The trap feels rational
Incumbents often chase their best customers because the margins, feedback, and incentives all point upmarket.
Good management can create the trap. Run the incumbent, serve your best customers, and watch a low-end entrant improve until good enough becomes enough for the market.
Your premium customers want more performance and higher margins. The entrant is weak but cheap at the low end.
Incumbents often chase their best customers because the margins, feedback, and incentives all point upmarket.
Low-end products improve faster than mainstream needs. Once they cross the threshold, price and simplicity become decisive.
Protecting the low end can look unattractive until it is too late. Separate teams and metrics often matter more than speeches.
The innovator's dilemma is not stupidity. It is a system where excellent local decisions add up to strategic exposure.
Ask which customers you are happy to lose today, what the cheap entrant is learning from them, and when “not good enough” might quietly become good enough.