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Harvard Case - Copenhagen Airports A/S: Innovation in Flight Mode?

"Copenhagen Airports A/S: Innovation in Flight Mode?" Harvard business case study is written by Christoph Grimpe, Nathan Rietzler. It deals with the challenges in the field of Entrepreneurship. The case study is 12 page(s) long and it was first published on : Dec 1, 2022

At Fern Fort University, we recommend Copenhagen Airports A/S (CPH) pursue a multi-pronged innovation strategy focused on enhancing the passenger experience, leveraging technology to streamline operations, and fostering a culture of continuous improvement. This strategy should involve a combination of internal innovation through dedicated teams and external partnerships with startups, incubators, and technology companies.

2. Background

Copenhagen Airports A/S is facing increasing competition from other European airports, particularly in the low-cost carrier segment. To maintain its position as a leading airport, CPH needs to differentiate itself by offering a superior passenger experience, improving operational efficiency, and adapting to evolving traveler needs.

The case study highlights CPH?s existing efforts in innovation, including the establishment of the Innovation Lab and collaborations with startups. However, these initiatives are fragmented and lack a cohesive strategy.

3. Analysis of the Case Study

Strategic Framework: We can analyze CPH?s situation using the Porter?s Five Forces framework:

  • Threat of New Entrants: High, due to the growing number of low-cost carriers and the ease of establishing new airport infrastructure.
  • Bargaining Power of Buyers: Moderate, as passengers have options for choosing airlines and airports.
  • Bargaining Power of Suppliers: Low, as CPH has a diverse supplier base.
  • Threat of Substitute Products: Moderate, as passengers can choose alternative modes of transportation like trains or buses.
  • Rivalry Among Existing Competitors: High, as European airports compete for passengers and airlines.

Key Challenges:

  • Lack of Clear Innovation Strategy: CPH?s innovation efforts are scattered and lack a clear direction.
  • Limited Internal Resources: CPH?s internal innovation team is small and lacks the expertise in emerging technologies.
  • Siloed Decision-Making: Different departments operate in silos, hindering cross-functional collaboration.
  • Resistance to Change: CPH?s traditional organizational culture may resist adopting new technologies and processes.

Opportunities:

  • Emerging Technologies: CPH can leverage technologies like artificial intelligence, blockchain, and internet of things (IoT) to improve operations and enhance the passenger experience.
  • Startup Ecosystem: CPH can tap into the vibrant Danish startup ecosystem to access innovative solutions and partnerships.
  • Data Analytics: CPH can utilize data analytics to understand passenger behavior and personalize services.
  • Sustainability Focus: CPH can position itself as a leader in sustainable airport operations, attracting environmentally conscious travelers.

4. Recommendations

1. Develop a Comprehensive Innovation Strategy:

  • Define Clear Goals: CPH should define specific, measurable, achievable, relevant, and time-bound (SMART) innovation goals aligned with its overall business strategy.
  • Establish an Innovation Council: A cross-functional council composed of executives from various departments should oversee the innovation strategy and prioritize initiatives.
  • Allocate Resources: CPH should allocate sufficient budget and resources to support the innovation strategy, including hiring skilled personnel and investing in technology.

2. Foster a Culture of Innovation:

  • Encourage Experimentation: CPH should create a culture that encourages experimentation and risk-taking, allowing employees to explore new ideas and solutions.
  • Promote Collaboration: CPH should break down silos and encourage cross-functional collaboration between departments, including IT, operations, marketing, and customer service.
  • Recognize and Reward Innovation: CPH should recognize and reward employees who contribute to innovative ideas and successful projects.

3. Leverage External Partnerships:

  • Establish a Startup Incubator: CPH should create an incubator program to support promising startups developing solutions relevant to the airport industry. This program can provide mentorship, funding, and access to CPH?s infrastructure.
  • Partner with Technology Companies: CPH should partner with technology companies specializing in areas like AI, data analytics, and cybersecurity to develop and implement innovative solutions.
  • Engage with Industry Associations: CPH should actively participate in industry associations and conferences to stay informed about emerging trends and collaborate with other airports.

