Lower performance

Definition

Lower performance refers to the situation where a product or service initially appears less effective or desirable than existing offerings in the market. This concept is crucial in understanding how disruptive innovations can emerge, often starting by serving a niche market or underperforming compared to established products, but eventually improving and displacing them over time.

5 Must Know Facts For Your Next Test

1. Lower performance often attracts customers who are overlooked by mainstream providers, allowing disruptive innovations to gain traction in niche markets.
2. Products with lower performance can initially be perceived as inferior, but they may cater to different customer needs or preferences that existing products do not address.
3. As disruptive innovations evolve, they typically improve their performance and begin to appeal to the broader market, eventually challenging established players.
4. Companies that focus solely on sustaining technologies may overlook the potential threat posed by innovations that start with lower performance but offer unique advantages.
5. Lower performance products can create opportunities for new entrants to gain a foothold in the market, leading to increased competition and forcing incumbents to adapt.

Review Questions

• How does lower performance serve as a strategic entry point for disruptive innovations in the market?
  • Lower performance allows disruptive innovations to enter the market by targeting customers whose needs are not fully met by existing products. These innovations can serve niche segments where price or specific features are more important than high performance. By focusing on these overlooked markets, disruptive innovators can build a customer base and gradually enhance their offerings, ultimately leading to competition with established players.
• Discuss the potential risks for established companies when they ignore products with lower performance in the context of disruptive innovation.
  • Established companies that dismiss lower performance products as unworthy may miss critical signals of emerging disruptive innovations. This oversight can lead to a lack of responsiveness to changing consumer preferences and technological advancements. As these lower performance products improve over time and start attracting mainstream customers, established companies may find themselves unprepared to compete against agile disruptors that have captured significant market share.
• Evaluate the implications of lower performance for innovation strategy within firms facing disruptive challenges in their industries.
  • Firms must adopt a dual innovation strategy that embraces both sustaining technologies and disruptive innovations. Recognizing that lower performance products can serve as a springboard for significant market shifts is crucial. Companies should establish processes for monitoring emerging trends and nurturing innovative ideas that may initially appear inferior but possess the potential for substantial growth. This approach helps firms remain competitive in rapidly evolving industries where consumer expectations and technological landscapes are continuously changing.

Related terms

Disruptive Innovation: A type of innovation that creates a new market and value network, eventually disrupting existing markets and displacing established competitors.

Sustaining Technology: Technologies that improve the performance of established products, focusing on enhancing existing markets rather than creating new ones.

Market Penetration: The process of gaining a larger share of the market for a product or service, often achieved through lower prices or improved offerings.