boston Consulting Group (Jena McGregor, The Worlds Most Innovative Companies, Business Week, April 24, 2006
www.businessweek.com/magazine/content/06_17/b3981401.htm)
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They also noted that in companies known for innovation usually lean towards products and not services. Hospitality firms in specific have remained relatively unbranded in this category because of the lack of historical tracking for service innovation. Without records and benchmarking, learning and growth of innovation as a status for the company is difficult. Participants at the roundtable proceedings reported in a paper by Verma, et. al., (2008) found that the tendency for viewing innovation as the opposite of a standardized approach to service delivery. As this is normally associated with economical benefits, organizations avoid innovation in their service delivery methods. 2.4.2 Importance Evidence from Gray, Matear and Mathesons (2000) research shows that market o rientation has a relatively large impact on the company performance and that this concept can be applied to both manufacturers as well as service providers. Other organizational characteristics which could affect marketing and performance include corporate culture, the adoption of new information technologies, promotion of ethical guidelines and procedures and most importantly for this research and emphasis on innovation. Their research also noted that the business strategy, services marketing and innovation literatures emphasise links between environmental scanning, innovation and firm performance, with some evidence that innovation might mediate the market orientationperformance relationship (Han et al., 1998). However, comparing the characteristics of hospitality firms with the most highly marketoriented service firms from other sectors has produced some important insights into possible ways of improving hospitality management and performance (Gray, Matear and Matheson, 2000). Their research showed that innovation is an important source of competitive advantage in markets where customer preferences are changing rapidly, where competition is intense, where product lifecycles are shortening and maturing, and/or where differentiation is limited. Gray, Matear and Matheson chose this research as a fairly large amount of research had already been done which link innovation and performance in the goods or manufacturing area. This relation in the case of the services sector has been done recently by authors such as de Brentani (1989, 1993); de Brentani and Cooper (1993), Johne and Storey (1998).
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2.5 Products vs. Service

The hospitality industrys challenge of innovating in real time sets up the distinction between service and product innovation. 2.5.1 Testing Verma, et. al., (2008) said that although its possible to run limited tests of service innovations, services are simultaneously produced and consumed. Thus, the testing of service innovations tends to occur in the actual marketplace, irrespective of how limited the test, while product innovations can often be tested in a lab or in tightly controlled focus groups. As a result, failures for service innovations are viewed as being extremely costly and considered more risky than product innovations. 2.5.2 Imitation In most cases, service innovations are easy to imitate. Verma, et. al. (2008), noted that the terms service innovation and imitation often go hand in hand. Therefore, what is todays service innovation becomes tomorrows commonplace service. Guests quickly learn to expect what was once novel and hospitality firms must engage in a never-ending search for the next new idea for service. 2.5.3 Planning & Development Another key difference between service innovations and product innovations is that a single person can develop a new product, but it takes a team to implement a new service. Thus, service innovation tends to follow a democratic process where a leader needs to create a culture that motivates employees to innovate. A top executive from a major hotel chain stated that service innovation involves a cultural imperative, where a process is in place for encouraging innovating thinking and the development of new ideas. As stated by Verma, et. al.(2008), Such a culture is especially important in the hospitality industry because, unlike manufacturing firms, most hospitality companies do not have laboratories expressly devoted to research and development, and because innovative ideas can arise from any individual at any level of the hospitality org anization.
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2.5.4 Employee Empowerment In an organization, the employees are the resources that are most in contact with a guest, especially concerning the hospitality industry. Thus they must be empowered to come up with new ideas, without worrying of a risk of failure. Managers should make clear to employees that failure is not only allowed, but also acceptable as part of the innovation process. As a consequence, evaluation methods should support innovative thinking. It is managements role to be facilit ators of innovation because a service innovation that exists outside the context of motivation will ultimately fail. 2.5.5 Measurement of Financial Impact In the success and failure of service innovations is the problem of how to measure the success of service innovations. Even with guest surveys and other measurement techniques, one roundtable participant noted that it is hard to quantify a guests experience to determine the success of an innovation. Specifically noted by Verma, et. al., (2008), was the inability to accurately measure the impact that a service innovation, has on profitability in isolation from other elements. In product innovation it is possible to accurately measure R&D expenses, launch costs, and resultant profits generated by a particular product, but with service innovation, the picture is jumbled. Especially in a hotel, many service elements are bundled together and may be either chosen or not chosen by each guest. Thus, the task of accurately measuring the impact of any one service innovation is next to impossible in the short term. Even in the long term the effects can only be suggested via increased market share or brand equity. Nevertheless, without financial measures of success it is hard to sell the idea of service innovation. 2.5.6 Funding In relation to the challenge of measuring the impact of a service innovation is the difficulty in getting research and development funding for service innovations because of the lack of hard financial data that would support the projected profitability of an innovation.
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2.5.7 Measurement of emotional impact Beyond finances, the connection between customers and services is emotional rather than rational, and measuring this experience is difficult. Hence, it comes to innovations that involve human interaction, and because every customer has different expectations and perceptions of service delivery, hospitality firms must take different approaches to serving different customersand different approaches to measuring their reactions to an innovation. (Verma, et. al., 2008) In summary, the distinction between product and service innovation was evident by the challenges that arise with service innovations. Innovative companies are focused on new methods for assessing the customers experience, particularly blogs and internet forums.
2.6 Limitation to New Product Innovation
Fig. 2: New Product Innovation Process (Knox, 2002) Traditional NPD and NSD are sequential and functionally driven. Marketing and sales act as the intermediary of customer needs. The simplified feed back path illustrated shows the hands-off that can occur. (Knox, 2002)
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The diagram also leads to two distinct points noted by Knox (2002) as: The traditional sequential procedures for moving idea through to final products and services are no longer sustainable in todays business environment Developing new products and services is a narrowed approach to creating customer value. Customer value is created when what is offered is better, cheaper and faster. For this companies must come close to their customer, which requires innovative thinking at all levels in the organization. By introducing measures of value-added time versus non-value added time, the innovation team can work together to identify the total time involved in value-adding activities and to eliminate time wasted in hands-off in the process. This leads to parallel activities across the multifunctional team, better internal communications and a clearer interpretation of customer needs and insights within the team.
2.7 Service Vacuum

Considering the distinction between service and product innovation, it can be noted that there is an absence of innovative firms in the service industries. Hospitality companies may be unfairly labelled because of the lack of historical tracking for service innovation in comparison to product innovation. Without a record of service innovation developments and benchmarks of success, it is harder to learn and grow, but it is also harder to document a firms status as an innovator. Complicating the lack of documentation for services, participants again indicated that products can be patented and clearly belong to the innovating firm, while service s are easily imitable. A successful service innovation that is quickly imitated by competitors seems not so innovative. Verma, et. al. (2008) also identified disincentives to innovation. In particular, once an innovation is rolled out, it is hard to reverse the innovation or to pull a new service from the market. When a single failure can result in expensive consequences, the risk becomes great enough to discourage firms from pursuing service innovations.
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Finally, often firms are torn between minimizing costs and providing an extraordinary customer experience.
2.8 Theoretical Framework