4. Focus on Key Innovation Areas:

  • Passenger Experience: CPH should focus on enhancing the passenger experience by leveraging technology to streamline check-in, security, and baggage handling processes. This includes implementing self-service kiosks, automated baggage drop-off, and real-time flight information systems.
  • Operational Efficiency: CPH should utilize data analytics and AI to optimize airport operations, including resource allocation, runway management, and ground handling.
  • Sustainability: CPH should invest in sustainable infrastructure and technologies to reduce its environmental footprint, attracting environmentally conscious travelers and meeting regulatory requirements.

5. Basis of Recommendations

These recommendations are based on the following considerations:

  • Core Competencies and Consistency with Mission: The recommendations align with CPH?s mission to provide a safe, efficient, and enjoyable travel experience.
  • External Customers and Internal Clients: The recommendations address the needs of passengers, airlines, and airport staff.
  • Competitors: The recommendations aim to differentiate CPH from its competitors by leveraging technology and innovation.
  • Attractiveness: The recommendations are expected to improve passenger satisfaction, operational efficiency, and financial performance.
  • Assumptions: The recommendations assume that CPH has the resources and commitment to implement the proposed initiatives and that the technology landscape will continue to evolve rapidly.

6. Conclusion

By embracing a comprehensive innovation strategy, fostering a culture of continuous improvement, and leveraging external partnerships, Copenhagen Airports A/S can position itself as a leader in the European airport industry. This strategy will enhance the passenger experience, improve operational efficiency, and ensure CPH?s long-term success.

7. Discussion

Alternatives:

  • Maintain Status Quo: CPH could continue its current approach, relying on incremental improvements and avoiding significant investments in innovation. However, this approach risks falling behind competitors and losing market share.
  • Focus Solely on Internal Innovation: CPH could focus exclusively on developing innovative solutions internally. However, this approach may limit access to cutting-edge technologies and expertise.

Risks:

  • Technological Disruption: Rapid technological advancements could render CPH?s investments obsolete.
  • Resistance to Change: CPH?s employees and stakeholders may resist adopting new technologies and processes.
  • Financial Risk: Investing in innovation can be costly, and the return on investment may not be immediate.

Key Assumptions:

  • CPH has the resources and commitment to implement the proposed initiatives.
  • The technology landscape will continue to evolve rapidly, providing opportunities for innovation.
  • Passengers will value the improvements in the passenger experience and operational efficiency.

8. Next Steps

Timeline:

  • Year 1: Develop a comprehensive innovation strategy, establish an innovation council, and pilot innovative solutions.
  • Year 2: Implement key innovation initiatives, including the establishment of a startup incubator and partnerships with technology companies.
  • Year 3: Evaluate the impact of innovation initiatives and refine the strategy based on results.

Key Milestones:

  • Q1 2024: Define innovation goals and establish an innovation council.
  • Q2 2024: Launch a pilot program for a new self-service check-in system.
  • Q3 2024: Partner with a technology company to develop an AI-powered solution for baggage handling.
  • Q4 2024: Launch a startup incubator program and host a pitch competition for promising startups.

By taking these steps, Copenhagen Airports A/S can position itself as a leader in innovation and ensure its continued success in the competitive European airport market.

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Case Description

Copenhagen Airports A/S (CPH) has been severely hit by the COVID-19 pandemic, with flight activity at levels not seen since the 1970s. Although the virus overshadows everything, three senior managers discuss a more long-term trend: the steadily declining revenues of the airport's shopping mall. Over the past number of years, consumer interest in food, beverages, and tax-free items has continuously decreased, posing considerable challenges to CPH's business model. About 80 per cent of the airport's profits are generated by the non-aeronautical business, of which the shopping mall is the biggest part, and CPH needs that income to continue investing into the airport's status as an important hub for airlines. What could CPH do to deliver better existing services, and what new services would merit serious consideration? Could CPH launch new products or services that would be attractive to both passengers and shopping mall tenants, or would it need to redevelop its entire business model? Since the commercial business was key to driving the airport's further development, the managers knew that finding answers to these questions was important to sustaining CPH's position as a leading hub in Northern Europe. The case is not about the COVID-19 pandemic and its implications for the aviation industry. This is a case about the long-term trend of declining revenues in the airport's shopping mall.

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