Stratasys : 3D Printing : Disruptive Technology

1A new manufacturing technology is showing the hallmarks of “radical” technological innovation (Koen & Elsum, 2011). 3D printing is a means of manufacturing prototypes and parts through the process of deposition, essentially building the required parts in three dimensions from the ground up to completion. The new upstarts in this business include a company called Stratasys. Founded in 1998, and currently employing more than 1400 people, Stratasys produces 3D parts based upon CAD files or other 3D content (http://www.stratasys.com).

The business strategy for Stratasys 3D printing is based upon their vision that complicated parts can be manufactured for very low cost. Without need of a large capital investment in a production line, a $15,000 Stratasys 3D printer will manufacture complicated prototypes and parts, based upon CAD files or other 3D content, for low per unit manufacturing costs.

Utilizing their patented technology, called “Fused Deposition Modeling,” or FDM, the proposed value proposition is to meet the needs of testing form, fit and function of a brand new part design, or creating a new hip replacement that promises virtually perfect dimensions and tolerances, as well as quick ambulatory recovery for the patients.

O’Reilly & Tushma (2004) suggest separating such a new and innovative business model from an existing sustaining organization. In the case of Stratasys, the company began as a typical hi-tech startup, raising capital through IPO, and has now attracted so-called “sustaining partners” as their technology proves increasingly viable. Hewlett-Packard has entered into an agreement with Stratasys (Shankland, 2010) to purchase HP branded 3D printers later in 2014.

As Stratasys continues to grow both organically and through acquisitions, they are developing a value network through the success of an ever increasing list of manufactured parts proving inexpensive on the basis of unit cost, reliable on the basis of their FDM technology, and meeting specifications that can be described as beyond six sigma in capability. As their resources grow, their capabilities increase, and in the last half of 2014 Stratasys will invest $50-$70 million in new manufacturing capacity to support future growth plans.

As evidence for the success of the Statasys strategy, and in support of their future financial guidance, second quarter 2014 financial results (http://investors.stratasys.com/releasedetail.cfm?ReleaseID=864895) reported August 7th include $178 million in revenue, 35% growth in revenue (all organic), and net income up over 50% to $28 million. Within the Stratasys’ financial results is a comment that the long-term business environment appears to be quite favorable. With HP as a new “sustaining” partner, it appears that for Stratasys, at least, the sky is the limit.

 

References

Koen, P. A., Bertels, H. M., & Elsum, I. R. (2011). The three faces of

business model innovation: challenges for established firms.

Research-Technology Management, 54(3), 52-59.

O Reilly, C. A., & Tushman, M. L. (2004). The ambidextrous organization. Harvard

business review, 82(4), 74-83.

Shankland, S. (2010). HP Joining 3D Printer Market With Stratasys Deal.

online]. CNET. Accessed August, 5, 2011.

Stratasys Reports Record Second Quarter Financial

Results (NASDAQ:SSYS). (n.d.). Retrieved from

http://investors.stratasys.com/releasedetail.cfm?Rel

easeID=864895

Professional 3D Printing | Stratasys. (n.d.). Retrieved from http://www.stratasys.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$15k is lowest price point of Stratysys 3D printer

HP Branded 3D Stratysis product available later this year

 

 

Stratasys Reports Record Second Quarter Financial

Results (NASDAQ:SSYS). (n.d.). Retrieved from

http://investors.stratasys.com/releasedetail.cfm?Rel

easeID=864895

 

Professional 3D Printing | Stratasys. (n.d.). Retrieved from http://www.stratasys.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shankland, S. (2010). HP Joining 3D Printer Market With Stratasys Deal.

online]. CNET. Accessed August, 5, 2011.

$15k is lowest price point of Stratysys 3D printer

HP Branded 3D Stratysis product available later this year

 

 

 

Koen, P. A., Bertels, H. M., & Elsum, I. R. (2011). The three faces of

business model innovation: challenges for established firms.

Research-Technology Management, 54(3), 52-59.

 

In fact, none of the disruptions we’ve described- Apple’s iPod, new digital advertising channels, and digital photography-relied on either a low-price or a new nonconsumer business model.

Within the technology dimension, the model distinguishes among incremental, architectural, and radical technological innovation.

 

O Reilly, C. A., & Tushman, M. L. (2004). The ambidextrous organization. Harvard business review, 82(4), 74-83.

O’Reilly and Tushman (2004) advocate yet another approach for business model innovations in this area: the ambidextrous organization. This approach offers a middle ground between completely separated and completely integrated organizations. O’Reilly and Tushman suggest separating the new business model from the sustaining organization-but they argue that both organizations should share senior management.

 

 

  1. Growing markets – what has been the business strategy for success in the past 3-5 years?
    1. Scott Crump started Stratasys 20 years ago based upon a breakthrough technology called Fused Deposition Modeling or FDM for three-dimensional “printing with product systems for manufacturers, engineers and designers.
    2. http://www.stratasys.com/3d-printers/technologies/fdm-technology#sthash.UXpI8Qa9.dpuf
    3. Stratasys Ltd. (NASDAQ: SSYS) is a 20-year old 3D printing firm located in Minneapolis, Minnesota and is considered the top of the food chain in this new disruptive technology as measured in revenue and unit sold. The vision is that entire products can be printed into existence, driving the equivalent of the next industrial revolution. The strategy is through the utilization of the FDM technology, 3D printing will allow complicated parts to be manufactured based upon low capital investment formerly required for a production line. Founded in 1998, and currently employing more than 1400, Stratasys produces 3D parts based upon CAD files or other 3D content.
  2. From Ch 4:
    1. Resources – How to develop a new value network with components that are new to the company
    2. Capabilities – Capital expenditures are projected at $50 million to $70 million, which includes significant investments in manufacturing capacity in anticipation and support of future growth.
    3. Competitiveness – Competitors are seeking to follow Stratasys with their own technology designs, but in terms of revenue and units, the FDM technology appears to be the one to chase.
  3. Evidence for
    1. Analysis
    2. Conclusions – http://investors.stratasys.com/releasedetail.cfm?ReleaseID=864895

As evidence for the success of the Stratasys strategy, second quarter financial results reported August 7th include $178 million in revenue, 35% growth in revenue (all organic) and net income up over 50% to $28 million. In the Stratasys’ financial results is a comment that the long-term business environment appears to be quite favorable.

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