Business-model-led Clusters of Innovation: the case of Product Led Growth

Abstract

A Cluster of Innovation (COI) refers to a critical mass of actors that stimulate innovation and new venture creation, and within which actors benefit from being formally or informally connected to each other. It is often thought of in the context of a geophysical location. A territory or a city can be a COI, but there can be other types of COI. For example, a network of businesses that are operating in a specific industry or a network of businesses that are targeting a specific market segment can also form or be part of a COI. In this chapter, we identify and analyse the COI that has emerged around the business model known as product-led-growth (PLG). PLG strategies refer to B2B companies that rely principally on their own product to engage and acquire customers. It contrasts with the more traditional reliance on brand and product advertising. PLG exploits the internet's easing of direct access to prospective customers, and customers' increasing willingness to experiment with Internet purchases. Riding this wave, a significant and increasing number of businesses are using PLG as a way to grow. Their scale and impact are attracting a specialized community of investors, major corporate partners, professional service providers and managers, and starting to behave as a COI. In this chapter of the book, we discuss the characteristics of the PLG companies and the benefits they get from being part of the same COI.