To be good at long-term investing, it is essential to understand the impact of innovation (previous posts.) Previously, we discussed how banking, one of the most highly regulated industries, is getting disrupted. There is a bigger under-current at play here.
Some Indian tech companies, recognizing that innovation is increasingly occurring outside their walls, have remade themselves into venture capital firms. Case in point: Info Edge and Persistent Systems. If the key to Big Bang Disruption is to run a large number of small experiments, then their strategy of making small investments into teething companies might allow them to drive the disruption rather than become victims of it. As the era of "big iron" gives way to on-demand-computing, my money would be on these two to overtake the present-day incumbents in the Indian IT space.
Read more: When the bell-curve meets the shark-fin