CitizenM Hotels: Service Operations & Business Model Innovation

authorsBob Lillis, Chris van der Hoven and Keith Goffin of Cranfield University School of Management discuss their multimedia case, CitizenM Hotels: Service Operations & Business Model Innovation.

CitizenM broke the mould in designing and creating a customer value proposition that is highly regarded by the customer segments they have targeted. However, Chief Operating Officer Michael Levie argues that in order to grow an entirely novel value proposition, he and his co-founders had to make a clean break from traditional management and culture in this part of the service sector because it was so 'strait-jacketed' that it was impossible to be radical. This case covers CitizenM’s unique business model and service operations configuration, and students are challenged to analyse the elements that have resulted in their success and growth. Multiple areas of interest are covered including their use of social media, daily operations and maintenance interactions, their novel use of hi-tech lighting and communications, and specialist recruitment techniques. The case contains extensive video interviews with Michael Levie and some of his key staff in Amsterdam.

Why CitizenM?

netherlands

The ‘traditional’ hotel sector is plagued by low margins and low to zero growth. What growth there is, is often top-line volume related and frequently driven by cost-cutting and acquisitions - typical behaviour in mature industries that have run out of ideas, or are locked into assets and business model configurations that prevent growth. In this sector and similar businesses, short-term margin gains can be attained by cutting costs and improving efficiencies, and volume growth from consolidation in the sector. However, these actions can only go so far - sustainable growth doesn’t typically come from cost-cutting. New value has to be created through innovation processes. The starting point for this journey is exemplified in this case - ie understanding the extent to which new value can be ‘locked-out’ by existing business models and the related pursuit of efficiencies.

We also felt that there was a gap for a service operations management case that graphically demonstrates how service managers seek to influence and control touch points that cumulatively comprise the customer experience in an experiential service setting like a hotel. When one of the authors stayed at the CitizenM hotel in Amsterdam he recognised the uniqueness of their customer value proposition and thought it would make a great case to fill the identified gap. He introduced himself, left his business card and asked if we could follow up with a visit to talk to their management and staff.

Why multimedia?

We believe that a multimedia case is an excellent medium to illustrate the behavioural aspects of service operations. For example, one sequence is filmed using the ‘Blair Witch Project’ approach (see section 2 of the case), as if the visit and experience is seen through the eyes of a guest who arrives at the hotel from the airport, checks in, goes to the room, looks around the room, visits the lounge, has breakfast and checks out. Its purpose is to provide visual signals and stimulants to convey an experience that written narrative cannot.

Multimedia allowed us to provide content in both visual and written form to cater for different learning styles and preferences. For example, the interviews are videoed but transcriptions are also provided in written PDF format. In addition, for courses that favour the case method, the use of multimedia cases can add variety and interest to traditional paper based modules. Feedback from students and educators has been very positive about our choice to use the multimedia format.

Multimedia challenges

When planning the case we had to address the usual issues of who to interview, interview questions/scripts, data collection and analyses, and permission to use the finished case. The use of multimedia also presented another raft of issues to consider such as who to film, how to film, what to edit and the various ways to design the case format.

video

The main challenge centred around editing, especially how to present the case in a multimedia format that would engage and sustain student interest. We knew that the entire case should ideally take a maximum of 40 minutes to view. To hold the students’ attention we took the decision that the video content should be in bite-sized chunks rather than long interviews with staff.

We also had to consider how to make the case available to a wide audience while looking after the investment made by Cranfield School of Management in the development of the case. A decision was taken to provide the case at no cost to users in the hope that they would recognise the benefits for their own learning, but also recognise their obligation to acknowledge the authors.

We learned many lessons during the case development process, the main two being:

  1. do not underestimate the time needed in the planning phase
  2. do not underestimate the difficulties with editing and getting to grips with technological issues.

Engaging students

To engage students we had to make sure the case design was good. Thanks go to Sam Rios, IT Graphic Designer, and Marie Creasey, Business Systems Specialist, in the School of Management Business Technology Group who successfully translated our ideas into something workable.

CitizenM hotels are interesting places and offer an insightful vehicle for any case study, we have tried to convey this in our work. To gauge student reaction we surveyed the class after using the case for the first time. All 30 participants returned a completed questionnaire and overall the feedback was very positive.

Using the case

We use the case for executive education courses to examine Strategic Innovation Management, Innovative Business Models and Service Innovation. We also use it in the Operations Management core module of our MBA programme for a session that looks at managing the customer experience.

Each delegate can be given access to the case at www.thecasecentre.org/CitizenMcase in advance of an intervention, or on the day. Depending on the size of the class they can work individually or in groups as required. With large groups we have played extracts from the case in a plenary room and then asked small groups to work together on formulating their view in response to specific issues raised. They then report back in turn, group-by-group or selectively, depending on the time available.

Themes

Broadly we cover both Operations Management and Innovation Management related content.

Operations Management is traditionally concerned with managing processes in terms of waste elimination and the application of bottleneck management principles in order to speed up throughput time in a process. There is a general lack of materials that adequately convey the rapidly developing service operations topic of how to manage behavioural operations. Traditionally, services marketing have taken the lead in this broad area, but we argue that managing touch points is an operations management responsibility. CitizenM provides an excellent setting to demonstrate how these touch points or service encounters are managed.

screenshot

Innovation Management is usually associated with growth aspirations. Unfortunately, there is a fairly low level of awareness that growth can be attained through the systematic application of innovation techniques. This case can be used as a basis for the discussion about the impact of innovation on a growth strategy in an organisation. It can be used as a vehicle to allow C-level executives to try their hand at value innovation techniques (eg as used in Blue Ocean Strategy), business model canvas (eg ways to lock-in value or ways to disrupt and lock-out competitors), and service innovation (eg using the service concept and service blueprinting). It is possible to do a Porter’s 5 forces analysis using the case and to discuss the need to choose combinations of customer segments and customer value propositions, and by definition to deselect some of these combinations. It is also possible, with a little preparation, to use the case for a ‘technology/product roadmap’ analysis with associated project portfolio selection techniques for ‘core space’ and ‘white space’ (including technology push and market pull options).

The content is sufficiently rich and topical to provide enough information for both a superficial discussion on expansion or disruption strategies (eg “If you were the board of CitizenM what would you do to launch this value proposition in Asia?”), and sufficiently detailed to allow delegates to do actual analysis (eg business models, service innovation, and differentiation through value innovation techniques).

Case details

Bob Lillis, Chris van der Hoven and Keith Goffin
Cranfield University School of Management
Ref 312-164-1
Please note that the case uses Flash and cannot be viewed on some tablet devices and smart phones.

About the authors

Bob Lillis is a Senior Lecturer in Service Operations Management at Cranfield University School of Management, UK. e bob.lillis@cranfield.ac.uk

Chris van der Hoven is a Senior Lecturer in Innovation at Cranfield University School of Management, UK. e chris.vanderhoven@cranfield.ac.uk

Keith Goffin is Professor of Innovation and New Product Development at Cranfield University School of Management, UK. e k.goffin@cranfield.ac.uk

Recommended reading

View full list of featured cases

Share this page:

Share your experience

Contact us
 
If you have recently registered a case with us and would like the chance to talk about your experience of writing and teaching it please contact Antoinette.
 
Antoinette Mills Antoinette Mills
Media and Systems Development Manager
+44 (0)1234 756416
antoinette@thecasecentre.org