CASE OPTION 1:
Management Is Social Business Working Out?
Social networking has never been more popular, with social tools accounting for 20 percent of all online activity, according to ComScore. Many of today’s employees are already well versed in the basics of public social networking using tools such as Facebook, Twitter, and Instagram. Larry Ellison, head of the giant software firm Oracle, even went so far as to declare that social networking should be the backbone of business applications and that Facebook is a good model for how users should interact with software. But when it comes to actually using social tools for internal business purposes, the results have been mixed.
Information Week’s 2013 Social Networking in the Enterprise Survey found that only 18 percent of respondents believed their internal social networking programs were successful. The Information Week survey cited lackluster adoption as a major obstacle to success. As with many technology upgrades, companies that have tried to deploy internal social networks have found that employees are used to doing business in a certain way, and overcoming that organizational inertia can prove difficult. IT leaders hoping to switch to a more social, collaborative office culture usually find that most employees still prefer to use e-mail, for example. The employees may feel too time-pressed to learn a new software tool.
Employees who are used to collaborating and doing business in more traditional ways need an incentive to use social software. Most companies are not providing that incentive: only 22 percent of social software users believe the technology to be necessary to their jobs. You might join Facebook because all your friends are on it, but in the workplace, ease of use and increased job efficiency are more important than peer pressure in driving adoption.
IT organizations need to take charge to ensure that the internal and external social networking efforts of the company are providing genuine value to the business. Content on the networks needs to be relevant, up-to-date, and easy to access; users need to be able to connect to people that have the information they need and that would otherwise be out of reach or difficult to reach. Social business tools should be appropriate for the tasks on hand and the organization’s business processes, and users need to understand how and why to use them.
In the summer of 2009, the NASA’s Goddard Space Flight Center launched a custom-built enterprise social network called Spacebook to help small teams collaborate without e-mailing larger groups. Spacebook featured user profiles, group workspaces (wikis, file sharing, discussion forums, groups), and social bookmarks. Very few users adopted it, and Spacebook was decommissioned on June 1, 2012. According to Kevin Jones, a consulting social and organizational strategist at NASA’s Marshall and Goddard Space Flight Centers, Spacebook failed because it didn’t focus enough on people. It had been designed and developed without taking into consideration the organization’s culture and politics. No one knew how Spacebook would help them do their jobs, as opposed to an existing method of collaboration such as e-mail.
Despite the pitfalls associated with launching an internal social network, there are companies using these networks successfully. For example, Red Robin, a chain of 355 restaurants with over 20,000 employees, uses social networking to give its front-line employees who interact with customers a greater voice in the company. Chris Laping, Red Robin’s CIO and senior vice-president of business transformation believed that engaging these workers would also increase employee loyalty.
Red Robin decided to try out Yammer, which is referred to as a “Facebook for business.” Yammer lets people create conversations, perform status updates, upload and share files, and set up workgroups for small project teams. The social collaboration software would allow Red Robin to get out a message and receive immediate feedback, so that the company could rapidly make modifications. For example, when Red Robin introduced its new Tavern Burger product line in April, 2012, it was able to refine the recipes and operational procedures in restaurants in about four weeks. The process would have taken 6 to 18 months in the past. Guests reported their feedback to servers in the restaurants, who relayed this information to their managers. Then all the managers got together right away on Yammer.
Red Robin used a viral approach to drive adoption. In the first month, 20 to 25 employees started using it and invited others. Membership spread quickly and Red Robin wound up with two Yammer networks:
“Yummversity” is a network for training employees, while “Yummer” is a network for restaurant managers, regional managers, and corporate office members to exchange information and respond to questions from the field staff. Yummer provides a voice for the company’s front-line workers. In the past they would pass information up the corporate management chain, but rarely received feedback about what was done with the information.
Yummer also provided the foundation for the company’s “Blueprint Project” designed to identify the best employee idea for cutting expenses without negatively impacting the customer experience. Thousands of people contributed ideas to compete for a $1000 prize. The winning entry was from a Seattle location manager who proposed replacing disposable child beverage cups with reusable ones. This seemingly small change produced a six-figure savings for the company.
