Lesson for Healthcare: Disrupt Your Own Business Model Before Someone Does it TO YOU

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.

6 thoughts on “Lesson for Healthcare: Disrupt Your Own Business Model Before Someone Does it TO YOU

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  3. Actually Netflix has been doing it right for a long time, well back to 2008 and that’s long time in technology terms. Along with a few others they were one of the first to sign up on Server 2008 with Microsoft with virtual servers baked in, and this was huge as with a few tweaks they were able to increase bandwidth about 8x, big deal for video and the brought in Silverlight technology right from the start. I sat in a tech net meeting back in 2008 to get this bit of knowledge with the company being a front runner.


    In addition they have constantly tweaked their algorithms to meet customer demand. In 2009 they began experimenting with behavioral analytics, in other words see what’ working with business intelligence and it has paid off and that’s how they were ahead of the game knowing the DVD was going to die eventually.


    They used technology in smart way to keep adjusting their business models through the use web algorithms and it has paid off. This is where I keep coming in to the use of algorithmic analytics in healthcare; however, we have much more to consider as this is the human business and not a DVD and it’s complicated and thus so the interpretations of those not quite up to par with digital literacy today are creating some very strange scenarios and thus so we need higher digital awareness with making laws and getting judges to use more real time technology like IBM Watson so we can get some smart data to look at and simulate to avoid some of the unintended consequences we see today.

    We won’t make it any other way as we can’t bring dull knives to gun battles anymore so yes using the analytics wisely with ethical interpretations as Netflix has done will get us there. It’s the disruption behind the scenes with intelligence combined with their public branding together that does for them.


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  6. I was just thinking about how Netflix seems to be making the transition well. They must have read Christensen.

    Meanwhile, while certainly making money short term, I think AppleTV is hurting AppleTVs brand. I’m still not convinced Apple can do software well. We can’t watch a movie uninterrupted. Great example of how the backend can have as much or more effect on user experience than the front end.

    Curious to see if Netflix will follow a pay-per-view model for premium movies and how that might effect their relationship with AppleTV. They need to find solid, independent access to the TV. Not sure if GoogleTV is there yet. Perhaps they need a hardware play. If they do go with premium content, hopefully they’ll get away from the time limits AppleTV has and ensure people can watch when and where they want to once they’ve paid.

    “Innovate or die”.

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