Why Disruption Changes the Entire Industry?

Change is inevitable and Innovation is no exception!

Kodak dominated the photographic film market during most of the 20th century. Its leaders blew their chances to see the digital photography revolution as a disruptive technology. Kodak filed for bankruptcy in 2012, it's failure surprised many and today finds itself in the management lessons. The video rental company, Blockbuster was at its peak in 2004. It failed to innovate, when Netflix introduced direct shipping of DVDs to the consumer's homes. Blockbuster filed for bankruptcy in 2010 and Netflix is now worth $132 billion.

There are at least 50 such corporations that failed to innovate and most of them are bankrupt.

Let's, look at the telecom sector in India.

Reliance Jio was launched on 5-Sep-16 causing the disruption in the market with its 4G LTE technology, affordable smartphones and plans (initial free) with unlimited voice calls  and data. All this, led to a major consolidation in the telecom sector of India. As of 31-May-19, it's now the largest mobile network operator in India and 3rd largest mobile network operator in the world with over 323 million subscribers.

Let's look at the closing stock price of 3 major players, before and after the entry of Jio:

Today, both Vodafone Idea and RCom have ended up becoming the "penny stocks".

Value investor, Vijay Kedia highlights a key reason, “if an industry or a business model has been disrupted due to entry of a new player, technology or shift in demand, the comeback is very difficult and next to impossible.

So, in the aftermath of Jio, it would be worthwhile to understand what did Airtel do differently than the Vodafone Idea?