Successful new service development: A study of the hotel industry in Germany

Abstract

Meeting the challenges of an unstable and turbulent business environment is not easy, it is like Darwin's evolution theory — survival of the fittest. In order to survive in the market place, it is important for service organisations to successfully develop new services. Despite the importance of successfully developing new services, knowledge about how to achieve success is limited because the failure rate for new service developments (NSD) remains high in comparison to new product developments (NPD). The success rate for new service projects are on average 58 percent, in other words, four out of ten new services fail in the market place. Therefore, it is critical to expand the knowledge of the factors that impact innovation efforts performance, if service firms are to significantly improve their low success rate.

In the past, several empirical studies have investigated the success factors associated with NSD and have shown the important role of service employees within NSD activities, however, they have not specifically addressed the issue of how to manage human resources for maximum effect. Service employees are enormously critical to the success of the organisation they represent because they directly impact customers' satisfaction. The attitudes and behaviours of service employees can significantly influence customers' perceptions of the service, and therefore, service organisations must find ways by which they can effectively manage their service employees' attitudes and behaviours so that they deliver high quality service. Furthermore, the majority of NSD research has concentrated on the financial service sector. Therefore, this study addresses the gaps in the literature by examining the impact of employee management on NSD success and investigates what factors impact on the performance of NSD in the hotel industry.

The findings of this study suggest that successful outcome in NSD is not the result of managing one or two activities very well, it is the result of managing several aspects competently and in a balanced manner. The success determinants can be summarised into four groups: (i) product-related, (ii) market-related, (iii) process-related and (iv) organisational-related. Key success factors relate especially to the market and organisational dimensions, while most factors of the process dimensions influence the performance of new hotel service projects. The factors of employee management were of fundamental importance. The factors of employee management that have a strong impact on NSD performance were strategic human resource management, behaviour-based evaluation, empowerment and training of employees. Most success factors found in previous NSD studies have been confirmed, while some factors have been partly confirmed or not confirmed at all for the hotel sector. The findings of this study demonstrated and empirically confirmed that employee management is an important aspect in NSD. Furthermore, these results contribute academically and some useful managerial implications can be drawn from the findings.