Wal-Mart is in an excellent position to assume the role of the disrupter. It has an incredible record of innovation and execution, yet it has grown to the point where its very success has led to problems. Wall Street analysts characterize this giant as having saturated its market with more than 4,000 stores. Same-store sales have fallen from year to year, and Wal-Mart's share price has dropped from its all-time high of $69, in December 1999, to $45 in October.
The need to do something different must have weighed on management, and its solution may prove to be a new disruptive phenomenon. Two years ago, Wal-Mart launched a pilot program of in-store clinics. These facilities provide standard medical treatments and services, ranging from vaccines for measles to cholesterol screening, all at low fixed prices. A standard checkup, for example, tops out at $65. Since 2005, Wal-Mart has opened 78 clinics in 13 states and has plans for up to 400 more in the next three years. If these succeed, the company intends to build up to 2,000 by 2014.
Wal-Mart's entry into health care may effect profound change by offering direct-to-consumer services and driving down prices for commodity services. Scott’s company is the master of this, and the health-care industry is, by and large, not used to competition. The basic-services segment is a less-demanding, low-end portion of the market not favored by the health-care giants. This plays well to Wal-Mart's strengths.
Wal-Mart, much like Apple, displays the key attributes of an XBD. And in just the way that Apple succeeded where Napster failed, Wal-Mart's size, brand appeal, strong finances, and resources should help it overcome resistance from hospitals, drug companies, and insurance providers. Given its legendary capability to innovate and execute, Wal-Mart may emerge as a superb XBD.
Judging from the comments of the business press and analysts, G.E. has a problem similar to Wal-Mart's: It’s too big. The company's market capitalization is $414 billion, and last year's revenue was $152 billion. Profits that inch up or down don’t seem to move the stock much. Something extraordinary is required.
What could be an opportunity worthy of the awesome resources held by one of the most aggressive corporations of our time? What could make G.E. into an XBD? In my email to Immelt, I suggested that he focus the company, or part of it, on developing an electric car.
A successful disrupter of the huge and complex energy industry has to be big, patient, and daring. I think GE has these qualities. Carmaker incumbents like General Motors, Ford, and Chrysler, as well as energy providers like Exxon Mobil, Royal Dutch Shell, and BP, seem reluctant to adapt to the needs of our economy, the environment, and our national security. It’s hard to think of a better fit than GE.
GE Energy, which reported a profit of $3 billion on