After breaking into China's smartphone market, where it becomes a leading brand, Xiaomi sees sales stagnate and then decline as the disruption strategy that empowered its rise loses momentum. As competitors counter every move, targeting its core consumer segment, the company urgently needs to reignite growth and develop a sustainable competitive advantage. The case describes the changing market landscape, Xiaomi's product portfolio, distribution systems, partnerships, brand management, promotion and pricing. The question is whether to remain focused on smartphones-on which Xiaomi's reputation has been built-or transform into an IoT 'ecosystem' encompassing a wider range of product categories. The challenge is to understand the respective pros and cons and formulate a detailed implementation plan for the chosen strategy.

New research shows that comparative ads and "Ours is the best!" product positioning can backfire, because they activate something known as the maximizing mind-set, which leads people to regard anything that's less than perfect as a waste of time.