Models that relate to product innovations cannot be applied to services. Services are predominantly intangible, heterogeneous, perishable and simultaneously produced and served. (Khan and Khan, 2009). Gallouj and Weinstein (1997) in their research showed that not only was innovation in services recognised on both the empirical and theoretical levels but that service activities played an increasingly prominent role in productive systems. Their research states that innovation in services is difficult in theory as well as in the activities. Service innovation based theory has been developed essentially on the basis of analysis of technological innovation in manufacturing activities. Also, the specific properties of service activities, especially the analytically vague nature of the output of services, make it tougher to measure them by traditional economic methods or their productivity and to detect improvement or change, on a qualitative level. (Gallouj and Weinstein, 1997) These two difficulties constitute the starting point for complementary groups of studies on innovation in service. (Gallouj and Weinstein, 1997) One group focuses on analysis of the introduction of technical equipment and systems in service firms and industries. Gallouj and Weinstein reiterated work done by Barras (1986) who observed a product life cycle that is the converse of the traditional industrial cycle. The basic element of this reverse product cycle theory is the adoption of an item of computer equipment by a service activity that triggers what might be called a natural technolog ical trajectory. (Gallouj and Weinstein, 1997) This leads to the emergence of incremental process innovations which are meant to improve the efficiency of the service being provided, an improvement in service quality through more radical process innovation and to the emergence of product innovation. However, Gallouj and Weinstein are of the view that Barras model is less a theory of innovation in services than a theory of the diffusion within the service sector of technological innovation derived from the manufacturing industry.
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The second groups study does not ignore the technological dimension, but focuses on nontechnological forms of innovation. These follow the precedent set by Schumpeter, whose definition of innovation was particularly broad and open. Schumpeter identified several different forms of innovation: the introduction of a new good, the introduction of a new means of production, the discovery of a new source of raw material or semi-finished product, the conquest of a new market, and the establishment of a new organisation (Gallouj and Weinstein, 1997). In this case Gallouj and Weinstein report that ad hoc forms of innovation, which are not immediately reproducible, as well as institutional formalisation trajectories (i.e., the search for a certain degree of formalisation, although not necessarily, or even predominantly, in tangible form) were more rampant. Gallouj and Weinstein found that the latter trajectory was also recently highlighted in the field of catering and related services by Callon (1995) and Dubuisson (1995). Gallouj and Weinstein (1997) have mentioned that many researchers found that innovations in services do not follow a technological trajectory, but rather service -professional trajectories in which technology is just one factor among several others. Being a successfully innovative organization helps respond to the cause of change and requires a long term, customer-led strategy. The most obvious form of innovation is in the form of new products or new services. However, as many leaders would agree, developing genuinely new products is a high-risk activity: industrial products have only a 50:50 chance of being successful, while consumer goods fare even worse, with a one in ten chance of succeeding (Cooper, 1993). To reduce the risk of failure, a robust multi-staged review procedure is adopted as shown below:
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Fig. 3: Categorizing New Product & Service Innovation According to Risk (Knox, 2002) Although successful inventions may offer genuine value to customers and be highly desirable, when they are patented, their value may not be sustainable. Products and services can be new in 2 ways: New to the company- the organization has never made or sold the type of product before, although other firms might have New to customers- the product or service is the first of its kind and is new to the market. They thus offer six different categories of new innovation which are summarized by Avlontis et al. (2001) as: New-to-the-market service including new-to-the-world services. New-to-the-company service, services that are new to the firm but not new to the market. New delivery process consisting of lines new to a firm, but not new to the world. Service modifications, major improvements or modifications of an existing service. Service line extension, addition to a firms existing lines. Service repositioning, that is, repositioning of an existing service.
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Most companies feature a mixed portfolio of NPD and NSD. Those which are stepping out are in the highest risk zone. Product improvements and line extensions are lower risk and represent over half of all new development activity. Similarly, the lowest risk developments are cost reduction and repositioning, or a combination of the two.
2.9 Innovating Services

Given the need to communicate intangible benefits, and the relative importance of good customer relationships, it could be expected that more rapid adoption of new information technologies such as the Internet, and the presence of written codes of ethics could also be of particular value to service firms, especially those in the hospitality industry. From previous market orientation and services marketing research it could be expected that company performance in the hospitality sector should be positively linked to: Market-oriented behaviour (or a market orientation); Market Orientation is a term that has been popularised by marketing practitioners that acts as an indicator of the extent to which a firm implements their marketing concept. This in turn holds the key to achieving organizational goals including market share and profitability. (Agarwal, Erramilli and Dev, 2003). Their research showed that performance is a mediator in the relationship as well as between innovation and objective performance. A ``balanced'' corporate culture which incorporates marketing, employee and stakeholder concerns; Effective and efficient innovation strategies; Yearly adoption of new media such as e-mail and the Internet for business communication; and Codes of ethics to guide staff conduct.
(Gray, Matear and Matheson, 2000)
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2.10 Service Process Innovation
Fig. 4: Examples of Service Process Innovation (Verma, et. al., 2008) Looking at service process innovation, or ways to improve the way they perform a task, Verma, et. al. (2008) has outlined ways to assess their services. Majority of the service process focused on new methods for assessing the customers experience. Examples include using open forums (or blogs) in which customers share their experiences (with the entire world), and creating complaint systems that are designed so that service failures can be recovered prior to a guests departure. Electronic word of mouth (e-WOM), i.e. any positive or negative statement made by potential, actual, or former customers about a product or company, which is made available to a multitude of people and institutions via the internet (Andreassen and Streuk ens, 2009). There are several reasons for this endeavour. Access to need-related information is often sticky, which means that it is costly to acquire, transfer, and use in a new location. One customer related information source that may overcome some of the stickiness and cost issue is e-WOM. Customers believe web-based e-WOM to be a credible and relevant communication channel.
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As a source of social capital e-WOM encourages others to share their knowledge, thereby being an ever-expanding knowledge base that contains information that enables innovating organizations to achieve a sustainable competitive advantage.
Their study was the first to disclose that e-WOM is a multi-dimensional construct consisting of four unique core categories, i.e. request for information and usage experience issues, business practice issues, and comments pertaining to new products launches/developments. They found that, with the strong increase in consumers engaging in various discussion forums and blogs as evidenced by the increase in number of discussion forums (e.g. Google.com, Yahoo.com), the increase in number of blogs (e.g. www.myspace.com, www.blogging.com), and the development of dedicated blog search agents (e.g. www.technorati.com, www.feedster.com, www.pubsub.com), there is both a dire need and a unique opportunity to better understand what people talk about when engaging in product- or service-related online conversations - an understanding that may help and guide firms in their quest for the next disruptive or sustainable innovation (Christensen et al., 2004). They then proposed that a proactive approach to e-WOM by listening in to ongoing discussions in relevant discussion forums would help firms to improve their service innovations in three ways. First, by listening to customers' desires, firms can get customer feedback faster. Second, by better reflecting customer needs in future a service, the quality of market information is improved, thus leading to superior decisions. Third, by adapting existing services and business practice, actions based on customer responses become more effective. If e-WOM can report the customers' voice effectively and efficiently, this may help firms manage the adoption process for new products or services more effectively. If this is indeed the case, then the bottom line is an improved innovation rate with better, faster results (Andreassen and Streukens, 2009) In addition, participants shared service innovations designed to wow customers. The group was particularly interested in various forms of technological advances to the service process, such as one-stop shopping, which allows the hotel to assist customers in planning an entire vacation. As the participants of the Cornell Roundtable dissected innovation failures, they found that the majority of the failures stem from the peculiar characteristics of service innovation, most of which they had already outlined. As the use of technology expands, employees may see
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technological applications as a threat, particularly technology that allows guest self service. Finding ways to encourage employee acceptance of self-service technology is a challenge. 2.10.1 Practising Service Innovation Service innovation consists of two inter linked issues: how to innovate and what to innovate (Andreassen and Streukens, 2009). Acquiring a better understanding of what customers really need would need is an efficient method of developing these ideas. 2.10.2 New Service Development (NSD) NSD, as mentioned before, is risky as it has a failure rate of about 50 percent. In order to address this high failure rate, studies have been focused on the factors that affect the performance of new services. Some of these factors include new service strategy and ascertaining the significance of NSD stages. (Alam, 2005) Alam and Perrys (2002) research observed that research had been done on service innovation and new service success factors, but little on the area of New Service Development (NSD) and how they are actually developed. To further complicate this, innovation has traditionally been associated with tangible products, resulting in literature about NPD rich. Also, as mentioned before, because of the unique characteristics of services, viz., intangibility, heterogeneity, perishability and inseparability, the intricacies of NSD have not yet been captured. Thus, NPD and NSD have stark distinctions in them. Alam and Perry (2002) reported that only two NSD models in empirical studies are available. The first model described eight linear and sequential stages of developing new services by Bowers, (1987 and 1989). In turn, Scheuing and Johnson (1989) developed an expanded model of 15 stages: Formulation of new service objectives Idea generation Idea screening Concept development Concept testing Business analysis Project authorization Service design and testing
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Process and system design and testing Market program design and testing Personnel training Service testing and pilot run Test marketing Full scale launch and post launch review
Although this second NSD models 15 stages are more comprehensive, the model does not address the important issues of cross-functional teams, parallel processing of the development stages and cycle time reduction that have been highlighted in the new tangible product development models above. Thus, there is no model of NSD that matches the models of new tangible product development.
2.11 Challenges
Considering future efforts to encourage service innovation, executives outlined the many challenges they face in Verma et. al. (2008) research. Some of the challenges mentioned included: How to measure service innovations effects on profit Understanding what delights customers How to predict whether a technological innovation will be accepted by customers and employees, Establishing employee reward and motivation systems to encourage innovation The fact that innovations can be easily imitated
One of the main challenges identifies was that service innovations are easily imitable. Others included the real-time nature of introducing new services and that services could not be tested in a laboratory. New services once executed are difficult to recall like products. (Verma et. al., 2008). Another very stark reason for this is being tangible products are easily patented and are owned by the firm. Services on the other are easily imitable rendering them not so innovative, and they typically spread and are copied. The bottom-line for all the challenges, however, is the many sources of risk connected to innovation: particularly, risk associated with service innovation failure, risk from the lack of
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measurement tools, or the risk of competitors imitating your innovation. At root, the risk of service innovation derives from the unknowns involved with implementing that innovation. Service organizations must constantly try to find new innovative ways to serve customers more effectively and efficiently. Although it is essential, organizations face some challenges in their efforts. Participants of the Cornell Roundtable cited such trends as technological advances to services, the offering of personalized service, and the use of customer relationship management tools to gather guest preference data
2.12 Key Elements in Service Innovation

