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All companies and entrepreneurs strive to be innovative and to respond to customer needs. But how do you balance the seemingly endless customer wish list with the very real impact of these “extras” on your bottom line?

My colleagues and I have spent the past several years looking for cost-effective companies that exceed customer expectations with less of what we call Costovation. How have these companies spent less and innovated more at the same time? We found three guidelines that these companies followed:

1. Dare to take a different approach

Every industry has its own lore: war stories and fairy tales that describe great challenges, twists and turns, and failures. Embedded in these stories are assumptions about how the industry is doing and what a company should look like in that market. Find these assumptions and defy them.

For years, the razor industry was in a displacement race for premiumization. Razor brands like Gillette and Schick spent millions on heating elements and added another blade. When the Dollar Shave Club launched its no-frills razor, the razor giants first wrote it off. You couldn’t imagine that people would be satisfied with such a basic product. But they were wrong – all they needed was a simple, dependable razor for a considerable number of men and women. Just like that, industrial history over razor features collapsed.

To build a fundamentally new low-cost business, dare to examine the merits of “unthinkable” measures like removing certain features or chasing after an unpopular type of customer. Your customers may not need all of the features and elements that the industry has long believed necessary. Just because your industry has always done it one way doesn’t mean it’s the best or only option.

2. Focus only on what is important and ignore the rest

Inexpensive business models require discipline and relentless prioritization. It doesn’t have to be as scary as it sounds. You should be proud of your compromises, as these are the choices that differentiate your company and brand from your competitors.

Planet Fitness, for example, mainly offers cardio machines instead of investing in large heavy dumbbells. This is a carefully calculated decision that seriously corresponds to the wishes of first-time and occasional trainers.

Quip, the venture-backed electric toothbrush company, shares the same philosophy. Quip believes that it is not the toothbrush itself that leads to good oral health, but rather the healthy habit of using it regularly and properly. As a result, the Quip toothbrush is nothing special – “no excessive power or unnecessary modes,” as stated on the website – but it does some important jobs exceptionally well: getting people to brush their teeth for two minutes, and too help you replace your toothbrush bristles regularly.

3. Innovate deep within the company – not just on the product

One of the most common mistakes companies make when innovating is thinking that the only place they can or should innovate is in the product. After all, the product is what their customers can see and interact with.

Entrepreneurs are not wrong to invest there, but they often overlook a great opportunity to innovate within the company. Consider the following examples:

• Australian software company Atlassian grew to $ 5.8 billion with no sales department and instead adopted creative basic marketing techniques to get the word out
• Framebridge, a startup with more than $ 37 million in venture capital, makes photo frames affordable and fast by limiting frame choices to only the most popular looks
• Wayfair reduces the cost of a furniture retailer as there are no huge warehouses. Instead, Wayfair strives to create a great website that connects customers to a network of furniture manufacturers. When a customer purchases an item, it is up to the manufacturer to ship the purchases directly to them

As you design and grow your business model, apply what you know about innovation to your operations, especially how you create, deliver, and sell your proposition. You will be amazed at the possibilities that you find.

Nobody sets out to build a complicated business. However, the natural evolution of businesses over time is to complement and complicate them. Combat this urge and costum instead. Be bold in your approach to the market and your business model, and keep asking yourself if your business aligns with what is really important to your customers.

Contribution to the Insider of Branding Strategy by Stephen Wunker, author of JOBS TO BE DONE: A Roadmap for Customer-centric Innovation

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