One might expect that innovators always offer a superior solution to that of established competitors. But what about Spotify in the music business, with a sound quality far below that of a CD? What do we make of Airbnb, which are just ‘amateurs’ offering a bed, just like Uber is offering cheap taxi rides by individuals in their personal cars? IKEA, with cheap furniture you’d better not move because it risks falling apart? Or Youtube, which offers video below the quality of DVD?
Successful innovators are doing no more than attacking the market by first occupying the lower end, left unserved by established competitors who prefer to focus on high-end customers with more money. This is literally what defines real disruptive innovation, according to Clay Christensen: it seems like ‘good enough’ technologies are invading the market, and that’s what disruptive innovation is all about.
Any B2B company offering a successful solution will gradually extend it with new functionalities, so its can serve more (profitable) customers in the high end of the market. After doing this successfully, should an established company start serving the low-end market again with a new, cheap solution?
It would be a great mistake for an established company to try and become a disruptive innovator: I haven’t seen many established companies become successful by introducing a new, low-end product range in addition to their existing high-end range. In most cases, the (volume) business model of the low-end market doesn’t fit with the the current (sales & marketing) organization of an established company active in the high-end, focused on offering ‘added value’ rather than volume business.
Keep on serving new customers in additional micro-verticals with the real value that makes you different!