During recent decades, the importance of services to the global economy has steadily grown while the importance of goods has somewhat declined. In fact, the service industries comprise approximately 70% of aggregate production and employment in the Organisation for Economic Cooperation and Development (OECD) nations and contributing about 75% of US gross domestic product (GDP) (Berry et al., 2006). Among all service industries in the United States, restaurant industry ranks among the top with 945,000 locations, 13 million employees and sales forecasted to reach $566 billion in 2009 reported Khan and Khan. It is projected to grow in 2009 in spite of the most challenging economic environment in nearly three decades, according to the National Restaurant Association (2009) Restaurant Industry Forecast Verma et. al. (2008) said, especially in context to the hospitality industry, innovation is the oxygen that keeps concepts fresh and attracts new customers, as well as encourages repeat customers. Although innovation requires creative thinking, coming up with a new idea is only the first step in ensuring successful service innovations. Participants in the Cornell Hospitality Roundtable Proceedings agree that service innovation was more complicated than just innovation. One participant said that service innovation is the process by which significant improvements in products and services are adapted and ultimately delivered to users. Three key elements of service innovation were identified by Verma et. al. (2008) in his report of the roundtable proceedings:
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Having a customer focus exceeding expectations of customers Having a process focus increasing efficiency Utilizing a continuous improvement mindset to doing business
Fig. 5: Key Elements of Service Innovation (Verma, et. al., 2008) Using the key elements found in the above figure, roundtable participants developed the following collective definition for service innovation, encompassing the essential factors related to service innovation, namely: customer focus, process focus, and continuous improvement (Verma, et. al., 2008) According to Verma et. al. (2008), Service innovation is the introduction of new or novel ideas which focus on services that provide new ways of delivering a benefit, new service concepts, or new service business models through continuous operational improvement, technology, investment in employee performance, or management of the customer experience. 2.12.1 Customer Focus Falling within the customer focus category is not only the importance of understanding and measuring customer acceptance of innovation but finding out their preferences as well.
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2.12.2 Innovation Process The process related aspects of service innovation, which involve both the design and management of the service process. In regard to managing the service process, many researchers stressed that a service innovations success depends on employees both being on board with innovation and feeling motivated to innovate. To the end, a company must instil a culture that supports innovative thinking. Phrases such as cultural imperative, democratic process, and employee empowerment were brought up on several occasions to describe the impact employees have on innovation success. Along with motivating employees to innovate and to help them embrace new service methods, adding technology to personal services and to offer self-service options enhances the service process innovation. In that context, it is important to remember that the success of technology based service innovations is greatly influenced by employees being involved with the service innovation process. In short, technology alone cannot support a service innovation. 2.12.3 Continuous Improvement Many of the participants in the Cornell Roundtable noted that innovation often stems from efforts for continuous improvement. To innovate, one must constantly search for and implement improvements and new features to the current service offering. Measurement is essential for continuous improvement. Many participants emphasized the importance of continuously testing, analysing, and improving processes. Verma, Plaschka and Dev, (2005) analysed various innovations in the hospitality. They include 2.12.4 Hotel Type Introduction of the boutique hotels concept in the recent past is an excellent example of an innovative product, in an industry that is mostly based on standards. This hotel type is an innovation to the traditional hotel experience and an attractive option for customers. This becomes furthermore innovated if it crosses with other industries to obtain co-branding for say fashion and jewellery concepts like the Bvlgari-Marriott alliance (Verma, Dev and Plaschka, 2005).
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2.12.5 Use of IT Use of up-dated Information technology is another form of innovation for hospitality organizations. One study determined which of the recent technological innovations were most beneficial, least beneficial, and had future benefits for hotels (Reid and Sandler, 1992). Those which were found most beneficial include: wake-up systems, electronic door locks, inroom pay-per-view, music players, internet connectivity, video check out, and a software library (Reid and Sandler, 1992). Lack of operational capability or limited resources make adopting some technology impractical. Aside from customer preferences for technology, the addition of new technological features to a hotels service concept has distinct phases of adoption (Namasivayam et al., 2000). The technology adoption process includes: Customer signalling, such as internet booking and in-room modems Enabling management, such as management email Enabling employees, such as voice mail Customer service revenue add-ons, such as ATM and interactive TVs Customer service value add-ons, such as internet access and in-room fax machines Wireless technology, such as curb side check-in, voice recognition, and smart cards (Namasivayam et al., 2000)
2.12.6 Customization of Services Service innovation can also be done through customization of the same service offered by the organization to suit the needs of a variety of clientele. This could include: Allowing guests to have flexible check in/out times Personalizing room decor Having child care options available
One of the challenges in implementing service innovation in this manner was the lack of operational capability. Adding such a policy successfully requires the alignment of hotels marketing and operational activities.
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Skinner (1974) provides a product-oriented example of the importance of balancing marketing and operational activities. He suggests that although it may seem profitable to add more products/features to the product mix, it may be too difficult operationally to implement (Skinner, 1974). This could occur in a service background as well. After extensive research, Verma, Plaschk and Dev (2005), found that overall, innovation does matter when selecting a hotel to both business and leisure customer segments.
2.13 Conclusion
Service innovation is a rather difficult task, especially when compared to product-innovation. Further, complicating this is the fact that the hospitality industry is one where real-time scenarios could affect a guests perception of the hotel. This makes execution of service innovation tougher. However, New Service Development (NSD) can be undertaken following the model shown in the research. Also, in this process some of the key factors that play a role include the customer, technology, the market or environment, culture, and the management of the organization itself. In conclusion, it can be said that although various theories and models exist on service innovation, many challenges both foreseeable and unforeseeable appear when innovation is being done. In order to overcome these challenges an organization can focus on the key elements which make up service innovation in order to find alternatives or solutions.
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Chapter 3: RESEARCH METHODOLOGY

