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This is part of a case series. As the Alps disappeared into the darkness through NayaMed’s window, the General Manager Aarnav Sendutta considered how to grow his fledgling unit. It was February 2014, and NayaMed, a unit of medical device giant, Medtronic, was just over two years old. It was formed to distribute Medtronic’s economy range of heart pacemakers and defibrillators, with regional sales and online technical support. Aarnav was facing two key issues. The first was the perception from Medtronic sales reps that NayaMed would cannibalise their offering. The second issue was how to grow the unit, which currently operated from its Lausanne base in Switzerland, targeting only Italy, Germany and Sweden. The business had grown but was still very small, generating US $4 million in its second year of existence. Aarnav’s passion for the NayaMed business was clear, the justification for NayaMed made good business sense, but attempts to grow it were being constrained by organisational issues within the parent company, Medtronic. What could they do?
- How can an established company develop a disruptive business model next to its existing business model? Is a separate unit necessary to “house” the disruptive business model?
- Under what circumstances does it make sense to create a separate unit and under what circumstances can the new, disruptive business model be developed inside the existing organisation?
- If the established firm decides to create a separate unit, does the unit need to have its own value chain activities or should some of these activities be shared with the parent?
- Over and above creating a separate unit, what else must the parent do to protect the new unit? In particular, how can the conflicts between the parent and the unit be minimised and the animosity between the two managed?
- Based on the experience of Medtronic and Nayamed, what lessons can we derive on how an established firm can play two games at the same time?
|Publication Date:||February 2015|
|LBS Case Code:||CS-15-001|
|Subjects:||Business model disruption, Business model innovation, Strategic planning|