Ecton Inc. Case Analysis

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  • Topic: Disruptive technology, Clayton M. Christensen, Marketing
  • Pages : 5 (1606 words )
  • Download(s) : 302
  • Published : June 8, 2008
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a. Explain the technology or innovation introduced in the cases.

Cannon knew that his compact echo machine, which he carried under his arm by a single handle, would have to perform competitively in a room filled with state-of-the-art echo machines made by long-standing competitors such as Hewlett Packard -- each machine weighing more than the average NFL linesman and costing nearly a quarter of a million dollars. To view the functioning of the heart, the face of the transducer, which was usually no larger than 9 square centimeters, was placed on the patient's chest at various angles. The transducer delivered ultrasound waves into the body and these waves were reflected back to the transducer as they crossed interfaces of different acoustic impedance. More simply, the ultrasound bounced off the internal structures of the body and returned to the transducer. The transducer converted the returning sound into electronic signals that were processed by the internal computers of the instrument, to create an image of internal body tissues. These images were then displayed on the screen for the user, and videotaped for storage and line analysis.

b. Would demanding customers consider the innovation's performance to be inadequate?

But he worried about how he might penetrate a market that seemed to have been held so tightly for so long by capable, entrenched competitors - and about what mix of product features and services might appeal to the customers he needed to target. Often, the need to move the instrument and a tech to other locations in the hospital could be disruptive to patient flow through the cardiology department's echo lab. Other areas in the hospital in which echocardiography equipment might be used had also been suggested, such as emergency rooms, outpatient clinics and satellite clinics, but it was very difficult for these non-cardiology specialty locations to justify the capital expenditure required for a new echo machine. Cardiology customers comprised 35% of the market. Instruments were priced from about $80,000 for lower-quality machines to high end instruments whose prices approached $300,000.

c. Would a different customer group be delighted to use the innovation - despite its limitations - because it allows them to do something that they couldn't do effectively or affordably in the past?

The intense pressures to control escalating health care costs proved to be a blessing in disguise for makers of high quality ultrasound equipment, because ultrasound exams were typically less expensive than competing techniques such as MRI and cardiac catheterization. Hospitals and physicians had therefore become very interested in advanced versions of Doppler echocardiography instruments that would potentially replace more expensive methods of obtaining images of soft internal body tissues. In addition, the fact that many purchases of new machines had been deferred in the early 1990s at the onset of managed care efforts meant that substantial pent-up demand for more modern equipment was likely to be unleashed in the future. In addition to these economic drivers of growth in the ultrasound industry, several new applications were on the horizon which portended further potential growth of the market. For example, some pediatricians were frustrated at the difficulty of assessing whether infants had congenital defects in the way their hips had formed. These needed to be detected early, so that corrective devices or surgery could be prescribed in a timely way. But x-ray diagnosis was expensive, inconvenient, and involved the use of ionizing radiation. Ultrasound could be used more safely, but it was not economical in a managed care environment to screen every infant through large, expensive hospital ultrasound labs, given the low probability that any particular infant might have the defect. Some posited that inexpensive, compact ultrasound machines that could be used in individual physicians' group offices...
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