According to our class readings about innovation, there are several key aspects
that a company, particularly one in the airline industry, should consider if it wants to
In Peter Drucker's article "The Discipline of Innovation," the
author defines innovation as the effort that a company makes to increase a company's
potential through focused and directed change.
Drucker notes that there are multiple
resources that a company can look to for innovation opportunities, including industry
and marketing changes, unexpected occurrences, incongruities, process needs,
changes in perception, demographic changes, and new knowledge, for which the
accessibility of, as Friedman highlights, is expanding exponentially.
examine these resources for potential innovation using the framework of Porter's "Five
Forces that Shape Strategy."
In the airline industry, big companies such as Delta have
recently found it very difficult to attempt to counter the threat posed by new low-cost
carrier entrants, whose fleets are made up of a single type of jet craft, which helps to
counteract the bargaining power of suppliers, and who lack labor unions that they have
to contend with.
With these low-cost carriers and the advent of instant internet price
comparisons, combating the bargaining power of customers has also proved difficult for
the major airlines.
To temper the threat of substitute products or services and limit price
wars arising from rivalry among existing competitors, for which the major airlines cannot
win, airlines need to offer products that differ significantly from competitors' products
and provide wider accessibility.
Since Delta cannot compete with the prices offered by
the low-cost carries, it is putting resources into the expansion of its international travel,
which is a market with minimal low-cost competition and few transportation substitutes.
Airlines should also look to their core competencies for innovation.
Though it did not
last, the culture of teamwork between management and labor, which resulted under the
leadership of Gerald Grinstein, can be viewed as one of Delta's core competences.
These competencies represent the collective learning of an organization that, if aligned