Case Study Questions
- Identify the management, organization, and technology factors responsible for impeding adoption of internal corporate social networks.
- Compare the experiences for implementing internal social networks of the two organizations. Why was one more successful than the other? What role did management play in this process?
Should all companies implement internal enterprise social networks? Why or why not?
References:
Donston-Miller, D. (March 6, 2013). 10 Ways to Foster Effective Social Employees. Information Week.
Healey, M. (March 4, 2013). Why Enterprise Social Networking Falls Short. Information Week.
Jones, M. (March 4, 2013). “Top Four Social Collaboration Software Fails,” Retrieved from www. Searchcustomization.com.
Kern, J. (February 28, 2012). Enterprises ‘Like’ Social Networks, Don’t ‘Love’ Results. Information Management.
Lavenda, D. (2014). How Red Robin Transformed Its Business with Yammer. Fast Company.
Morgan, J. (Week, March 21, 2013). How to Market Collaboration to Employees. Information Week.
Niccolai, J. (January 30, 2014). Ellison: Facebook the New Model for Business Applications. IDG News Service.
CASE OPTION 2
Technology Will Mobile Technology Put Orbitz in the Lead?
When it comes to mobile apps and gauging their impact on consumers and business, the online travel industry and its airline and hotel reservation systems are probably the best place to look. And there’s no better company in this industry in developing mobile apps than Orbitz Worldwide Inc. Orbitz connects consumers to plane tickets from 400 airlines, hotel rooms from 80,000 hotels worldwide, as well as rental cars, cruises, and vacation packages.
Orbitz was launched in 2001 by five major airlines—Delta, United, Continental, Northwest, and American, to compete with Internet travel companies such as Priceline, Travelocity, and Expedia, which were upending the travel industry. These companies have remained formidable competitors.
From its very beginning, Orbitz distinguished itself as a leader in mobile technology. In 2006, it became the first Internet travel company to offer a mobile Web site where users could check flight status for 27 airlines, search for hotels in the United States and Cancun, Mexico, and access a personal page with itineraries for Orbitz-booked trips.
During the years that followed, Orbiz made many enhancements to its mobile services. It enabled mobile users to view average wait times for airport security lines, locate available Wi-Fi services at airports, compute check-in delays and taxi line wait times, and view weather and traffic conditions. In 2010, Orbitz redesigned its mobile Web site so that users of any Web-enabled device could access capabilities similar to any full-screen e-commerce site, including the ability to purchase flight tickets, book car rentals, and obtain hotel reservations. Like the standard Orbitz Web site, the redesigned mobile site offers a Price Assurance service, which guarantees customers an automatic refund if another Orbitz customer books the same service for less. Orbitz also developed apps that ran on iPhones, iPads and later Android devices that could perform the same functions.
Orbitz was first-to-market with an m-commerce site designed specifically for business users. The opportunity was huge, since most business travelers carry smartphones or tablets. Corporate travelers typically must adhere to company rules specifying preferred vendors, cost limits, mandatory services, and expense documentation. Since each company has its own business “rules” for travel, the Orbitz m-commerce platform needed to be customized for each firm. Orbitz constructed a mobile Web site that could be accessed from any Web-enabled device. The Orbitz for Business mobile Web site delivers the same set of tools enjoyed by the consumer market while incorporating features that enable business travelers to adhere to company guidelines—the ability to enter and modify the purpose of the trip, search results that give precedence to preferred vendors, and access to company-specific reference data.
In 2011, the m-commerce site was again upgraded to respond to swiping gestures, expedite touch screen transactions, and accommodate the small screen size of any Web-enabled mobile device. Orbitz’s new proprietary global online travel agency platform creates mobile HTML5 Web pages on the fly from standard e-commerce Web pages. Mobile users can book vacation packages, view the savings from simultaneously booking a flight and hotel room, and create an online profile linked to their credit card to expedite the checkout process.
