The result is a thriving digital marketplace that helps consumers solve an endless variety of problems, almost anywhere in the world. The lesson Disruption Theory teaches, therefore, is not how to design a product differently, but how to compete differently. Both the i-mate JAM and iPhone were presumably designed to bring computing to the masses—a job PC makers were ignoring. But Apple wrapped the iPhone in a business model that enabled it to do that job better than anything else out there.
How, then, can innovators compete differently to disrupt healthcare? Telemedicine, which enables virtual consultations between healthcare professionals and consumers, represents the choice innovators have about how to compete in healthcare. The innovators who ultimately transform healthcare will remember this, and compete differently.
Rebecca Fogg. Thank you for visiting. They were buying or boxes, they wanted them all the same and they wanted to be able to order or more roughly the same next year. They wanted to compare 4 vendors on price with the same spec sheet.
Nor did they care much about the user interface, because most of the users were only going to be running 1 or 2 apps anyway. They are not the buyers driving the smartphone market, who do. The traditional business theory about vertical integration rests on the costs and controls. This article from QuickMBA describes it well emphasis mine :.
Two issues that should be considered when deciding to vertically integrate [are] cost and control. The cost aspect depends on the cost of market transactions between firms versus the cost of administering the same activities internally within a single firm.
The second issue is the impact of asset control, which can impact barriers to entry and which can assure cooperation of key value-adding players.
The issue I have with this analysis of vertical integration — and this is exactly what I was taught at business school — is that the only considered costs are financial. But there are other, more difficult to quantify costs. Modularization incurs costs in the design and experience of using products that cannot be overcome, yet cannot be measured. Some consumers inherently know and value quality, look-and-feel, and attention to detail, and are willing to pay a premium that far exceeds the financial costs of being vertically integrated.
An obvious one in technology is consoles. Every successful console has been closed and integrated, thus providing a superior user experience. There has been no low-end disruption although, interestingly, consoles are falling prey to new market disruption — again, I fully subscribe to that theory. Another example is textiles — everything from shoes to clothing to accessories.
According to low-end disruption, a bag is a bag is a bag. Cars are particularly interesting because in Disruption, Disintegration and the Dissipation of Differentiability Christensen himself offered it up as a potential proving ground for his theory.
TC: It is. It is, and the fortunate thing, though, is that we can provide a substantial number of customers a really great experience with really high-quality products. The quality and precision are just unbelievable, really.
But we can do this for a lot of people. A whole lot of people. Not all consumers value — or can afford — what Apple has to offer. A large majority, in fact. The framework that makes the most sense for the consumer market comes from another Harvard professor, Michael Porter. Michael Porter has described a category scheme consisting of three general types of strategies that are commonly used by businesses to achieve and maintain competitive advantage.
These three generic strategies are defined along two dimensions: strategic scope and strategic strength. Strategic scope is a demand-side dimension and looks at the size and composition of the market you intend to target.
Strategic strength is a supply-side dimension and looks at the strength or core competency of the firm. In particular he identified two competencies that he felt were most important: product differentiation and product cost efficiency. Low-cost is absolutely a viable strategy.
Now, let me be clear, once again. None of this is to suggest that Apple is doing anything wrong. Smartphone sales may be slowing, but Apple is still a beloved brand, its products are excellent, its history and cachet are unmatched. I mean, has there ever really been a time without Jony Ive? Possibly not a lot of fresh ideas. But is there such a thing as a way-sexier cloud computing business? But this time, I think the company will get beaten to that punch—or whatever punch is next.
Apple will be around for a long time. Molly Wood mollywood is an Ideas contributor at WIRED and the host and senior editor of Marketplace Tech , a daily national radio broadcast covering the business of technology. She has covered the tech industry at Cnet, The New York Times , and in various print, television, digital, and audio formats for
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