ACCA Strategic Professional · Strategic Business Leader · Strategic choices
Lumio, a small start-up, offers a basic accounting app at a price far below incumbents. The app lacks advanced features and is first adopted by micro-businesses ignored by large vendors. Lumio then steadily improves it and begins to win mainstream customers. Which theory does this pattern illustrate?
This illustrates Christensen's disruptive innovation. Lumio enters at the low end with a cheaper, simpler product for customers incumbents neglect, then improves it and moves up-market, eventually threatening the established vendors' mainstream customers.
- ABlue ocean strategy creating uncontested market space through value innovation
- BChristensen's disruptive innovation starting at the low endCorrect
- CSustaining innovation by incumbents serving their best customers
- DAnsoff's diversification into new products and new markets
Explanation
A simpler, cheaper offering that begins with overlooked customers and then moves up-market as quality improves is the classic low-end disruption pattern. Sustaining innovation improves products for existing top customers. Blue ocean focuses on creating new demand by redefining value, and diversification involves both new product and market.
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