Currents of Disruption: Innovation a Boon to the Wise, Threat to the Slow
In the disruption game, innovation and speed determine who benefits and who is at risk. Watch Portfolio Manager Marc Pinto discuss this fast-moving trend.
- We believe disruptors will continue to gain market share through innovation, displacing traditional competitors in sectors including technology, retail and health care.
- Astute multinationals are starting to leverage disruption to reduce costs in information technology and health care and better access their customers.
- Many companies that traditionally were in fields at risk of being disrupted have innovated and positioned themselves to benefit from enhancements in technology.
Marc Pinto: So today, we’ve been talking about disruption and companies that are actually being the disruptors, those that are benefiting from the disruption and those that are at risk. So the opportunities that we see accrue to namely the companies that are the disruptors that will continue to gain market share and through their innovation will continue to displace traditional competitors in their space whether it be technology, retail or health care. The other beneficiaries will be companies that essentially benefit from what the disruption creates, which is namely faster and more expedient access to services and data at a lower cost. And we’re seeing this already develop with a number of multinational companies, where they’re reducing their costs in areas like IT, health care, and then are using technology to better access their customer and the end consumer. And so we think that’s a very powerful force that the customers of the disrupting technologies will receive. Clearly, the threat is to those that are being disrupted and have not yet innovated or changed their business model to essentially protect their franchise and protect their customer base from those companies that are disrupting them. So, for example, in technology, you know, we see potential threats to traditional hardware and software providers who don’t have cloud-based systems and therefore are at risk to that particular development in technology. Happily, we do see a lot of companies that traditionally were in fields where they were at risk to being disruptive but have innovated and have positioned themselves to benefit from the change in technology. And Microsoft, which, you know, has really evolved their business model from being a traditional essentially retailer of PC-based software to one of the largest cloud infrastructure players and really are benefiting in all the growth that you’re seeing from the adoption of the cloud. So it’s an interesting time to look at this whole theme of disruption, and it’s a very quick-moving evolution and things change day to day. And so it makes it certainly very challenging but fun from our standpoint to stay on top of these trends.
Foreign securities are subject to additional risks including currency fluctuations, political and economic uncertainty, increased volatility, lower liquidity and differing financial and information reporting standards, all of which are magnified in emerging markets.
Technology industries can be significantly affected by obsolescence of existing technology, short product cycles, falling prices and profits, competition from new market entrants, and general economic conditions. A concentrated investment in a single industry could be more volatile than the performance of less concentrated investments and the market as a whole.