By doing what they must do to keep their margins strong and their stock price healthy, every company paves the way for its own disruption.
Sentiment: NEGATIVE
The stock market clearly values companies that can deliver disruptive innovation.
It's competition that forces companies to get out of their complacency.
So companies have to be very schizophrenic. On one hand, they have to maintain continuity of strategy. But they also have to be good at continuously improving.
With less competition to fear, companies are emboldened to raise their mark-ups and profits. That lifts share prices and thus the wealth of already wealthy shareholders.
Brands will increasingly handle their own e-commerce and rely less and less on local distribution partners. Why should they give away their profit margins?
In the larger companies, you have this tendency to get top-down direction.
Any business owner can tell you that if their company isn't performing profitably and up to standards, one of two things will happen: either you make changes to improve its efficiency, or a competitor will drive you out of business. Market forces have a way of cutting to the chase rather quickly.
As they grow, companies saturate their markets, become more complex and difficult to manage, and face larger and more entrenched competitors.
Great companies have to manage the cadence of what they do.
If we take care of the business and keep our eye on the goal line, the stock price will take care of itself.