3.1. Introduction
A successful research can be conducted through a well planned and organized structure. In this chapter the author has discussed the method used for conducting the research. This section gives a step by step elucidation of the research path with appropriate justification for the adopted method. A desktop research has been conducted where a review of past and present literature is done. Also analysis of case studies has been done in the following chapter. Analysis method for the data has also been shown.
3.2 Research Purpose

Methodology defined by Robson (1993) is the approach to find the answer to a research problem. It helps to determine the technique in order to find the solution to an issue or a research question. It identifies the path taken to achieve the outcome. The purpose of the research identifies the aim and the means to achieve it. Robson explains the purpose of a research in the context of Exploratory researches, Descriptive Research and Explanatory research. 3.2.1 Exploratory Research This type is undertaken when the research problem has not been clearly defined. It determines the best research design, data collection method and selection of subjects. Exploratory research relies on secondary research 3.2.2 Descriptive Research This research describes data and characteristics about the population and phenomenon being studied. Thus the purpose of the research is to describe. It gives the choice of various perspectives, aspects, levels, terms and concepts to observe, register, systemise, classify and interpret. 3.2.3 Explanatory Research This type is applied when the issue is already known and has a description of it. The desire to know why to explain is its purpose. It builds on exploratory and descrip tive research and goes on to identify the reasons for something that occurs. It looks for the causes and reasons
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In this research, the researcher has explored service innovation in theory and practice through detailed literature review. The researcher has tried to find out the factors that impact innovation in services in hospitality organization and the importance of NSD in innovating services. Thus, it can be said that the research undertaken is an explanatory research which builds on exploratory research aspects. This method allows the researcher to understand and analyse theories and make deductive statements from them. The research is centred on service innovation during New service Development and funnels to the factors affecting innovation in services. Analysis of data on this subject is done through the previous literature review and case studies which is seen in a later section.
3.3 Research Process

The main purpose of conducting a research is discovering, interpreting, and developing methods and systems for the advancement of knowledge on a wide variety of subject. (http://en.wikipedia.org/wiki/Research) Research is an organized, systematic, data based, critical, scientific enquiry or investigation into a specific problem, undertaken with the objective of finding answers or solutions to it. Sekran (2003) The motive behind conducting a desktop research in the area of service innovation is to identify the theoretical as well as practical implications it has on the hospitality industry. It also explores the importance of NSD as a method of service innovation. Zikmund (1991) showed the actual research process in the following 6 steps: 1. 2. 3. 4. 5. 6. Identifying the research problem Defining the research problem Determining how to conduct the research or the method Collecting research data before analysing Interpreting the data Presenting the result
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For the purpose of this desktop research however, the researcher would be using an adapted research method based on Zikmunds research process that would go in the following steps:
Observation
Initial Information Gathering Review of Literature / Theoretical Framework Analysis and Interpretation of Data Discussion and Findings 3.3.1 Observation According to Sekrans (2003) work observation is the first stage in which one sense that certain changes are occurring or that some new behaviours, attitudes and feeling are surfacing in ones environment. When the observed phenomena are seen to have potentially important consequences, one would proceed to the next step. A people oriented manager is always sensitive to and aware of what is happening in and around the workplace. Changes in attitude, behaviour, communication patterns and style along with various other verbal and non-verbal cues can be readily picked up the manager who is sensitive to the various nuances. This stage therefore involves screening certain stages occurring within the environment. Broadly, this research is pertaining to service innovation, which is essential for organizational success in todays competitive age. Service innovation and its benefits have come to light only recently and thus, in the form NSD it proves successful for smart -innovating organizations. Economic profitability that can be gained through innovation has also made many managers and organizations rethink their innovation strategies. Thus, there is a need to study the antecedents, role and advantages of service innovation.
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3.3.2 Initial Information Gathering Preliminary data collection comes from the initial data gathered from the researchers observation. However, these must be reliable sources of data. Thus, initial information gathered for this research included the basic literature review of the past and present stance of service innovation. Its antecedents and importance was analysed for supporting the theoretical framework being used in this dissertation. The researcher observed that interest was being shown in this field of service innovation and development. Multiple sources of literature were used in order to analyse the role service innovation plays during the process of NSD. Firstly some books were used to get basic academic knowledge on the subject. . Articles by Alam and Perry, 2002; Chen, Daugherty and Grawe, 2009; Dev, et. al.; Drejer, 2004; Enz, et. al., 2009; Gallouj and Weinstein, 1997; Gray, Matear and Matheson, 2000; Hildebrand and Forcada, 2009; Khan and Khan, 2009; Knox, 2002; Oke, 2007; Sundbo, 1997; Verma, et. al., 2008; and Verma, Plaschka and Dev, 2005 were reviewed to get a clearer picture of the task involved. Articles dated as far back as 1989 and as recent as 2010 have been reviewed. After this generalized electronic search engines were used such as Google, Google Scholar and Wikipedia. Key search words for this purpose included Service Innovation, Process Innovation, New Service Development (NSD) and Innovation in hotel services. After a sufficient amount of literature and articles were collected, a citation index was made for quick reference. The major part of information was gathered from electronic databases such as Emerald Insight, EBSCO Host, Science Direct, Springer Link, and Sage Publications available through Huddersfield Metalib E-Library using an Athens Databank Login. Some of the Journals referred to include Journal of Services Marketing, Managing Service Quality, European Journal of Innovation Management, International Journal of Contemporary Hospitality Management, etc. The researcher also referred to various white paper researches available on the world wide web. The researcher used the snowballing approach to get deeper into the subject. Industry reports and surveys done by Boston Consulting Group (BCG), Harvard Business Review (HBR) and the Cornell- Centre for Hospitality Research, etc. were used. Referencing was also done from newspaper and magazine articles such as Business Week.
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For the purpose of discussion, the author has reviewed, analysed and interpreted various case studies pertaining to this subject. 3.3.3 Review of Literature The researcher read extensively on available published literature by various authors on many related subjects. It reviews the past and present of service innovation along with its impact on the NSD process. The theoretical framework discuses the various relations shared by them and the impact one have on another. The basic structure of the literature review covers aspects such as innovation and its importance especially in the field of hospitality. It talks about the need for hotels and related hospitality services. It highlights the various different aspects of service versus product innovation. Types innovation like product innovation, process innovation and market innovation are discussed with illustrations on how they can be implemented successfully. The service innovation process and various theories and models developed over years of research have been illustrated. It concludes by discussing in-depth the key elements that assist service innovation and the various challenges they brought on during the process. From the above it can be seen that it summarizes the variable that are studied in this research 3.3.4 Analysis & Interpretation of Data In order to support the theoretical framework built by the researcher additional data was gathered. This data is in the form of case studies obtained from electronic article database of various organizations, particularly those in hospitality and related services. The data would contain information supporting the level of service innovation and development in the organization. Deduction is the procedure of arriving at conclusions by interpreting the meaning of the data analysis (Sekaran, 1992). The researcher will build using a detailed explanation of the data gathered. This will be in a narrative style and compared to theoretically significant propositions. The findings will be compared to the data from the literature review.
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3.3.5 Case Study A study in which the researcher explores in detail a program, an event, an activity, a process of one or more individuals can be called a case study (Creswell, 2003). The study of a particular case is always time bound and data is collected using various tools and procedures such as interviews, questionnaires, etc., over a period of time. For the exploratory part of a research according to Yin (2003), a case study is most suitable. Various reasons support this such as less control in the hands of the researcher with regards to events and the current facts which are aligned to reality. One of the main benefits of case study analysis is that the researcher is not restricted or bound by a particular methodological tool. 3.3.5 Conclusion & Recommendations The discussion will lead to the discussions and findings of the explanatory study. Suitable recommendations would be made to enhance understanding. The conclusion is finally obtained by comparing the literature review results with the data collected. Therefore, the researcher observes that the conclusions of the research are logically linked to the research done earlier.
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Chapter 4: CASE ANALYSIS

