To: Director, Tourism Local Authority-New Zealand
From: Director, Marketing-RTO Erehwon
Re: Improving innovation process to tackle peak tourism periods
Date: 1 June 2011
The peak period of tourism season has been a challenge to handle due to the negativity surrounding RTO Erehwon. RTO Erehwon has continuously failed in its innovative processes and this has lead to a number of destination marketing challenges. RTO Erehwon has undergone many changes in the last 8 years hence causing lack of stability in the individuals handling processes. They staff turnover is high, with processes being changed every 18 months. This has led to lack of continuity and knowledge cannot be passed on how to handle destination marketing, hence causing issues with the absorptive capacity and innovation process.2.0 Issue Brief
From: Director of Marketing, RTO Erehwon
Re: The Failure of the Regional Tourism Organisation of Erehwon’s Innovation Processes
Date: 1 June 2011
The issue that needs to be tackled is the failure of the RTO’s failure to implement innovation at Erehwon especially during the peak tourism seasons.
Background and Discussions
RTO Erehwon is a small organization, which combines Regional Tourism and EDA in terms of funding but is considered as a medium sized company in terms of FTE. The organization has four main managers and employees report to the general manager. The company receives a total funding of between $500 million and $1 million annually. The company mostly is a representation of domestic visitors.
Innovation management is the way an organization systematically promotes innovations through various tasks like planning, organization, management and control (Brexendorf, Bayus & Keller, 2015). Absorptive Capacity is the ability of an organization to absorb new information and apply it to its business. An organisation should be aware of the information that is out there and they can be able to apply to their business (Tortoriello, 2015). RTO Erehwon is facing a number of issues when it comes to innovation management and absorptive capacity. These issues have been brought about by different factors in the organization’s micro and macro environment.
The major issues that are being faced by the company are lack of good marketing strategies and low employee morale due to frequent leadership changes that have led to high turnover. All these have affected innovation an absorptive capacity. When it comes to marketing of products, it is evident that the management of RTO Erehwon have clear ideas on how innovation can give them advantage in the industry in terms of marketing. The managers have different ideas on how the organization can come up with unique products but are yet to implement them because of different distractions.
Marketing strategies are poor because managers are not working together to come up with the required strategies. An example is when one of the managers, Andrew Abbot who has a gate-keeping role decides not to involve his team members with tourism knowledge in a decision, which he makes to use RTO’s financial resources, to contract an outside firm to develop some creative content before launching a campaign proposal. Such behaviors hamper innovation in organizations as individuals feel that they are being sidelined.
Poor Marketing has led to RTO Erehwon not having a good relationship with its stakeholders. This is demonstrated by various stakeholder comments. Some stakeholders feel that the marketing strategies, which are being used, are going against the organisation rather than help the organization. They also feel that RTO Erehwon has staff with knowledge concerning products but this knowledge is not being passed down to the consumers in terms of the products being marketed. They feel that senior management does not listen to them (Kraiczy, Hack & Kellermanns, 2015).
The budget for the company has also been cut down by TLA and this leads to RTO Erehwon using resources, which are meant for destination marketing and using them for economic development projects (O'Connor et al, 2014). Negative sentiments by stakeholders led to withdrawal of funding hence forcing the company to review its budget. This has further led to poor marketing, as the available budget is not enough for the company to fully develop its marketing strategy.
RTO Erehwon does not understand the needs of the consumers as demonstrated by one of the stakeholders. Stakeholders claim that the marketing strategies of the organization do not have selling points which are unique and do not carry out destination marketing campaigns well. This led to negative perception that the company is low performing and has very little success. This affects innovation as organizations who innovate understand the needs of the customers perfectly.
RTO Erehwon’s ACAP process was put in place to enable the organization acquire, transform and exploit knowledge that was considered useful for its marketing tasks. The organization however has not done this hence leading to poor marketing of its services. No knowledge has been gained for the use in any marketing strategy.
The other major problem facing RTO Erehwon is low employee morale which has been brought about by many leadership changes as these has brought about a number of issues. Low employee morale has brought about problems in the structure of the company. The company has a flat structure, which should be favourable for innovation. A flat structure enables effective communication and teamwork and this leads to motivation of employees, which in turn leads to creativity and new ideas. Low employee morale has led to lack of ideas flowing as they should at hence leading to lack of innovation as some people may have information and keep it to themselves (West & Bogers, 2014).
Due to numerous leadership changes, training and development has not taken place hence contributing to the low employee morale. Training and development is key in any organization for motivated staff. The organization has not put emphasis on training and development yet most of its leaders do not have experience in the tourism sector. The management are to be trained on various areas so that they can have information needed to be well versed with the tourism sector of the region. There is no one to provide development and mentorship due to high turnover rates. Employees have to learn on their own and this has caused stress hence leading to lack of motivation.
