Disruptive Innovation

 

Over the past few centuries we have seen lots of companies rise and doom. Usually when a company rises to a larger scale and commands a huge percentage of the market share - sustaining the same percentage of share over a long run is a challenging task. 

For any company to retain the customer base over a long time usually requires a brilliant management team. Because Innovation transforms an existing market or sector by introducing simplicity, convenience, accessibility and affordability where complication and high cost have become the status quo.- eventually completely redefining the industry and the market share.

So an incumbent company's management team (which already commands a huge market share) who does not pay close attention to this competitive response that is happening in the market - are bound to fall straight off the cliff after nearly arriving there. 

Time and again the world has witnessed this. Innovations that initially seem to be a minuscule threat, if ignored have the potential to the greatest disruptive threats. 

One great example of this would be Facebook going all out and purchasing WhatsApp, Instagram for a mammoth price, which did not make any sense at that time. But looking back, Facebook's decision at that time could really make sense - because Facebook as a company commands a humongous consolidated audience base which has been sustained over a long time.