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jhwang@innosightinstitute.org
a ce of cal
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ta
Sus
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P
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Q u
• Technological
• Business Model
• Commercial System
Experimentation
Performance
& problem-solving
Pattern Recognition
Rules-Based
Experimentation i ne
Performance
& problem-solving d ic
M e
e in e
i t iv ic
t u e d
In a l M i ne
ir ic dic
p Me
Em io n
i s
ec
Pr
Rules-Based
• Technological
• Business Model
• Commercial System
PROCESSES:
PROFIT FORMULA:
Ways of working together to
Assets & fixed cost structure, address recurrent tasks in a
and the margins & velocity consistent way: training,
required to cover them development, manufacturing,
budgeting, planning, etc.
RESOURCES:
THE VALUE PROPOSITION:
People, technology, products,
A product that helps
facilities, equipment, brands,
customers do more effectively,
and cash that are required to
conveniently & affordably a
deliver this value proposition
job they’ve been trying to do
to the targeted customers
04/19/11 Copyright Clayton M. Christensen 9
and Jason Hwang
Three Types of Business Models
Focused value-adding
Today’s hospitals process hospitals & clinics
and specialist provide procedures after
definitive diagnosis
physician practices
are agglomerations
of solution shop,
value-adding Facilitated networks take
process, and (a few) dominant role in the care of
facilitated network many chronic diseases
activities
04/19/11 Copyright Jason Hwang and Clayton 11
M. Christensen
Turning machines
Polishing Dept.
Hobbing department
uc n
tA
od e
Tapping equipment
Shipping Department
pr tak
A starts here
by ath
P
Annealing
furnace
Boring machines
Cut-off Storage
saws
by product B
Path taken
De-burring machines B starts here
Office area
Stamping machines
04/19/11 Copyright Clayton M. Christensen 12
and Jason Hwang
Economies of scale and countervailing costs of product-line complexity
10.010
Overhead Burden Rate
1.0
10 20 40 80 100 160 320
1
10 100
Plant Scale (sales in $millions)
04/19/11 Copyright Clayton M. Christensen 13
and Jason Hwang
Disruptive innovation in the hospital business model
Focused value chain
General Hospital Hospital
Value Proposition:
Value Proposition:
Resources Fast, convenient Resources
The solution to any
resolution of rules-
problem starts here
based acute disorders
04/19/11 Copyright Clayton M. Christensen 16
and Jason Hwang
The Three Enablers of Disruption
• Technological
• Business Model
• Commercial System