Innovation as a need for business survival

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It is a fact nowadays that in order for a firm to tackle any possible challenges that occur in the "business world", innovation can be proved as one of the best strategies for the firm. Innovation and more specifically managing the innovation can increase the firm's productivity, can help improve the way business' processes are made and can lead the firm to gain and sustain a competitive advantage in the market.(Tidd)

One good example to examine the role of innovation to a firm and how did it contribute to the successful start and growth of the firm is the case of EasyJet. The low-cost airline company was founded in 1995 by Sir Stelios Haji-Ioannou and in a short period of time managed to shake the waters of airline industry by mainly changing the procedures that until last decade were used. In reality Easyjet did not change any of the basic technological parts of the airline industry but what it did was to change the whole idea of flights and the way it was done up to then. This was done by taking advantage of the Internet and at the same time by reducing distribution costs (booking tickets via the internet), reducing any "unnecessary" services live on-board meals, and by using the airports in an efficient way, which is going to be analyzed later. ( firm currently owns 48 aircrafts, operates about 35 routes at 18 different European cities. (

At this point it is crucial to examine why Easyjet did chose its own path for success and to find out in which ways did the firm moved towards the trajectory of continuous innovation, because we have to emphasize on the fact that Easyjet is a company that always thinks "out of the box" and innovation is always part of the firm's strategy. The company was recently awarded with the Innovation Award for Air Travel at the 2009 Business Travel Show that was held in London (

If we could conclude the firm's strategy, we could say that the firm's philosophy is to build a low cost airline by fully exploiting the Internet. In contrast with the majority of the other firms, including competitors, Easyjet realized and used the Internet not only as a way of advertising and promoting the company but as a main aspect of its strategy, as the "core of the company". ( EasyJet started operating in 1995 with one major goal, to become a big low cost airline and all the actions made from that moment were made towards this direction. Easyjet became a low cost airline but competed traditionally huge firms of the industry like the British Airways and Lufthansa. The company did not achieve this by purchasing cheap, old aircrafts and operating uncompetitive routes but by the exact opposite. EasyJet innovated by operating modern aircrafts (Boeing 737) at really competitive routes and managed to cut expenses from any other unnecessary service that was provided by competitors. So, the firm denied the travel agents and used e-booking systems for tickets (at the beginning tickets could also be booked by phone), used only one type of aircrafts in order to reduce the maintenance costs, chose to operate in airports where less congestion occurred, reduced turnaround times at the airport, quitted the service of free food during the flights and generally promoted innovative ideas that changed the whole concept of airlines, but every action made was heading towards one philosophy, to reduce unnecessary costs for the firm.

Moreover, as years went by, EasyJet managed to demonstrate the "power" of the Internet, as by 2002 more than 90% of the tickets were sold online. However, the huge affect that this innovative idea had to the whole sector is much more important because it literally changed the way all the competitors operate and we can see that nowadays a great majority of flight tickets are sold online. The fact that web sales were going to be integrated into our everyday life was the key point that Easyjet exploited and led the firm into huge growth and profits over the next years. By the year 2001, easyJet plc made a profit before tax £40.1 million, an amount which was 80.2% higher than the previous year. (,

So we realise that EasyJet and especially the founder of the firm, Sir Stelios Haji-Ioannou had a clear vision for the firm's future. It was clear for them, which was the path that they had to follow and the "steps" for this path was continuous innovations. Nothing in the business plan of the company was left unexamined but everything was planned carefully. Sir Stelios was inspired by the Southwest Airlines in the US and he realized that he could create something similar in Europe. At the same time the market deregulation and the whole globalization environment in the early 1990's (Benjamin Reboul, "New entrants are always the ones that introduce radical innovations", Imperial College London,Tanaka Business School) set the proper environment for Easyjet to start operating and later on grow. However, the most important point that we have to emphasize on is the role of innovation for this firm. At the beginning as we mentioned before, bookings were made through telephone and by 1998, web bookings started for EasyJet. It took only four years (April 2002) until 90% of the bookings were made online (Ian Yeoman and Una McMahhon-Beattie, Revenue Management and Pricing, Case Studies and Applications, 2004). So we realize that the firm predicted the great potential of the Internet and the huge impact that it was about to have on people's lives, but at the same time the crucial point was that the firm was able to adapt these changes and be the pioneer in this field because thinking out of the box and generally innovation is the way for success for EasyJEt. So, even thgouh did not introduce anything new for the technical and technological part of the industry, the complete change and the radical transformation of business processes in the industry was really important. The firm chose her own path, forcing the competitors to imitate EasyJet's practises and this can be seen as the path dependency of the firm.