4.1 Introduction
Analysis of data is imperative as it supports the researchs problem or aim and objectives. In this chapter data collected from the various literary sources is analysed. The data gathered from the case studies too is collated and analysed. This is then compared to results obtained form the analysis of data which was obtained from the academic literature that has been done. Thus, the practical data is compared to the theoretical data acquired. Thus, the researcher has transcribed the case studies by studying it. The researcher then identifies the various themes emerging from it. These themes from the empirical data and the case study are then compared to arrive at sustainable conclusions.
4.2 CAPELLA HOTELS AND RESORTS: 24-HOUR CHECK-IN AND CHECK-OUT POLICY (Enz et. al., 2009)
The Capella Hotels and Resorts chain allows its guests to check in and check out at any time, day or night. Capella has pledged to have a room ready for each new guest upon arrival, rather than asking the guest to wait until 2:00 pm or 3:00 pm, as is the industry norm. Furthermore, guests can use the room as long as they like, rather than being required to check out by 12:00 noon. In fact, guests are charged for an extra night only if they check out after midnight. The focus on quality customer service is reflected in their twenty-four written service standards, one of which states: The suggested hours of operation are guidelines, not limitations for satisfying individual guest desires and preferences. (Enz, et. al., 2009) 4.2.1 Execution Leaders at Schulze and Capella developed brands service standards knowing that check -in and check-out times were areas of guest frustration. In putting to effect this 24 -hour standard innovative service concept affects operations for the front office, reservations, laundry, and housekeeping. Employees soon became excited about the opportunity to pioneer a new process which improved customer service.
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4.2.2 Outcome Capella does not have complete data on satisfaction or loyalty yet because many of its properties have just opened. They believe from 12 months of guest data collected for their Velden and Dusseldorf properties that together yielded a 91-percent average overall guest satisfaction score and a 93-percent score for likelihood of recommending the property. Capellas first 18 months, there were no negative comments about rooms not being available, but many positive comments about flexibility and personalized guest experiences. More importantly their service standard influenced staff at all levels and inspired them to be more customer focused. The employees felt empowered to provide the guests with the experience they desired, and felt good about providing outstanding service. Even an independent employee satisfaction survey in November 2008, employees rated their feeling of empowerment at 92 percent. 4.2.3 Insights Capellas 24-hour check-in and check-out policy is simple in concept, but could have been difficult to execute. While the 24-hour policy contributes to guest satisfaction, Capella does not consider it a unique selling point on its own. In fact, Capella does not even publicize or advertise it, but communicates it informally to guests electronically and vocally. This service standard is just one factor in a much longer equation designed to create customer loyalty and word-of-mouth advocacy. The service standards also fit Capellas marketing strategy for a target segment of travellers who have high expectations and are willing to pay for the best service. The 24-hour check-in and check-out policy made sense for Capellas customers, whereas it would be unnecessary, inappropriate, and costly for properties targeting less affluent and less demanding guests. 4.2.4 Analysis The researcher found that the most important thing that Capella hotels did was realise the need to innovate at the right time. Type of Innovation: To begin with it must be noted that Capella Hotels Innovative move according to various researches would be categorized under service process innovation. According to Avlontis (2001) service innovation categorization, Capella Hotels
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strategic innovative move would be a New-to-the-market service including new-tothe-world services innovation.
Market:
Rohm of Capella Hotels said, Have you ever been in the position where you want something and youre willing to pay for it, but a service provider just isnt willing to give it to you because its not part of their standard offering? We believe those are missed opportunities and we strive to give our discerning guests more flexibility. Capella Hotels had a target market consisting of price insensitive customers. They had knowledge about their market and knew that their market was willing to pay a certain price to get a certain amount of flexibility. Keeping these things in mind they chose service innovation as a method of gaining competitive advantage in the market as well as create a loyal customer base.
Customer co-option: Their innovative service remodelling was based on the customers and their needs. These customer needs were directly taken into consideration during the NSD process and thus, makes their check-in check-out policy customer co-opted or drafted.
Service Element: Based on Verma, et. al. (2009), the key elements of innovation include being customer focused, process focused or undergoing continuous improvement. From the case study the researcher noted that their main focus lay in giving the customer what he desired. They repositioned the main focus from their processes - as they were hindering the process of keeping their guests satisfied to their customers. Breaking norms in the hospitality industry they focused on the customer and his needs. Their customer centric approach exceeds guest expectations as reported by their customer loyalty. Service innovation is simply new ways of meeting or exceeding guests expectations.
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Customization and personalization of services: Capella aimed at being focused on choice they wanted to offer choices that no other hotel in the world can match. Thus, Schulze promised high levels of personalization and attention to detail at the Capella properties. Their customer-focus led to various standards that had to be set to facilitate their new policy. To achieve this they used new technologies, procedures, and methods that improved the guest experience. This led to process service innovation. One of the best examples of service process innovations is personalised service, which was exactly what Capella wanted to offer. They gave their customers the freedom to check-in and check-out at any time. This is in tandem with theory formulated by Verma, Plaschk and Dev (2005), who said that customization of services, was one of the most important innovations in the hospitality industry.
Employee empowerment and satisfaction:
Our staff have strong empathy for the customers and a genuine desire to make our guests happy, Rohm explained. Employees feel empowered to provide the guests with the experience they desire, and feel good about providing outstanding service. Capella staff members do everything in their power to give each guest a room upon arrival. To facilitate the process, Capella room attendants are authorized to release rooms themselves after cleaning, although managers make spot checks to ensure that room attendants maintain quality standards. This level of employee involvement and empowerment maintained high levels of satisfaction among them.
Stakeholder mapping: In terms of results, Capella Hotels succeed in keeping not only their customers satisfied, but their stakeholders including employees happy.
Awards and accolades: The awards for high level of their guest and employee satisfaction speak for the financial data that was not available.
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Culture:
When a speedy room turn is needed, managers, bellmen, and other staff often assist the room attendants. Managers are more than willing to strip beds and clean bathrooms. The hotel was set up on the belief that customers should determine aspects of the guest experience rather than the hotel setting rigid guidelines. Culture is the most difficult and intangible element of service delivery to manage them effectively.
Word-of-mouth and advertising: Capella does not even publicize or advertise its flexible check-in check-out policy, but communicates it informally to guests. This service standard is just one factor in a much longer equation designed to create customer loyalty and word-of-mouth advocacy.
Thus, the researcher found that Capella Hotels used various smart options stated in various theories and models to execute a successful service innovation that not only gave them a competitive edge but also rejuvenated their product and achieved sufficient financial gains. Capella is built on providing what the customer needs, rather than just offering a general hospitality product to the market, Rohm concluded. We let the guest engineer their own experience, rather than be limited by restrictions imposed by the industry.
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4.3 ROYAL PLAZA ON SCOTTS: SUCCESSFUL BRANDING OF CUSTOMER SERVICE (Enz, et. al., 2009)
Newly independent after thirty-two years of chain affiliation, Royal Plaza on Scotts faced the challenge of establishing itself as an independent brand. The hotel has operated under six names, including the Royal Holiday Inn Crowne Plaza and the Royal Crowne Plaza Singapore, creating a confusing brand image for prospective guests. In 2005 the hotel began a $20-million dollar renovation and was renamed Royal Plaza on Scotts. In conjunction with the physical renovation of the hotel, the general manager stated that upgrading the facility was not enough: We [the staff] must renovate our heartware as well. The management team concurred that product differentiation alone was insufficient to set the hotel apart, especially as one of the few independent hotels operating in the intensely competitive Orchard Road area. In September 2006, therefore, the hotel embarked on redesigning, upgrading, and reenergizing its customer service as a means of creating a differentiated, competitive edge. Royal Plaza on Scotts was one of the first hotels to adopt this approach of branding its customer service through a complex, multistep course of action. 4.3.1 Execution The facility and service upgrade was provoked by customers who commented on the propertys tired look. With the multi-million-dollar makeover, which allowed Royal Plaza to be repositioned as a world-class business hotel, the brand in itself too had to be enlivened so as to be meaningful and relevant to the customers, staff, and the environment. As part of that makeover, the staff had to be capable of articulating and acting on the new brand concept, image, and values in a manner that evoke the customer, interesting way to ensure the success of the newly independent property. The hotel conducted a brand audit by conducting guest focus groups and surveying the staff to discern their likes and dislikes concerning the existing hotel and what they wanted to see in the renovated property. The human resources office collected data from the staff, and customer input was gathered from corporate bookers and regular customers. The focus groups and surveys pinpointed the hotels strengths and weaknesses, including service delivery standards and styles. The team first addressed strengths and weaknesses that allowed a quick response. To create the desired brand image, the hotel ran a two day workshop, facilitated by Barlow and involving three dozen staff members representing a
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cross-section of the hotel, including the general manager. Breaking with tradition, the hotel eliminated scripts and allowed staff members to express themselves naturally. They redefined the tone, spirit and logic of the hotels communication style for both internal and external customers. The key messages of the brand image workshop were also developed and disseminated to the staff. Because the branding strat egy was well supported by the hotels owners and the entire management team, the staff embraced the approach and resulting challenges. Conducted in the three local languages (English, Malay, and Mandarin), the workshops were managed VIP functions, including special food items and personal touches, and showcased new ideas on how to enhance the Royal Plaza customer experience. Thus, the staff was able to experience the new service style. 4.3.2 Outcome Guests noticed the difference in the service delivery soon after reopening, and some guests articulated their experiences using the terms of the brand values. Furthermore, guest comments and ratings catapulted the hotel from its previous position of number 28 (of 184) on Tripadvisor in 2008 to number 7. After the renovation, Royal Plaza won numerous awards, including, in 2007: Best Independent Hotel Award 2007 (TravelWeekly Asia), Expedia Insiders Select 2007 (Expedia), Best City Hotel 2007 (TTG Travel Awards), and Carousel, Best Buffet Restaurant in Singapore 2007 (The Straits Times); and in 2008: ASEAN Green Hotels Recognition Award (Singapore Tourism Board), Best Employer (Individual Category) Award 2008 (Travel Weekly Asia), and Best Independent Hotel Award 2008 (TTG Asia Travel Awards). Not only did employees feel more empowered, as their personal expression was encouraged in the organization, but they were proud to have won the industry awards listed above. In addition, the hotel won new blue-chip accounts, some of which had never previously considered the Royal Plaza. By branding customer service, Royal Plaza was able to clearly articulate and act on its brand promise and to be more focused and consistent in its business objectives, strategies, and customer retention initiatives. Average daily rate increased from S$194.71 in 2006 to S$282.64 in 2008. Similarly, revenue per available room increased from S$123.02 in 2006 to
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S$240.29 in 2008, and gross operating profits increased from nearly 33 percent in 2006 to just over 53 percent in 2008. Since the total estimated cost for the implementation of this innovative practice was S$250,000, the return seems considerable. Although funds have been allocated to sustain these efforts, the view is that the money was well spent. 4.3.3 Insights Any hospitality organization can take the approach used by the Royal Plaza, but it entails a major commitment. Royal Plaza continued to fine-tune its service initiatives to ensure they remained parallel with its brand values. The hotel also sought new ways to measure and reward staff performance on delivering on the brand promise. The process demonstrated that branding is not just about the product, but is manifested in what a company does for its customers and staff. This knowledge and clear actions for institutionalizing the brand values allowed an independent hotel like Royal Plaza to effectively compete with chain-branded hotels by differentiating its service experience. Such a branding effort can be successful only if it has total support from the top and all stakeholders involved. Otherwise, such an initiative will quickly fail. 4.3.4 Analysis The researcher analysed from the above case that the rationale behind innovating the right thing at the right time was explained by the various cautionary activities undertaken by them. The first observations made were with regard to the need for innovating Type of Innovation: Royal Plaza underwent renovations as part of its product innovation process. However, in rebranding itself, it had to undergo change in its customer services, putting it in the Service Process Innovation Paradigm. Within this, its move could be put under Service repositioning, that is, repositioning of an existing service by Avlontis (2001)
Independent Branding: 32 years of affiliations under various names including Royal Holiday Inn Crowne Plaza, Royal Crowne Plaza, Singapore, etc. created confusion of brand image with prospective customers. In trying to find a brand image and an identity for itself, Royal Plaza, decided to innovate their services.
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Competition: Being one of the only independent hotels that were operating in that area, competition was tough and new innovative ideas seemed to be the right answer. In order to acquire a differentiated and competitive edge over the competition, Royal Plaza decided to service innovate.
Product innovation v/s Service innovation: The management of the Royal Plaza agreed that only differentiating the product was not enough to make the hotel one of a kind, especially taking into consideration the intense competition that was seen in that area. Therefore, along with physical renovation of the hotel began their service innovation process which included redesigning, upgrading and reenergizing its customer service.
In 2005 the hotel began a $20-million dollar renovation and was renamed Royal Plaza on Scotts. Other factors that were involved in the development and implementation of their service innovation included, Branding action: Royal Plaza on Scotts was the first hotels to adopt this approach of branding its customer service through a complex, multistep course of action explained in detail ahead. Royal Plaza was going to be repositioned as a world-class business hotel; the brand itself had to be enlivened so as to be meaningful and relevant to the customers, staff, and the community. The staff had to be capable of articulating and acting on the new brand concept, image, and values in an, interesting way to ensure the success. Customer Co-option: The need for upgrading the facility and services was seriously considered after customers thought the property looked tired. Clearly, the consumers thought the hotel needed a breath of fresh air. Service Element: As the innovations were made keeping the customer in mind, the service innovation is consumer-focused. They exceeded customer expectations, with new technology, procedures and methods that would enrich a guests experience.
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Branded Customer Service: The general manager hired the professional help of Janelle Barlow, who is the consultant and the developer of the concept. Firstly, Barlow took into confidence the hotels management by ensuring them that branding the propertys customer service would ensure success. The complex, multi-step course of action: 1. Brand Audit: While brand auditing they conducted guest focus groups and surveyed staff to assess their likes and dislikes concerning the existing hotel. These focus groups helps the management and Barlow pinpoint the hotels Strengths, Weaknesses, Opportunities and Threats (SWOT) including service delivery, standards and styles. 2. Work Shops: To create the desired brand image, the hotel ran a two day workshop. Based on customer feedback management wanted to focus on authenticity as a quality to win repeat customers, in contrast to competitors heavy reliance on scripting and rigid standards, which customers found robotic and cold. Breaking with tradition, the hotel eliminated scripts and allowed staff members to express themselves naturally. They also redefined the tone, spirit and logic of the hotels internal as well as external customers. 3. Brand Champions and Change Catalysts: These employees were chosen to act as role models to help to rally the staff around the brand values identified in the workshop. 4. Brand Development: Step four involved incorporating the brand values into the daily terminologies used in meetings to align the daily staff activities with those values. The hotel reviewed and modified management systems to ensure that its environment was conducive to implementing the new brand values. Brand development was added to the marketing directors responsibilities, so that the corporate brand values were constantly incorporated into messages disseminated to both internal and external customers. 5. Brand Engagement:
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The fifth step involved conducting brand engagement workshops to share the brand audit findings. The meeting then unveiled the desired staff mindset, along with the S.E.R.V.I.C.E. acronym and the brand story. 6. Implementation: The sixth and final phase of the process was implementation, which required several adjustments to hotel processes and procedures. First, recruitment processes had to be altered so that prospective staff members could be evaluated for brand fit, that is, the right attitude to deliver service according to the organizations brand values. Second, an abbreviated version of the brand engagement workshop was integrated into the staff orientation program to ensure that all newcomers comprehended the key values and brand image. Third, the performance management appraisal system was redesigned to include a section dedicated to measuring how each staff member had succeeded in making every brand value come to life within the appraisal period. Fourth, metrics were also established to measure guest feedback on their service experiences with the hotel in a way that was aligned with the brand values. Finally, ongoing system reviews were employed to ensure continuous alignment.
Degree of Employee Empowerment: Management reviewed the degree to which staff members were empowered and define the parameters for involving managerial intervention.
Demonstrating the transformation: The stakeholders, especially customers, needed to be shown that Royal Plaza was undergoing a transformation
Internal Communications: Internal communications, including staff bulletin boards, briefings, a newsletter, and informal meetings, reiterated the S.E.R.V.I.C.E. concept, and colourful posters of each brand value with a brief description, featuring staff as models were displayed in all departments.
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The Logo: In designing the new logo of Royal Plaza on Scotts and all other materials, it was essential that the design elements reflect the hotels new brand values and personality.
Guests noticed the change in the property from the time it opened in 2007 and another success story was made. Guest Comments: Guest comments and ratings catapulted the hotel from its previous position of number 28 (of 184) on Tripadvisor in 2008 to number 7.
Awards and Accolades: After the renovation, Royal Plaza won numerous awards, including, in 2007; Best Independent Hotel Award 2007 (TravelWeekly Asia), Expedia Insiders Select 2007 (Expedia), Best City Hotel 2007 (TTG Travel Awards), etc.
Employee empowerment: As a personal expression of their feelings was encouraged, employees not only felt more empowered but were proud to be a part of that organization
Blue-Chip Accounts: In addition, the hotel won new blue-chip accounts, some of which had never previously considered the Royal Plaza.
By branding customer service, Royal Plaza was able to clearly articulate and act on it s brand promise and to be more focused and consistent in its business objectives, strategies, and customer retention initiatives. In turn, management and staff expressed a constant desire to do things in a refreshing way, personalizing how the staff care d for guests, and seizing moments to transform into extraordinary experiences for Royal Plaza guests. (Enz. et. al., 2009) The hotels owners were pleased with the fact that financial targets were exceeded and returns on investment would be known.
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Market Share: Royal Plaza slowly gained a market share against the internationally branded competition.
ADR, RevPAR, etc.: ADR went up from about $194.71 in 2006 in $$240 in 2008. Similarly, RevPAR increased from S$123.02 in 2006 to S$240.29 in 2008, and gross operating profits increased from nearly 33 percent in 2006 to just over 53 percent in 2008. Since the total estimated cost for the implementation of this innovative practice was S$250,000, the return seems considerable.
Innovating in this manner is something that requires a lot of determination and dedication. Royal Plaza continued to fine-tune its service initiatives to ensure hey remained parallel with its brand values. The hotel also sought new ways to measure and reward staff performance on delivering on the brand promise. Branding not only for products: This process of innovation demonstrated that branding is not just about the product, but is manifested in what a company does for its customers and staff. Although funds have been allocated to sustain these efforts, the view is that the money was well spent. This knowledge and clear actions for institutionalizing the brand values allowed an independent hotel like Royal Plaza to effectively compete with chain-branded hotels by differentiating its service experience. Such a branding effort can be successful only if it has total support from the top and all stakeholders involved. Otherwise, such an initiative will quickly fail.
4.4 Conclusion
One of the organizations were found to have innovated through developing a new service, whereas the other one re-innovated their existing services. The researcher found that both the organizations used their customers as the focus for the innovation of their services. They also used technology to satisfy their innovative services, and their products as well as supporting services which make them successful. These modifications were found to have a positive impact on the organization and its components as their employees were also satisfied with the
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innovation. They were not only given more empowerment which lead to higher employee morale but as a result they performed better and ultimately were more satisfied. Also, the researcher observed that both the organizations had a culture or developed one that was conducive to innovation at various levels. As mentioned earlier, it is difficult to measure the financial impacts of service innovation due to its intangible nature. However, both the organizations won many awards and accolades for their innovative method and culture. The innovation they exercised also impacted various other aspects of their organization that were also recognised by awards as well just guest comments commending their work. Thus, the extent of innovations as well as for their financial benefits. Their financial benefits reflected in their overall performance. Needless to say, customers needs were met and increased their guest satisfaction levels. Both organizations try to gain a competitive advantage by innovation. This was achieved in both cases. However, in terms of the theories and models that have been outlined, both cases adapted these models in order to suit their requirements. They kept in mind external factors such as the customers, environment as well as the market, and internal factors such as employees, stakeholder interests etc.
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Chapter 5: CONCLUSION AND RECOMMENDATIONS

