Inovation Business Model work

Please be sure to complete all sections and address all questions

A. Finalize Problem Formulation (30 pts total)

In order to generate solutions to a problem you need to target specific problems. Looking back at the last project your group completed, Please select three of the most significant challenges identified (from that entire project) that seem like they could be resolved with a process, management, or business model innovation

A1. Root Cause Analysis (15 pts): Start by doing a root cause analysis (5 why’s) exploration to examine the underlying reasons for each of the three problems you identified (at each level ask why, identify several potential reasons, select the one or two that seems most significant, and ask why again, repeat). Remember, you want make sure that your underlying reasons are things that can be changed or controlled by you as you redesign the organization's, management systems, and business model. Also remember the number 5 is not magical – the best challenge to focus on might still be the top level one, it might be one level down, or it might be 5 levels down (or you might even identify a new one through the process of thinking more deeply about a number of issues).

Challenge / Opportunity #1: Changes the concept of what a salon and a spa are

· women go to spas to relax

· costs for launch are high to accommodate both

· difficult to find/hire qualified employees

· lots of regulations on both sides

· hard to create an environment that meets both settings

· costly

· requires very different equipment

· conflicting atmosphere

· hard to find employees that are qualified for both areas

· salons/spas are often an escape from work

· spas work hard to remove you from the “real world”

· women have a lot of responsibilities between running a household and working

· many women don’t always take a lot of “me-time”

· people are busy, always working

· efficient use of free time

· can relax while taking care of hair, nails, and other needs

· customers trust spa/salon employees

· relaxed multitasking: get ready while relaxing

· requires little to no effort from the consumer

· fun to have someone pamper you; differs from normal routine

· people are busy so it is hard to efficiently balance working and relaxing

· Problem Statement: Business people don’t have an efficient way to combine relaxation and work time because people’s work lives and personal lives have become more intertwined.

Challenge / Opportunity #2: Difficulty with hiring/A waste of employee time and resources

· Employees might not have the required skills to fulfill the responsibilities of both a personal assistant and a salon worker (one or the other)

· Possible requirement to hire more people to bridge the gap between the two skill sets → hiring a set of salon workers AND a set of assistants

· Problem Statement: It is hard to find people skilled in both styling and business, therefore the salon may have to give in and hire employees with only one of the skill sets instead of both. This means more employees must be hired and therefore can be very costly.

· Employees may be inefficiently using time as personal assistants since they must remain by the side of a single customer rather than being able to accommodate multiple customers managed by most salons

· Costly to hire and employ people that are qualified for the vast set of skills needed

· Inefficient and problematic workspace-- stylists are supposed to come to the customer while the customer is stationary the whole time

· Most salons have multiple stations for each skill set (i.e. nails, hair, and make-up)

· Stylists have to constantly move tools/ equipment from customer to customer; some equipment is hard to move

· There is a chance for open space to be left vacant for long periods of time; break out rooms take up space, but are not always used

· This would cause major structural changes because many pieces of salon equipment are designed to stay in one place

· Creates more demanding work for employees- Employees are burnt out faster from constantly moving

· Employees must bring their specific supplies with them as they change stations

· Employees must be able to complete both stylist and personal assistant (business) tasks

· Clients may be overly demanding to employees because of the personal assistant aspect of the job

· This causes employees to be on their feet more than a traditional salon, leaving little to no time for breaks

· Quality of employees work is decreased because they are tired from having to move around constantly

· Problem Statement: If employees are worked too hard and are constantly tired, then their quality of service to their clients is decreased which can lead to low customer satisfaction and loyalty.

· Employees must be able to complete both stylist and personal assistant (business) tasks

· This causes employees to be on their feet more than a traditional salon, leaving little to no time for breaks

· Constant need to move around causes employees to value speed & efficiency over quality

· Less facetime between clients and stylists causes worsened customer relations

· Problem Statement: Customer relations is extremely poor because there is negligible time between consumer and employee spent connecting.

· Decreases trust in the client/stylist relationship

· Each customer requires more attention than a traditional spa in which the customer moves to accommodate the employee

· Clients are more focused on work than on talking or connecting with employees who are treating them

Challenge / Opportunity #3: Targeting the wrong/not all possible customers

· Marketing to a very specific narrow base of customers

· Not all the business entities are required for each client

· Specifically segments women but proposes a solution that is also compatible with the needs of business men

· Neglects to consider the generational differences of people currently in the workforce

· Could be compatible with lifestyles that do not revolve around the workforce

· Non-working mothers also use salon services, but often refrain due to overhanging responsibilities

· People use the spa as an escape from work/daily life

· Millennials and those of younger generations feel like they can’t spare time out of their “busy” lifestyle

· Elderly women enjoy going to the salon in groups with their friends; this format caters to more socialization among clients

· Can be versatile in many different applications across different groups (i.e. Bachelorette party etc.)

· Non-working mothers also use salon services, but often refrain due to overhanging responsibilities

· Millennials and those of younger generations feel like they can’t spare time out of their “busy” lifestyle

· Elderly women enjoy going to the salon in groups with their friends; this format caters to more socialization among clients

· People use salons as a pre-event activity (ex. Pre-wedding, Pre-prom, etc.)

