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The characteristics of each innovation models are presented in Table III.1.

Table III.1 – Three approaches to creating new-growth businesses

Dimension Sustaining innovations Low-end disruption New market disruption
Targeted performance Performance improvement in Performance that is good Lower performance in “traditional”
of the product or attributes most valued by the enough along the traditional attributes, but improved
service industry’s most demanding metrics of performance at performance in new attributes -
customers. These the low end of the typically simplicity and
improvements may be mainstream market. convenience.
incremental or break-through
in character.
Targeted customer or The most attractive (i.e., Over-served customers in the Targets non-consumption:
market application profitable) customers in the low end of the mainstream customers who historically lacked
mainstream markets who are market. the money or skill to buy and use
willing to pay for improved the product.
performance.
Impact on the required Improves or maintains profit Utilizes a new operating or Business model must make money
business model margins by exploiting the financial approach or both, a at lower price per unit sold, and at
(processes and cost existing processes and cost different combination of unit production volumes that
structure) structure, and making better lower gross profit margins initially will be small. Gross margin
use of current competitive and higher asset utilization dollars per unit sold will be
advantages that can earn attractive significantly lower.
returns at the discount prices
required to win business at
the low end of the market.
Several studies have examined the conditions or rules of the platform and its effects on competitive strategy
in a variety of industrial contexts. Recently, it is suggested that digitizing and its affordance of convergence
is one of the primary drivers for platform change [b-Yoo 2012]. They note “from one perspective, in order to
harness the convergence and generativity made possible by pervasive digital technology, firms now innovate
by creating platforms rather than single products.” The penetration of digital technologies into products and
services and their success as witnessed by the history of existing online markets has heightened the role of
platform strategies in firms’ innovation activities [b-Yoo 2010, b-Tilson 2010]. Also, [b-Sandberg]
complements this understanding of platform evolution by analysing qualitative changes in platforms rules
and architecture and how they relate to strategy (i.e., how the platform is positioned with regard to its use
and production contexts).
More innovative firm tends to be platform providers in order to harness the convergence made possible by
digital technology, firms innovate by creating platforms rather than single products [b-Yoo 2012]. The firm
needs to source its products or services across multiple innovation domains (e.g., devices, networks,
contents, and services) in order to increase its innovation complexity and diversity [b-Yoo 2010]. Platform
evolution has been also explored in the context of market-based competition on two-sided markets [b-
Eisenmann], and related concerns for strategy management [b-Gawer].

In Table III.2, an example of use case (or business model) analysis framework is shown.

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