Invention is about bringing new products and technologies into a market, while innovation is about developing new solutions that offer value to the customer. (Knox, 2002) Just lowering costs and improving performance in a competitive market does not lead to sustainable market advantage. Sustainable growth is generated by continuously innovating, thus responding to the causes of change in a particular business environment. This requires a longer-term, customer focused strategy and not the short-term cost cutting advantage. Innovation is achieved undoubtedly through the introduction of new products and service in the market. However, innovation needs to be more broadly defined. it must cover the assets and capabilities of the organization which are managed to create customer value at a corporate level, rather than in the content of revenues, costs, returns associated with a new product or service launch. Innovation is multi-faceted, and has to provide customers with solution as well as products (Knox, 2002)
5.1 Introduction
After comprehensive analysis of the data gathered by the researcher during the course of this research using data from various authors and case analysis, observation and inferences were made. This chapter attempts to conclude the issue identifies and researched in this study. These deductions have been made from a holistic assessment of the data. The researcher has also presented areas where there is scope for further research.
5.2 Discussion
Increased pressure from competition has made innovation a key tool which gives organizations a competitive advantage. However, the advantage gained by innovation is slowly competed out as organizations imitate the product or service. Re-innovation would help the organization to not fall back amongst competition. The survival of established organizations hinges on their capabilities to make adaptive changes whenever the environment changes radically. The importance of innovation in organizations has been highlighted through various theories. Innovation can be done in three ways product innovation, process innovation and market
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innovation. A stark difference in product innovation and service innovation was seen, each having its own pros and cons. The author found that service innovation is largely process based as services are intangible, heterogeneous, inseparable and perishable. It was also found that research in this area is relatively lesser than product innovation as service innovation inherently comes with a host of risks that are involved. This has lead service organizations to innovate less often, leading to research and practical data being hard to find called a service vacuum. Various key elements and aspects which influence service innovation have been discussed. These include market orientation, a balanced corporate culture, effective and efficient innovation strategies, adoption of technology and an ethics code. Besides these, new service development was found to be an effective innovative strategy. Few models were found that theorized the process of NSD. The challenges in service innovation has been done - especially in comparison to product innovation. Here, the four characteristics of services were found to be responsible for many of the challenges. The author then reviewed the key elements in service innovation. This was found to be the beginning for organizations who are thinking of service innovating. Innovation in the hospitality industry was found to be either with respect to the hotel type, use of technology and customization of services. Customization of services is the most commonly seen service innovation. However this too is applicable to various degrees based on the product itself. In order to see the degree to which hospitality firms apply these theoretical inputs, the author has reviewed two case studies regarding service innovation in the hospitality industry. One of these organizations were found to have innovated through developing a new service, whereas the other one re-innovated their existing services. However, it was found that both the organizations however, used their customers as a key input for the innovation of their services. They also used various technologies to satisfy their innovative services. Thus, they were customer-focused. These modifications were found to have a positive impact on the organization and its components as their employees were given more empowerment, leading to higher employee morale as well as better performance and satisfaction. Their corporate culture was found to tend towards innovation. Both the organizations won many accolades for these innovations as
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well as for their financial benefits. Their financial benefits reflected in their overall performance. Needless to say, customers needs were met and increased their guest satisfaction levels. In conclusion, the author found that service innovation had a robust theoretical base even though it is still in its infancy. Practically the various organizations implementing innovation were found to adapt these theoretical input to suit the environment they were functioning in order to maximise their effectiveness. They adapted to the specific market they were serving as well as their specific requirements, using inputs from customers. They adapted also, to technology that was feasible in terms of investment for them. They also mapped their stake holders interest, and satisfied their interests. They both tried to gain a competitive advantage by their respective innovative procedures. Thus, it can be said that service innovation not innovated their organization on a whole as well as improved their performance.
5.3 Recommendations
The author here has made some recommendations for organizations that are planning an innovation in their services. Service innovation being easily imitable, it is necessary that organizations consider continuous innovating them. This will help them gain a competitive advantage in the market and help them not fall back. Organizations must ensure that their core competencies are in tandem with their innovation. Along, with service innovating, it must be noted that many products and services that some of their products and process would need alterations to fulfil the service innovation put to play. Being customer-focused was found to be an advantage. Also, keeping the market in mind while planning the innovation process and implementation is important. Since service innovations are often created to meet a customer need, participants encouraged using technology that allows operators to know more about what customers are thinking. This could mean, harvesting the information found in open forums, as well as new survey techniques that are designed to assess customer preferences, notably, those available through the internet are some methods.
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Technology needs to be harnessed to ensure effective innovation. However, it is necessary to keep in mind the affordability of the organization, so as to not overload the financial structure of the company. Continuously testing, analysing, and improving processes improves the effect of the service innovation.
5.5 Scope for Further Research