· People sometimes use salons for party events, such as Bachelorette or birthday parties

· There is a drastic difference between a girl’s night out and a business meeting

· Salons are seen as a place for leisurely activities

· There is a possibility for decreased income, because a party would restrict the time that a salon is open to multiple clients

· Parties have the potential to be booked at a rush time for walk in/individual clients

· Depending on parties’ needs, they may not be utilizing the full services of the salon. Whereas, lost potential customers might have.

· Parties would book out the salon for multiple hours; a time that the salon could be catering to multiple rounds of clients

· Problem Statement: Having parties booked for a number of hours eliminates the opportunity for other people to come in, resulting in a slower turnover of customers and potential for less revenue

A2. Problem Formulation (15 pts): Based on your root cause analysis / 5-whys exploration above as well as your original challenge / problem identification project, formulate several problem statements that you think would strengthen the original idea if they are resolved. In Part B and C of this assignment, you will be brainstorming solutions to these problems. If you reach a dead end on one problem you might need to switch to brainstorm solutions to another problem statement. Please frame these problems statements here and briefly discuss why each is so important:

Problem Statement #1: Business people don’t have an efficient way to combine relaxation and work time because people’s work lives and personal lives have become more intertwined.

Why is this problem so important to solve: This is a mass sector of our population facing a common issue that has potential to be solved and to better/bring balance to consumer lives.

Problem Statement #2: Customer relations is extremely poor because there is negligible time between consumer and employee spent connecting.

Why is this problem so important to solve: If customer relations is poor, then there’s a low chance of establishing customer loyalty which has a major negative impact on revenue.

Problem Statement #3: Having parties booked for a number of hours eliminates the opportunity for other people to come in, resulting in a slower turnover of customers.

Why is this problem so important to solve: A slower turnover rate of customers, due to the salon being booked out for parties, can result in a loss of income depending on the parties needs and number of people.

Problem Statement #4: If employees are worked too hard and are constantly tired, then their quality of service to their clients is decreased which can lead to low customer satisfaction and loyalty.

Why is this problem so important to solve: Low satisfaction and loyalty rates can result in low numbers of customers, resulting in decreased revenue and margins. This can put the salon in jeopardy to stay in business.

Problem Statement #5: It is hard to find people skilled in both styling and business, therefore the salon may have to give in and hire employees with only one of the skill sets instead of both. This means more employees must be hired and therefore can be very costly.

Why is this problem so important to solve: The more employees the business has to hire, the more paychecks have to be given out. This cuts into initial revenue for the business, decreases the chance for competitive wages in the industry.

B. Process or Management Innovation Ideas (30 pts total)

B1. Brainstorm a large list of solutions (Process or Management Innovations) (10 pts):

Select two or three of the above Problem Statements (make sure that the ones you choose are operational in nature (pertains to value chain activities or management systems) or can be solved with a different organizational design, process innovation, or management innovation). For each of the problems that you explore, brainstorm a large list of process or management innovations that can help overcome the problem:

Underlying Problem #1: Business people don’t have an efficient way to combine relaxation and work time

· Building salons in office spaces

· Companies scheduling salon services for employees throughout the work week

· Having one-on-one meetings at a spa instead of a cafe/food place

· A coworking space built with salon integrations (i.e. foot spas built attached to office chairs)

· Bring the salon to the business people- salon stylists go into companies and provide salon services during work day

· Spa conference rooms; getting spa services while in a meeting

· Creating salons that integrate team-building activities so they can be used for company retreats

· traveling spas can come to the place of work give people a break from their office lives

Underlying Problem #2: It is hard to find people skilled in both styling and business, therefore the salon may have to give in and hire employees with only one of the skill sets instead of both. This means more employees must be hired and therefore can be very costly.

· Targeting individuals who have business background but are looking for a change in career paths for employment opportunities

· Market to cosmetology grads and offer a program to offer on the job business training or introduction to business environments

· Creating programs for criminals with business backgrounds to earn cosmetology degrees

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B2. Select & Describe Most Interesting Process or Management Innovation Ideas (20 pts)

Finally, out of all the ideas identified, select and describe the 2-3 process or management innovations which seem most interesting. Which offer the most potential to evolve the original idea to overcome challenges or enhance impact? Please discuss each idea in some detail. In your discussion be sure to cover – if it is a process innovation: how does the new process / set of activities create more value or eliminate waste / reduces costs, or otherwise positively affects the process of creating the product or service? If it is a management innovation: how might the new management system help better identify, hire, reward, motivate, develop, etc… employees. For any idea, highlight unknowns or uncertainties that remain for each of these modifications to the initial idea and what might be some unintended side effects? etc...

Process / Management Innovation #1: Building salons in office spaces (Jen)

Process / Management Innovation #2:

Process / Management Innovation #3: Market to cosmetology grads and offer a program to offer on the job business training or introduction to business environments

C. Business Model Innovation (40 pts total)

Essentially in this area we are looking for business model innovations that address some fundamental flaws in the initial business model envisioned. You can dramatically change the potential success of your venture by changing aspects of the business model while staying more or less true to the original idea (or at least staying true to the type of value creation and opportunity that motivates you in the first place). Please feel free to utilize any of the techniques you have learned so far for the following sections – you may use root cause analysis, job mapping or other design thinking techniques, research and trend analysis, divergent thinking techniques like forced association, etc…

C1. Innovate to Drive Adoption (10 pts)（John）

First brainstorm a large number of ideas about how to modify the business model to encourage adoption – how can you

increase compatibility, increase simplicity, increase observability, or increase trialability?