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Ecton - Disruptive Technology

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Ecton Inc, as an innovator in the field of medical imaging is caught in a familiar dilemma that many startup companies face once they are in the final stages of a product development cycle- whether to continue with product rollout, forcing a change in the scale of operations requiring substantial capital input, OR, to get acquired by a larger organization which has the expertise and resources to ensure production, sales and distribution for the same product. In this essay, we will discuss Ecton's proposed business model, why Ecton qualifies as a disruptive innovator, and analyse and recommend alternatives that it can take to chart out its future

Ecton - A brief SWOT Analysis

Ecton has diverse strengths to its credit. Integrating a team of engineers from ATL and Interspec to design a compact ultrasound device with a price at half the lowest competitor reflects the strong technical and product development skills of Ecton's team. Demand drivers such as escalating health costs and migration of patients from expensive hospitals to out-patient facilities are potential market hubs for Ecton. However, problems in acquiring funding from VC's impact its abilities to position itself as a niche player in the imaging market. Also in the way of growth are the powerful barriers to entry, such as overcoming customer brand loyalties and the consolidation of suppliers.

Ecton- Positioning Strategy

In order to combat the massive presence of HP and Acuson in the imaging market, Ecton has to look out for "Asymmetries of motivation"1 and position its Doppler Echocardiography device as "a screening and monitoring tool, instead of merely an expensive diagnostic laboratory method", as mentioned in its original business plan. Ecton has rightly concluded that it cannot win the battle on HP's grounds; hence it has to shift the goalposts. Having developed a product having a very different feature mix than established competitors, it has to look outside the typical market. Alternative markets like physician clinics, outpatient clinics etc are a viable market where the reduced features and reduction in image quality when compared to MRI may be looked over the substantial reduction in cost. By exploiting this lower end of the market, Ecton might bypass the "barriers to entry" that HP has formidably built. Another potential gold mine for Ecton is the virtually uncontested developing markets where Ecton might quickly build up a major customer base.

Ecton - A Disruptive Technology?

A key point of distinction between sustaining and disruptive technologies is that sustaining technologies provide additional features or attributes of an already existing technology to the customers. Disruptive technologies provide a completely different set of attributes, that at the outset, are not valued by existing customers.2

We will apply the litmus test devised by Clayton M.Christensen to determine if Ecton is indeed a disruptive innovator

Test 1 - Does innovation target previously untouched customers?

Yes, Ecton targets outpatient clinics, physician clinics etc which were not able to afford such systems before. As well as emergency rooms, mobility is an issue- where Ecton scores. Ecton is unlikely to be accepted readily by mainstream cardiology labs.

Test 2: Is it a simple product?

It is stated in the case that Ecton's product is compact and simple to use, the product specifications mention that it weighs less, and can be carried on a single hand.

Test 3: Does it help customers to do the same things easily and effectively?

Yes, it is stated that hospitals call the echo machine from cardiology to ICU if an exam is necessary; the resulting billing process is very complex - Ecton will simplify all of this

Clearly, Ecton proves itself as a disruptive innovator. Now, the task is to see the road ahead.

Evaluation

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