Lesson For Health Care: Disrupt Your Own Business Model Before Someone Does It To You

Vince Kuraitis

First published 4/25/11 on e-CareManagement

Healthcare needs positive role models for innovation…and we have a real-time mentor in Netflix.

If you have a Netflix subscription, you probably identify with the company as providing a convenient DVD rental service — order on the web, the DVD arrives by mail, send it back in the handy pre-paid envelope when you’re done.

Today’s ReadWriteWeb describes Netflix’ latest letter to shareholders and explains how the company is preparing for the demise of DVDs:

…the real story might be the company’s continued march away from its once bread and butter offering – the humble DVD.

While the company barely pays lip service to DVD subscriptions, it spends the majority of its time discussing plans for first-run TV series and movies, expanded network offerings and competition within the streaming video space.

In 16 pages, the word “DVD” is mentioned only a dozen times, with just over 100 words devoted to the topic in a section titled “DVD was a Booster Rocket, but is not a Differentiator”:

We believe that DVD will be a fading differentiator given the explosive growth of streaming, and that in order to prosper in streaming we must concentrate on having the best possible streaming service.  As a result, we are beginning to treat them separately in many ways.  Already, if you look at our signup page for non-members, it is all about streaming.  Having said this, DVD rental is still a great business for us, and we are working on solutions to make sure DVD continues to be a profitable business for us in the years ahead, but it is not core to winning in streaming at this point.

In the handful of other mentions, we find the word “DVD” next to words like “flattening” and “decline”.

The lesson here: be the disruptor of your own business model before someone else does it TO YOU. Customers and investors will reward you.

Vince Kuraitis is a health care analyst writing at e-CareManagement.com.

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