Innovation thrives where people work together despite being in separate departments. There seems to be many good ideas from RTO Erehwon but implementation is a problem due to lack of teamwork, as morale is low in the company. Andrew Abbot for example has a lot of knowledge but is not willing to share with his fellow colleagues.
An organization should be able to audit its core knowledge and use knowledge that it already has to its advantage. At RTO Erehwon, boundary spanners used the knowledge, which they already had to raise the knowledge of gatekeepers who would later influence the organization’s strategy (Wales, Parida & Patel, 2013). Social integration mechanisms enabled employees to access previous knowledge. Low morale among employees has led to knowledge not being passed effectively as it should.
Options and Recommendations
Poor marketing and low morale at the company has been caused by different issues as per the audit results. The company should use the areas with the lowest scores on the radar chart to come up with effective solutions. According to the Absorptive Capacity Audit radar chart, the company has been unable to use knowledge continuously so that it can come up with an effective marketing strategy for peak times and this has a score of one. They have also been unable to absorb and assimilate external information necessary for coming up with a good strategy for peak times hence achieving a score of one in this area too. Adapting external knowledge is also an issue in the company and here the score is three. For Erehwon to succeed therefore, they must use knowledge to train and develop employees and to come up with good marketing strategies. Absorption and assimilation of external information must be done through benchmarking and applying this to market better and to boost employee morale.
The innovation Audit as per the radar graph has the lowest ratings on strategies, organization, linkages and learning and scores here were all slightly above two. This shows that the organization has no effective strategies for innovation, there is lack of organization, and they use no external linkages and do not focus on learning. For the organization to solve the issues of poor marketing and low employee morale, they have to come up with new strategies.
RTO Erehwon will implement its strategies according to the areas that were lowest in the radar charts. The company will adapt and use external knowledge, which it will gain from the other RTOs in the industry, both big and small. Knowledge will be absorbed and assimilated by taking employees through training and giving them practical on the job experiences. Erehwon will appropriate benefits being received from various knowledge areas and assess the impact they are having on employees. All these knowledge gained will then be used repeatedly in training new employees and in implementing strategies for marketing and boosting employee morale.
Erehwon will put in place marketing strategies and human resources strategies. The strategies must come up with ways in which the organization will market its products in a superior manner and how it will take care of employees to boost morale. They must also use learning as a tool for improvement. They must learn how to market effectively and how to handle human resources in a way that will reduce turnover rate. Erehwon will create linkages with organisations that will help it improve on its processes and become successful. Processes must also be streamlined to create conducive working environment and come up with appropriate plans. The company must also organize itself well if it is to succeed in destination marketing.
Ahlin, B., Drnovšek, M., & Hisrich, R. D. (2014). Exploring the moderating effects of absorptive capacity on the relationship between social networks and innovation. Journal for East European management studies, 213-235.
Ashton, A. S. (2014). Tourist destination brand image development—an analysis based on stakeholders’ perception: A case study from Southland, New Zealand. Journal of Vacation Marketing, 20(3), 279-292.
Backmann, J., Hoegl, M., & Cordery, J. L. (2015). Soaking it up: Absorptive capacity in interorganizational new product development teams. Journal of Product Innovation Management, 32(6), 861-877.
Brexendorf, T. O., Bayus, B., & Keller, K. L. (2015). Understanding the interplay between brand and innovation management: findings and future research directions. Academy of Marketing Science. Journal, 43(5), 548.
Kraiczy, N. D., Hack, A., & Kellermanns, F. W. (2015). The relationship between top management team innovation orientation and firm growth: the mediating role of firm innovativeness. International Journal of Innovation Management, 19(01), 1550005.
O'Connor, G. C., Ravichandran, T., Choi, B. C., & Ma, J. (2014, January). Organizing for breakthrough innovation: leadership, structures, and processes. In Academy of Management Proceedings (Vol. 2014, No. 1, p. 12870). Academy of Management.
Pearce, D. G. (2015). Destination management in New Zealand: Structures and functions. Journal of Destination Marketing & Management, 4(1), 1-12.
Tortoriello, M., 2015. The social underpinnings of absorptive capacity: The moderating effects of structural holes on innovation generation based on external knowledge. Strategic Management Journal, 36(4), pp.586-597.
Wales, W. J., Parida, V., & Patel, P. C. (2013). Too much of a good thing? Absorptive capacity, firm performance, and the moderating role of entrepreneurial orientation. Strategic Management Journal, 34(5), 622-633.
West, J., & Bogers, M. (2014). Leveraging external sources of innovation: a review of research on open innovation. Journal of Product Innovation Management, 31(4), 814-831.