3rd Lufthansa Case Challenge Innovation

Task description for mixed and master student teams

Innovation is at the heart of all business. Companies need to adapt to change either with new technologies and processes, new products and services or sometimes even with completely new business models. More than ever, airlines are currently facing a multitude of different challenges and rapid change. New market entrants (e.g. Low Cost Carriers, Gulf Carriers), high bargaining power of oligopolistic suppliers, increasing fare transparency due to online services, a changing awareness for pollution and greenhouse gas emissions, as well as product substitutes like high speed train networks result in fierce competition and shrinking margins. As a globally leading aviation company, Lufthansa Group wants to be at the forefront of tackling these challenges by creating business value through innovation. Consequently, Lufthansa is constantly looking for promising new ideas that bear the potential to continuously enhance our operational excellence, but even more importantly, to differentiate ourselves in an increasingly competitive market environment. Lufthansa Group is a diversified aviation group including several airlines as well as aviation service segments. While air transportation represents our core business, we are always looking for profitable new revenue drivers both in the airline scope as well as in the field of aviation services. Over the decades, we have built an impressive set of competencies (e.g. worldwide logistics network, handling complexity), intangible assets (e.g. loyal customer base, high-value brand image), know-how and expertise in a broad array of functional fields and industry segments. This represents a great basis to organically develop or invest in adjacent profitable new business opportunities. As both financial and managerial resources are always scarce, the most interesting new business opportunities pass a threshold of at least 1million annual revenue potential and can be characterized by a rather low financial invest, but comparably high return. Thus, we want you to help us explore promising business opportunities, develop feasible ideas to exploit these opportunities and give profound recommendations on how to best invest our scarce resources. Therefore, imagine you were a consulting team trying to bid for an innovation strategy project at Lufthansa Group. To convince our management board, you are asked to develop specific innovation concepts for Lufthansa that enable us to either organically grow into or acquisition-based invest in new business opportunities. In developing your innovation concepts, please try to basically follow the subsequent approach:

4. Innovation Concept Evaluation

Business Case

3. Idea Development

Concrete Innovation Concepts

2. Idea Generation

Set of Ideas

1. Analysis

Areas of Opportunity

1. Analysis You are asked to analyze Lufthansa Groups current activities and compare them, for instance, with customer needs and preferences or competitive offerings in order to identify gaps or potential areas of opportunity for Lufthansa. Areas of opportunity could refer to both existing and new fields of activity, such as:

Our airline group of sub-brands (e.g. Lufthansa Passage, Germanwings, Swiss, Austrian Airlines) Our aviation service segments (e.g. aircraft overhaul, cargo transportation, airline catering, aviation IT services, etc.), as well as Potential new business fields, complementary or adjacent to our current field of activity

You can base your analysis for instance on publicly available information, gather data yourself by surveying (potential) customers, conducting interviews with experts, or just use your own creativity. 2. Idea Generation Based on the areas of opportunity detected, you should brainstorm ideas how Lufthansa Group could potentially exploit these business opportunities. Ideas could include all ways of differentiation strategies and are highly welcome to go beyond our current mindset . The listed questions should provide you some direction whereas the examples should give you an idea of what we mean with thinking beyond.

Exploiting Lufthansas capabilities by developing new markets and customers or new products and services (What is Lufthansa unique at? Where does Lufthansa have a competitive advantage that could be monetized? Example: City Travel Guides written by Crew Members) Exploiting the Lufthansa brand name and image by developing new products/ services for our existing customer base (What other products and services could fit to the current Lufthansa brand values? What else would existing customers buy if it was branded Lufthansa? Example: LH Premium Food)

Exploiting the Lufthansa customer base through monetizing our customer knowledge (What are travel/ transport related needs of existing Lufthansa customers? How can Lufthansa monetize the detailed knowledge on its customers through Miles&More? Example: Stronger linkage of travellers through social media)

3. Idea Development Using the most promising ideas identified in the previous stage, think of concrete ways and measures Lufthansa Group could possibly implement in order to benefit from the identified areas of opportunity. Elaborate these measures and describe them in detailed innovation concepts. Please try to highlight in what way these innovation concepts align Lufthansas existing core competencies, its capabilities and brand positioning. 4. Innovation Concept Evaluation Please try to assess one of the innovation concepts developed in terms of its feasibility, investment requirements, revenue potential, and alignment with existing capabilities. Choose the most promising concept and evaluate it in a high-level business case. At this step, please just use publicly available data and make reasonable assumptions where you cannot find any more accurate information.

Formal Requirements

Write an executive summary (max. 1 page) that strongly focuses on the results of stage 3 and 4. Describe your approach and findings as well as condense your innovation concepts in a comprehensible report of 10 to 12 pages length. Try to spend not more than 1 page on each analysis and idea generation and use the rest of the space for outlining your innovation concepts as well as the business case. Structure your text by using meaningful headlines and make sure you provide clear recommendations for the Lufthansa Group management board. Visualize your innovation concepts and your business case results using Power Point (5 to 10 slides) and/or any other innovative form of media. Please make sure that you clearly picture your recommendations for the Lufthansa Group management board.

Assessment Criteria
Your report, executive summary, and your visualization will be evaluated according to the following criteria:

Creativity/innovativeness (15 Points) Profitability impact potential (10 Points) Competitive advantage o Short-term (5 Points) o Long-term (5 Points) Time-to-market (5 Points) Business case (10 Points)