As we pointed out, EasyJet has been always seeking for new fields and ways to innovate in order to grow furthermore. However, throughout the firm's history there are examples that EasyJet did not "went it alone" for innovation but collaborated with other firms in an attempt to achieve better results. The first example that we are going to refer is the venture between EasyJet and ?WhatIf?The Innovation Company in the summer of 2000. This type of collaborations/ventures between companies can be really helpful because new insights can be brought to company so that the problems can be examined in a more objective way.(reference vivliop!!!/simeiwseis!!!)

The problem that EasyJet wanted to solve was that "Significant gains in profitability and efficiencies will be achieved by minimising the time our planes spend on the ground between flights. We will reduce average turnaround time from 50 minutes to 25." (easyJet share offer document Summer 2000, Source:

In a very short period, at about three months time, on a camp set up in Luton Airport, a joint team between EasyJet and ?WhatIf? proceeded to many interviews with individuals and other involved firms(airport staff, baggage companies etc) in order to have opinions and suggestions from everyone and to have a clear understanding of the issue. At the end of these sessions what the joint team realized was that the enormous amount of people that were evolved at parts of the whole process was the crucial thing that generated problems. However, the problem wasn't the number of people but the lack of team spirit between them, because there was misunderstanding about the role and the importance of each individual and company to each other objective and to the general objectives of EasyJet. The solution that was chosed was to run several cross functional teams in order to enhance the team spirit among the individuals and also several innovative ideas to reduce the total amount of time spent at the airport like providing the technical operator with headphones so that he can directly talk to the pilot without having to wait for the aircraft to be empty of passengers. The result was that the turnaround time was reduced from 50 minutes to 33 which proved helpful for Easyjet at difficult times for the industry.


Another collaboration for Easyjet was the one with Microsoft in 2007. ( The two leading innovating companies collaborated for the creation of new desktop gadgets that could help business passengers to better organize their flights but also real time updates, even simplier purchase of Easyjet flight tickets and at the same time access to information about hotels, restaurants and car rental for many destinations. It is quite clear that EasyJet could not have the appropriate knowledge to create a new software application so it was a good choice to collaborate with Microsoft and on the other side, the launch of the new Microsoft Vista technology could be well "promoted" by compatible applications like the Easjet desktop gadget, the gadget of one of the biggest airline in Europe. So this Co-development agreement (reference vivlio!!/simeiwseis) could be proved helpful and profitable for both EasyJet and Microsoft.

( The launch of this new application was set together with the launch of the new Microsoft Windows Vista operating system(2007) and what this application does is that provides the passengers to better organize and personalize their flights in a more convenient way than the website of Easyjet.


"As the airline that pioneered the use of the internet, technological innovation is at the heart of our business and we will continue to focus on making life easier for consumers in the provision of all of their travelling needs." (Andy Harrison, easyJet Chief Executive, In these words we can see the determination of the firm into innovation and also satisfaction of the customer. However, at the two previous case studies demonstrated EasyJet seeked for collaboration in order to further innovate. The reason for a firm to look for collaboration are certainly the reduction of the total cost of the process and at the same time the reduction of the level of uncertainty.(reference apo vivlio/shmeiwseis) .