Swimming in the Blue Ocean of Growth, Starwood Hotels Continues to Innovate

By Imran Suleman

As a business traveler, you have at one time or another stayed at a Starwood Hotel or Resort or one of its many internationally known brands such as the Sheraton or Westin .  One of the reasons why you and many others chose to stay at a Starwood Hotel and Resort may have to do with the way Robyn Pratt and her team at Starwood elect to grow their business.

“About two years ago, a lot of questions were raised about how to be innovative at Starwood,” explains Robyn Pratt, Vice President of Six Sigma and Operational Innovation (Europe, Africa, and the Middle East), from her office in Brussels, Belgium.  It was at this juncture that the Senior Leadership team of Starwood EAME developed their Operational Innovation team, headed by Pratt.  In an industry marred by fierce competition and shrinking margins, this group thought long and hard about gaining market share, and gaining it rapidly.

Starwood Hotels and Resorts, one of the world’s largest hotel companies, has been able to hold strong where the competition and economic environment can drive industry forces against its players with swift ease.  In order for Starwood to be competitive and successful, innovative tool sets were needed to augment Starwood’s methodical investment in Lean Management and Six Sigma.  In order for Starwood to actually grow, Pratt noticed the value that lay in capturing uncontested market space to spur Starwood’s growth.

“We looked at the non-customers in our industry, and how we could convert them into a customer,” says Pratt. This was an important discussion point for the Starwood innovation team.  Since the existing pool of hotel customers were finite, small, and already being fought over fiercely by several hotels, growth for Starwood lay in acquiring, retaining, and growing that market segment that do not stay at hotels.

BLUE OCEAN STRATEGY

Blue Ocean Strategy, a methodology and tool, first developed by W. Chan Kim and Renée Mauborgne in their best selling book of the same name, was going to be the cornerstone of Pratt’s approach to innovation.  In association with a leadership programme at INSEAD , headed by Adjunct Professor Jens Meyer, Starwood EAME leadership decided to embark upon the Blue Ocean path to grow Starwood.

Blue Ocean Strategy is a business strategy that empowers you to be competitive in uncontested, undiscovered market spaces where there is no competition.  Whereas there are companies that emphasize the value of Lean and Six Sigma, or Blue Ocean strategy to achieve success, Starwood consciously went after looking for ways to marry both Lean Six Sigma and Blue Ocean in their approach.

VOICE OF THE NON-CUSTOMER

It takes a long time to find those Blue Oceans and to grow, says Pratt.  “The Nintendo Wii used Blue Ocean strategy to compete with its arch rivals, including the Playstation.” According to Pratt, Nintendo looked at those who did not play video games, and found out that there were several reasons why such potential users shied away from video games. One of them was the amount of violence found in such activity. 

Nintendo began to create an experience for a market segment that did not traditionally indulge in video gaming.  As stated by Satoru Iwata, Nintendo President: "…We're not thinking about fighting Sony , but about how many people we can get to play games. The thing we're thinking about most is not portable systems, consoles, and so-forth, but that we want to get new people playing games." (Source ). 

The Wii was created and developed, and was able to gain market share in uncontested space. As of the first quarter of 2008, the Wii had sold an unprecedented 24.45 million units worldwide, setting several sales records across the globe.

Pratt explains that it is this same philosophy, of going after the non-customer, the non-user of your offering or service that will be the growth inducer for your company.

As part of their mission to succeed, Starwood began to conduct in-depth interviews to gain an understanding of the elements that would drive the non customer to Starwood. “For example, we started talking to consumers shopping for beds,” says Pratt.  Additionally, they spoke with the sales people, and tried to identify the attributes that a bed shopper looks for when purchasing a bed. 

Once such in-depth data was gathered through interviews, the process of selling the Blue Ocean tool to leadership began.  “Selling to leadership is still a challenging task,” says Pratt.  Whereas it is easy with Six Sigma to show a structured path that will take you from point A to point B, with Blue Ocean the direction is not always clear. “You could start somewhere, and end up in a place that is completely different than you expected,” says Pratt.

Another distinctive feature that is part and parcel of Pratt’s interpretation of Blue Ocean strategy revolves around not identifying the blue “ocean” all at once, but instead finding the “blue puddles, lakes or rivers.” Identifying the smaller potential avenues of success can lead to a greater incremental triumph over the passage of time.

Today, Starwood has set an example in the industry by growing its share of the market by articulating its quest for growth through the successful use of tools like Blue Ocean strategy, alongside an imperative Lean Six Sigma program.  Pratt says that in the coming months Starwood will be ready to announce another innovation strategy that they are equally enthused about.

Blue Ocean Strategy (BOS)

• A strategy to grow market share by creating and conquering uncontested market space
• BOS is explained in the book “Blue Ocean Strategy” by W. Chan Kim and Renee’ Mauborgne
• http://www.blueoceanstrategy.com

Starwood Hotels and Resorts

• Incorporated in 1980
• one of the world’s largest hotel and leisure companies
• Brand names include the Westin, Sheraton, W and more
• http://www.starwoodhotels.com

Imran Suleman holds a BS from Ithaca College (1997) and an MBA from Binghamton University (2002).  He can be reached at isuleman@gmail.com.

XONITEK Corporation is a management and technologies consulting firm with a world wide presence and a reputation for excelling in the optimization of business synchronization .