Strategic Innovation at the Base of the Economic Pyramid

Abstract

Much has been written about strategic innovators – companies that develop radical new strategies to attack entrenched competitors and create new markets in the process [Bower and Christensen (1995); Hamel (1996 and 2000); Kim and Mauborgne (1997), Markides (1997), Govindarajan and Trimble (2006)]. These organisations achieve their success by moving beyond industry norms or ‘sustaining’ innovations to achieve some form of architectural or business model innovation, thereby disrupting established competitors and generating value for themselves, their customers and their shareholders [Christensen, (1997); Markides, (1998)]. A significant enabler of strategic innovation in recent years has been the emergence of information and communication technologies that have reduced transaction costs and accelerated the exploitation of architectural innovation at the industry level (Anderson & Markides, 2006). As already proposed by Derek Abell (1980) in his seminal work on the subject, all companies in an industry develop their strategies on the basis of the answers that they give to three key questions: Who should we target as customers; What products/services and what value propositions to offer the chosen customers; and How to offer these products/services in a cost-efficient way. Strategic innovation takes place when a company identifies