Deconstruct a breakthrough innovation strategy step by step.
Ampersand’s method helps teams to clarify their aspirations, align their efforts and pull the business forward to a more compelling future. This case example illustrates how your team could use this approach.
From Empire to Dynasty
For context, permit a bit of history. In 1839, Jamsetji Tata was born in Gujarat, India under the British Raj. At 29 he launched the trading company that would become the Tata Group – a symbol of hospitality in an inhospitable empire. Tata went on to build the gleaming Taj Mahal Palace, the first luxury hotel constructed in India, by India, for India. (He felt compelled after being refused entrance. to the Watson’s Hotel restricted access to “whites only”. A century foreign travelers and wealthy Indians are drawn to the to the jewel on the Mumbai peninsula, the pinnacle of the Taj Hotel dynasty.
From Top to Bottom
A century later, Tata Group’s third generation Chairman Emeritus Ratan oversaw a vast portfolio. Taj Hotels no longer served only the most prestigious travelers.
Chairman Emeritus Ratan Tata
Taj Hotel Group CEO Rakesh Sarna
Late Professor C.K. Prahlahad
Solve from the bottom up
To accomplish this feat, Tata turned to the late professor CK Prahalad. CK promoted a new hypothesis—industry missed an enormous opportunity at the “bottom of the pyramid”. He cited leading indicators, such as the early work of Grameen Bank. Tata invited Prahlahad to Mumbai to address their executive team.
The $26 Challenge
Prahlahad kicked off by describing his own experience of waking up that morning at the Taj as “deeply disturbing.” A surprised murmer ran through the assembled executives. He asked them for the average price of a night’s stay at the Taj. They indicated $400. He pummeld them with questions:- “How many travelers does that serve?”
- “What percentage of overnight travelers through Mumbai might that represent?”
- “What do you suppose would be the average monthly income of the rest of those travelers?”
- “What is your monthly income?”
- “Could your family afford to stay at this magnificent hotel?”
Wildfire
Code-named ‘Wildfire’, Taj’s design team rallied around the challenge . They sweated the details. They sought input from staff at every level. And they went out into the streets.
In six weeks, they produced their innovation strategy, summarized in eight steps.
Innovation Delivered
As promised, Prahlahad returned exactly on the team’s deadline. A nervous spokeswoman presented Wildfire’s plans. First she apologized; they had tried to meet the challenge but fallen short. “I’m sorry sir. We thought we could reach $26 per night. But customers told us that flat screen TVs would be an important amenity. And an air-conditioned fitness center. That pushed us up to… $27.50.” CK grinned. The team shared mock-ups of the model site. Drawings and spreadsheets presented a well-lit lobby and welcoming spaces, a common dining area, fitness center, laundry and double rooms with bath and – sure enough – flat screens in every room.But wait. The numbers didn’t add up. How could Taj afford to operate profitably at $27.50? CK pinned the spreadsheet with his index finger.
“You forgot labor costs! ”
Hotels traditionally organize around service models with high labor costs. Hierarchies manage functional chains of command (front desk, housekeeping, food service, etc.), a distinct division of labor across multiple shifts. Motels, by contrast, like fast-food restaurants, design for self-service.
Meet Ginger
Wildfire produced the Taj economy hotel chain “Ginger”, priced below 1,000 rupees for a double room. Ginger hotels now dot the map around India’s major cities. Ginger signage invites you to “Please Serve Yourself”. No one greets you; at best you may find the one staffer onsite to clean and replenish common spaces at night, rooms during the day. Check in at the automated kiosk, which issues your keycard. Select hot and cold meals from vending machines. By clever design, Ginger invites you to tidy up for your fellow guests. Few of these concepts are new to the world. 40 years earlier, McDonald’s trays taught the world to dispose of their own waste. The difference was applying it to a hotel model, and designing with an elegant simplicity that made new behaviors feel completely natural. Ginger’s first property launched in Bangalore in 2004. They expanded almost as fast as they could acquire property. Their now familiar orange banner welcomes guests at key junctures along rail and road. Today Ginger proudly serves native intercity travelers across India. Within a decade they became both the largest and most profitable asset in the Taj portfolio.
Ginger serves the common traveler, a much needed welcome to the bottom of the pyramid. The Taj Palace may have been a hotel worthy of Bombay. Ginger provided a hotel worthy of all India.
Design Your Own Innovation Strategy
How might Tata’s lessons inform your own growth plans? Could your enterprise welcome the bottom of the pyramid? What kind of innovation strategy would “democratize” your offering? What opportunities would that open for your business? You’re only eight steps from creating the jewel your dynasty.
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