Understanding a Drastic Shift in Strategy

The Harvard Business Publishing site posted a very interesting article written by Scott Anthony about a company undergoing a drastic strategic change: moving from a product producer to a service company.

The story is about Dash Navigation, a startup in the GPS space with a novel business model:

Dash introduced its first product–the Dash Express–earlier this year. The device mimicked many of the features of devices sold by companies like Garmin and TomTom, with an interesting service model. Customers pay a modest monthly fee to have access to real-time traffic information. Even more interestingly, the real-time traffic information comes from aggregating data from Dash devices. Further, Dash created open protocols to allow developers to create “mash-ups,” such as a way to find the cheapest gas near a driver at a particular time.

The article goes on to discuss the strategic change:

Clearly Dash’s business model would have its greatest chances of success if Dash were able to get its device in the hands of tens of thousands of consumers in a particular market. Unfortunately, Dash has struggled.

User reviews suggest that Dash’s device didn’t do a good enough job with the basics. Of 161 reviewers on Amazon.com, 65 gave the product three stars or lower. A typical review contains language like, “It frequently thinks I’m exiting the freeway, even though I’m not. When driving down the street it will all of a sudden decide to reroute me around a block of houses, as if it believes I turned, when in fact I’m still going straight.”

It’s tough enough to be a late entrant into a field populated with big companies. If your device doesn’t cross the “good enough” bar on critical dimensions, you are in real trouble.

This week Dash announced that it would lay off close to two-thirds of its workforce and would exit the device business. Its new model is to license its software to other GPS and cellphone manufacturers and turn into a service provider.

The question is – is this necessarily bad? We’ll see in a couple of years. Read the complete article here: http://discussionleader.hbsp.com/anthony/2008/11/is_dash_dead.html

November 10, 2008 | Filed Under Cases 

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