GPS and improved search capabilities enable consumers to locate nearby hotels and conduct price, distance, and rating comparisons; to compare flights and car rentals based on various criteria, including traveler type; and to access customer reviews. Orbitz also instituted mobile exclusive same-day deals, called Mobile Steals, available both on the m-commerce site and through the Hotels by Orbitz app available for iPhone and Android devices. Proprietors are able to fill rooms that might otherwise remain vacant, and consumers save up to 50 percent of the standard rate. While only 12–14 percent of traditional e-commerce Web site shoppers want to reserve a room for the day on which they are searching, smartphone and other mobile users book for the same night between 50 to 60 percent of the time because they are more likely to be traveling and need a room at the last minute.
Orbitz touts the ability to book a hotel room in just three taps. The new mobile Web site has produced a 110 percent increase in visits, a 145 percent increase in the conversion rate, and four times the number of transactions compared to the original Orbitz m-commerce site. Orbitz has been focusing on lodging because hotel bookings are more profitable than airline reservations. Priceline.com, the largest and most profitable online travel agency, generates approximately 90 percent of its sales from hotels. Orbitz receives only 27 percent of revenue from hotels.
Orbitz further enhanced its iOS and Android apps to cut down the number of steps required to search for and make reservations so that the entire process can take place on the mobile device without redirecting the user to hotel, airline, or car rental Web sites to complete the transaction. Orbitz now has apps for the iPhone, iPad, iPod Touch, Kindle Fire, and Android devices.
Does all this investment in mobile technology make a difference? Chris Brown, Orbitz vice president in charge of product strategy, believes that the ability to be a major player in the rapidly escalating m-commerce market will pay off. Increased transaction speed provided by Orbitz mobile apps will attract new customers, especially those trying to book same-day reservations, which account for about 50 percent of Orbitz’s mobile car rental purchases. Consumers who book with mobile devices tend to book closer to when they travel and are more certain to buy than just shop. By the end of 2013, mobile apps accounted for about 30 percent of Orbitz hotel transactions.
But the other online travel players also believe consumers will increasingly move to mobile to make their travel plans, and they also have been making large investments in mobile Web sites, search tools, and apps. Priceline and TripAdvisor have rated highest in providing an engaging, enjoy able experience on their sites, and both continue to enjoy much stronger growth in unique visitors and visits than Expedia and Orbitz. Travelers are increasingly planning trips on sites such as TripAdvisor, which aggregate offerings from a number of different online sources in one place. TripAdvisor offers more than 100 million traveler reviews and obtains most of its revenue from ads and referrals to other travel sites. TripAdvisor recently redesigned its Web site to show customers all the rates offered by online agents like Expedia, Priceline, and Travelocity in a single list on its site. By using this “metasearch” capability, customers are able to find the lowest prices on a single screen without having to click on several links.
Case Study Questions
- How important is mobile technology in Orbitz’s business strategy? Why?
- What managment, organization, and technology issues did Orbitz need to address in its mobile strategy?
- Why are mobile phone users much more likely to book same-day hotel room or airline reservations?
- What role does Orbitz for Business play in the company’s business strategy?
- How successful is Orbitz’s mobile strategy? Explain your answer.
References:
McCartney, S. (April 23, 2014). Free Travel Free-for-All Among Online Booking Sites. Wall Street Journal
Orbitz Worldwide, Inc. (OWW). (March 18, 2014). SEC Filing 10-K Annual Report for the Fiscal Year Ending Tuesday, December 31, 2013.
Jacobs, K. (August 8, 2013). Orbitz Profit Tops Forecasts, Hotel Booking Revenues Up. Reuters.
Fitzgerald, D. (August 8, 2013 ). Out of Nest, TripAdvisor Soars Past Expedia,” Wall Street Journal.
Baker, K. (January 10, 2013). Orbitz Falls as CIO Exit Rekindles Hotel Growth Concerns. Bloomberg Businessweek.
Peckyno, R. (July 29, 2013). How Mobile Will Impact Online Travel Companies. Motley Fool.
Siwicki, B. Orbitz Spreads Its ‘Mobile Magic’ Throughout a Redesigned M-commerce Site. Internet Retailer.
Laudon, K. C. and Traver, C. G, (2013). E-Commerce 2013. Pearson Education.
