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May 10, 2013

Space Ho­tels, LTD —Part 1


A Fictional Business Case Study

Space Ho­tels, LTD. (SHL) was the num­ber two ho­tel chain in the coun­try. How­ev­er num­ber three and num­ber four were al­ways at its heels, try­ing to knock it down from its 2nd place. In oth­er words the com­pe­ti­tion was some­thing fierce.


The best ideas are common property.
—Seneca, Epistles (5 BC – 65 AD)


pyramidSHL was a clas­si­cal hi­er­ar­chi­cal and pyra­mi­dal or­ga­ni­za­tion which con­cen­trat­ed pow­er at the top. Al­though they had com­pe­tent and ded­i­cat­ed em­ploy­ees, ideas that did not con­form to those from top man­age­ment, sel­dom went any­where. The most com­mon ex­cuse giv­en was to say that those ideas were not in sync with in­dus­try’s “best prac­tices.

SHL’s top man­age­ment was al­ways pre­oc­cu­pied with their num­ber one com­peti­tor and mar­ket lead­er, GLOB­AL HO­TELS. They were par­tic­u­lar­ly keen in find­ing out any new prod­ucts and ser­vices which GLOB­AL HO­TELS might have in their pipeline; sim­ply to im­i­tate them. More­over, they did not pay any at­ten­tion what­so­ev­er to their small­er com­peti­tors: Boast­ing that their own mar­ket share would shield them from any sud­den dis­rup­tion.

Our sto­ry be­gins with Ms. June Space­walk­er; a very ef­fi­cient and loy­al call cen­ter op­er­a­tor. The call cen­ter ac­count­ed over 65% of SHL’s rev­enues; so it was, crit­i­cal to the bot­tom line. Call cen­ter op­er­a­tors had to be trained for a long pe­ri­od of time, in or­der to mas­ter a com­plex IT lega­cy com­put­er sys­tem; which SHL had writ­ten and main­tained, over the years.

One morn­ing, June was book­ing a lux­u­ri­ous ho­tel room and out of the blue the cus­tomer said:

—Could you please make sure that there is pink toi­let pa­per in the bath­room?
Tak­en aback by this odd re­quest, she replied:
I’m sor­ry sir, but I have no way to put this in­to the com­put­er.
The cus­tomer in­sist­ed:
—I am will­ing to pay re­al mon­ey, as long I can have pink toi­let pa­per in the room!
Last­ly, June told him:
Sir, I can­not promise you any­thing but I’ll see what I can do. Thank you for do­ing busi­ness with Space Ho­tels and en­joy your stay wit us.

pink_toilet_paper3Through­out the rest week June took at least a dozen sim­i­lar calls. It was startling to hear these cus­tomers clam­or­ing for pink toi­let pa­per. Dili­gent­ly, June went to John Mars, her young su­per­vi­sor, and told him the sto­ry. She sug­gest­ed that the com­pa­ny could earn ex­tra in­come by pro­vid­ing pink toi­let pa­per as a new fea­tured ser­vice. Last­ly she told John:

I know that IT is re­al­ly busy with more im­por­tant things, but, if we could get them lis­ten we would have a win­ner here.

John did not re­al­ly be­lieve her; af­ter all, she had been with the com­pa­ny for so long, who knew what was re­al­ly hap­pen­ing. Nev­er­the­less he said:

June, let me look in­to it. Thanks for the heads-up and keep up the good work.

John su­per­vised 32 call cen­ter op­er­a­tors and sure enough he start­ed get­ting sim­i­lar re­ports from them. Think­ing that this could help with his next job re­view, he went to Bill Or­bit; his man­ag­er. How­ev­er, he didn’t just want to pass the in­for­ma­tion along and up the lad­der; he was de­ter­mined to put his two cents in and to show that he was on the ball. John said:




Hey Bill, do you have minute? I don’t know if you are aware, but my peo­ple have been get­ting a lot of calls from mo­ti­vat­ed cus­tomers which are al­most de­mand­ing, that we pro­vide them with green toi­let pa­per in their ho­tel rooms.

In turn Bill went to Lin­da Star­dust, who was the di­rec­tor of the 1100-strong call cen­ter op­er­a­tions. He too put a lit­tle spin on his sto­ry. Bill said:

Lin­da you and I have known each oth­er for a long time. I know that we may not make our num­bers this year

Lin­da replied:

Yes Bill, this is putting a lot of pres­sure on me, es­pe­cial­ly since I am get­ting heat from up­stairs

Bill con­tin­ued:

Well, I have been get­ting some re­ports that sev­er­al of our cus­tomers are re­quest­ing that we pro­vide them with box­es of laven­der tis­sue pa­per.

Bill got Lin­da’s at­ten­tion so she asked him for more. Bill con­tin­ued:

I was think­ing that maybe we could pack­age these re­quests as a new ser­vice and per­haps this could help us with our cur­rent jam.

 SPACE HO­TELS start­ed los­ing book­ings to its third place com­peti­tor HUN­GRY HO­TELS, even dur­ing their peak sea­son.

A few months lat­er and based on the rec­om­men­da­tions from the VP of mar­ket­ing, the ex­ec­u­tive team agreed that IT was go­ing to mod­i­fy their lega­cy sys­tems. Call cen­ter op­er­a­tors would then be able to of­fer their brand spank­ing new prod­uct: Rain­bow col­ored nap­kins. Fur­ther­more, they were go­ing to spend more mon­ey on op­er­a­tor train­ing and a mar­ket­ing cam­paign. They would tar­get their re­peat cus­tomers via their Space Ho­tel News mag­a­zine.

It took them over six months to turn over the pro­ject to pro­duc­tion. Ev­ery­body was cel­e­brat­ing and con­grat­u­lat­ing them­selves. For once, they ar­gued, they had been more in­no­va­tive and re­spon­sive than GLOB­AL HO­TELS.

But as you might have guessed it, SHL start­ed los­ing book­ings to its third place com­peti­tor HUN­GRY HO­TELS, INC. (HHI) This hap­pened, even dur­ing their peak sea­son. A pro­cess of fin­ger-point­ing, re­crim­i­na­tion and even lay­offs of call cen­ter op­er­a­tors en­sued.

custodian2In the mean time, HHI dis­placed SHL, be­com­ing the 2nd mar­ket play­er. It turns out that a low­ly HHI cus­to­di­an em­ploy­ee had worked in the pa­per mill plant that ac­tu­al­ly pro­duced the so called pink toi­let pa­per.

One evening while on du­ty, the cus­to­di­an and HHI’s CEO were rid­ing the el­e­va­tor to­geth­er. He got up the nerve to speak to the CEO and told him that he heard about study that the pa­per mill com­pa­ny had com­mis­sioned. The ru­mors, he con­tin­ued, clear­ly stat­ed that pink toiled pa­per could cure can­cer. Why not have HHI of­fer it to their cus­tomers?

In­trigued by such an idea, the CEO had his team qui­et­ly in­ves­ti­gate this out. It ap­pears that there was some truth to it. Fur­ther­more, they polled the mar­ket and performed some focus groups, and they saw a clear trend. So with­out hes­i­ta­tion, they went on to de­liv­er prod­uct to mar­ket first, and in full force. In turn, the cus­to­di­an re­ceived a well de­served bonus that year.


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