The researcher has observed the degree of disparity between the theoretical construct made by various researches done in the past and the practical implementation of these theories in the hospitality industry. It was found that in order to make the theories applicable to the specifics of that particular organization. Many factors such as market, stakeholders interests, customer needs and the overall environment must be taken into consideration. An interesting continuation to this research would be to make comparisons between various innovations done in hotels and test with quantitative studies. A framework can be made for organizations to follow taking into considerations aspects found in Porters 5-forces model and Diamond model. Profitability can be quantified post implementation of innovative services. Also, a more conclusive research must be conducted to generalize the impacts of service innovation for the hospitality industry. The researcher considers risk involved in service innovation to be a particularly fertile topic for research that specifically addresses the challenges to innovation that have been outlined by the researcher. Researchers could pursue work in the service innovation domain. The challenges mentioned in this research, (and others not stated here) provide researchers with the opportunity to conduct research and the potential to contribute significant managerial insight for services. In addition to encouraging future research regarding the challenges of service innovation, it would be of interest to study the current trends in innovation.
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REFERENCES
Agarwal. S; Erramilli, M. K. and Dev, C. S., (2003), Market Orientation and Performance in Service Firms: Role of Innovation, Journal of Services Marketing, Vol.17, No. 1, pp. 68-82
Alam, I. and Perry, I., (2002), A customer -oriented new service development process, Journal of Services Marketing, Vol. 16,No. 6, pp. 515 -534
Alam, I., (2005), Service innovation strategy and process: a cross-national comparative analysis, International Marketing Review, Vol. 23, No. 3, pp 234-254
Andreassen, W., Streukens, S., (2009), Service innovation and electronic word-ofmouth: is it worth listening to?, Managing Service Quality, Vol. 19, No. 3, pp. 249265
Chen, H., Grawe, S. J. and Daugherty, P. J., The relationship between strategic orientation, service innovation, and performance, (2009), International Journal of Physical Distribution & Logistics Management, Vol. 39, No.4, pp.282-300
Drejer, I., (2004), Identifying innovation in surveys of services: a Schumpeterian perspective
Gallouj, F. and Weinsteing, O., (1997), Innovation in Services, Research Policy, Vol. 26, pp. 537-556
Gray, B. J., Matear, S. M., Matheson, P. K., Improving the performance of hospitality firms, International Journal of Contemporary Hospitality Management, Vol. 12, No. 3, pp. 149-155
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Hildebrand, d., Forcada, M. A., Droege, H., (2009), Innovation in services: present findings, and future pathways, Journal of Services Management, Vol. 20, No. 2, pp. 131-155
Jena McGregor, The Worlds Most Innovative Companies, Business Week, April 24, 2006 (www.businessweek.com/magazine/content/06_17/ b3981401.htm)
Johne, A. and Storey, C. (1998), New Service Development: A Review of the Literature and Annotated Bibliography, European Journal of Marketing, 32, 3/4, pp.184-251.
Johne, A., (1999), Successful Market Innovation, European Journal of Innovation Management, Vol. 2, No. 1, pp. 6-11
Kandampully, J., (2002), Innovation as the core competency of a service organization, European Journal of Innovation Management, Vol. 5, No. 1, pp. 18 -26
Khan, M. and Khan, M. A., (2009), How technological innovations extend ser vices outreach to customers: The changing shape of hospitality services taxonomy, International Journal of Hospitality Management, Vol. 21, No. 5, pp. 509-522
Knox, S., (2002), The Boardroom Agenda: developing the innovative organization, Corporate Governance, Vol. 2,No. 1, pp. 27-36
Nambisian, S. (2002), Designing virtual customer environments for new product development: toward a theory, Academy of Management Review, 27, 3, pp.392-413.
Oke, A., (2007), Innovation types and innovation management p ractices in service companies, International Journal of Operations and Production Management, Vol. 27, No. 6, 564-587
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Ottenbacher M.C., (2007), Innovation Management in the Hospitality Industry: Different Strategies for Achieving Success, Journal of Ho spitality & Tourism Research, 31, 4, pp.431-454.
Sekran, U. (2003) Research methods for business, New York: John Wiley and Sons. Siguaw, A. J., Enz, C. A., Kimes, S. E., Verma, R. and Walsh, K., (2009), Cases in Innovative Practices in Hospitality and Related Services, Cornell Hospitality Report, Vol. 9, No. 17
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Verma, R., Anderson, C., Thompson, G., (2008), Key Elements in Service Innovation: Insights for the Hospitality Industry, Cornell Hospitality Roundtable Proceedings
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Service Innovation - Theory and Practice in The Hospitality Industry

