Colin Barry

SonoSite (BSSE, Monday, Week 3)


Analyzing disruptive business models is graphing margin (y-axis) over time (x-axis) by customer segment/market (z-axis).
Usually margin is related to quality or level of service --- in the steel industry, y-axis should be quality of steel. In the medical imaging industry, y-axis should be clarity of image.
But going up the y-axis means increasing margin.
Good example (courtesy of HBR):

Ideally, incumbents can spin out disruptive innovations in separate business units. There are still huge headaches --- it's hard to run an organization containing two separate salesforces that sometimes steal customers from each other.
Example: EMC (high-end product) and Data General (low-end product) merger.
Solution: Find someone else with worse margins to sell one of your products. EMC licensed Dell to sell their low-end product. Dell was thrilled to be hawking low-end IT infrastructure products (which have much better margins than their core PC business). Removes salesforce conflict.