Innovation does not have to require more features, more functionality, and more sophistication
“Cost-cutting” and “innovation” often end up on opposite ends of the corporate seesaw: emphasis on one comes at the expense of the other. In company after company, conversations about innovation are isolated from conversations about serious cost-cutting. The two occur among entirely different groups of people, referring to different projects taking place at different times and sometimes on entirely different corporate campuses.
This divide is artificial--and it masks an enormous opportunity to deliver transformative, category-changing innovations. Over the past 7 years, New Markets leadership has catalogued hundreds of examples of what we call costovation--a type of innovation that significantly compresses costs while still wowing customers. Costovations meet or exceed customer expectations with less, and they appear in companies large and small, young and established, in developed and developing markets, and across a fantastically wide array of industries.
Companies like Yotel have mastered the art of selling a unique, low-priced service to a specific customer set. Yotel has established itself in and around international airports like London Heathrow and Paris CDG to service the ubiquitous time-conscious business traveler. The company recognizes the priorities of this group (a decent bed, an excellent shower, free WiFi, and most importantly, proximity to their next flight) and has tailored its offerings to address these needs directly and cost-effectively.
Unlike typical airport hotels that are accessible only by shuttle, Yotel often offers accommodations directly on-site. The rooms are much smaller than a typical hotel room, allowing the company to save on real estate, and automated check-in kiosks and food-vending walls erase the need for extensive personnel. These costovation strategies enable Yotel to offer rooms that are much less expensive than a typical hotel, and much more appealing to time-starved business travelers looking for a place to clean up, plug in, and rest before the next leg of their journey.