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INSTITUTE OF HOTEL MANAGEMENT, AURANGABAD

Aarthi Ramani (H-1401)

Submitted in Fulfillment of the Requirement for BA (Hons.) in Hotel Management

THE UNIVERSITY OF HUDDERSFIELD, UNITED KINGDOM April, 2010

Service Innovation: Theory and Practice in the Hospitality Industry

Aarthi Ramani (H-1401) April, 2010

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

Chapter 1: ISSUE IDENTIFICATION

1.2 Issue Identification

Service Innovation: Theory and Practice in the Hospitality Industry

1.3 Aim and Objectives

Service Innovation: Theory and Practice in the Hospitality Industry

Statement of aim and objectives and outline structure

Review of previous literature

Methodology used for research

Analysis of case study

Conslusion and Recommendations

Service Innovation: Theory and Practice in the Hospitality Industry

Chapter 2: LITERATURE REVIEW

2.2 Need for Innovation

Service Innovation: Theory and Practice in the Hospitality Industry

2.3 Traditional Innovation

2.4 Innovation Now

Service Innovation: Theory and Practice in the Hospitality Industry

2.5 Types of Innovation

Service Innovation: Theory and Practice in the Hospitality Industry

2.4 Service Innovation

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

2.5 Products vs. Service

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

2.6 Limitation to New Product Innovation

Service Innovation: Theory and Practice in the Hospitality Industry

2.7 Service Vacuum

Service Innovation: Theory and Practice in the Hospitality Industry

2.8 Theoretical Framework

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

2.9 Innovating Services

(Gray, Matear and Matheson, 2000)

Service Innovation: Theory and Practice in the Hospitality Industry

2.10 Service Process Innovation

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

2.12 Key Elements in Service Innovation

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

Service Innovation: Theory and Practice in the Hospitality Industry

Chapter 3: RESEARCH METHODOLOGY

3.2 Research Purpose