Instructor: Aleksi Aaltonen, Section 002

What a Disruptive Innovation-Themed ETF Brings to the Table

 

In a recent Webcast, “How Investors Can Identify Disruptive Innovation and What it can Add to a Portfolio”. It talks about disruptive technology should be able to do the following. First, “enable rapid cost decline” Second, the impact of the technology should pass across sectors and geographies. Third, prolong innovation process. In the article, it talks about how robotics can enable rapid cost decline. The value of disruptive technology can be varied from industries and sectors of business, by innovating the business process with automation, artificial intelligence and robotics can potentially “enable rapid cost decline”, however, such technologies require long-term investment in both time and capital. Hypothetically, if the company utilize such disruptive technology, it needs to evaluate the scale of impact in its operation, in-depth analysis of what benefit the firm can acquire in the long-term. For instance, Netflix, the well-known online streaming service, represents as a perfect example in disruptive innovation. First, the company reshapes the entire eco-system of how people watch TV shows and movies. Second, by hosting the platform online, the firm successfully decrease its operation cost by not opening any physical stores, unlike Blockbusters at the time. Third, it serves as a perfect example of how the streaming service can have the great impact geographically in a short period of time. Today, Netflix attain approximately 130 millions of users in 190 different countries. In conclusion, disruptive innovation must provide a method to enable rapid cost decline, across geographic and sector barriers and spawn innovation process to achieve its purposes as the game changer in the industry.

5 Responses to What a Disruptive Innovation-Themed ETF Brings to the Table

  • Another example of innovative, disruptive technology is 3D printing. In the near future, 3D printing is set to transform the way that items are designed, manufactured and distributed in many of the key, evolving industries. By cutting labor costs and improving time efficiency, 3D printing can use a wide variety of materials and techniques to create a final product. Specifically in the automotive industry, 3D printing is seen as a tool to benefit business. In 2014, vehicle manufacturer Local Motors revealed the world’s first 3D printed car, named Strati after the Italian word for layers. Local Motors’ next project is to release an entire series of 3D printed cars called LM3D. As automakers adopt 3D Printing, rival companies will experiment with materials and deliverables to offer the best product, including IoT connectivity. The construction industry and 3D Print technology could answer the current cry for housing in an overpopulated world. 3D Printing has the potential to disrupt the construction industry on a fundamental level, especially in cutting the necessary labor supply. Lastly in the health care industry, 3D printing has been used to make surgical models for training and trial surgery, as well as creating functional replacement body parts from prosthetic limbs to organs and skin. Across industries, 3D printing has proved that it can penetrate the market and make a lasting impact, along with saving both time and money.

    • I agree that 3D printing can be disruptive – however, I think the hype has bit died around it. But as we learn from Gartner hype cycle, this is expected. The true benefits from a new technology will often realize slower than the initial projections let us believe. 3D printing has also interesting copyright and other legal implications if people can ‘copy’ physical objects like digital files.

  • This is a very interesting topic and really hones in on the idea that technology is for a business purpose. As you mentioned, Netflix had a business purpose to provide movies at a more affordable rate. I believe in the future, all businesses are at risk to be taken over by technological improvements. For instance, Uber eliminated the costly feature of taxi shields, which in NYC can cost hundreds of thousands. Building upon your idea, this led to massive investment potential for investors. In another 10 years, disruptive technology will greatly affect our daily lives.

  • It’s always interesting to study how disruptive technology can upheave societal standards of living. At the exponential rate that technological advances are progressing, it’s intriguing to see what type of technological innovation will reshape society in the future. I feel like one of the most glaring disruptive innovations is smartphones and the capabilities they have provided in the last 10 years or so. The ability to access any kind of information or entertainment at the touch of your fingertips has revolutionized communication. I wonder how quickly society will adapt to these new disruptive systems in the future and how quickly universities will begin expanding their courses to keep up with these technological disruptions.

    • Smartphones have truly changed society, there is no doubt about it. But sometimes the most influential technologies are not those that initially look like game changers (Internet was for a long time an obscure toy for academics and engineers). There is a lot of hype around technologies that fade away without much impact (at least nowhere near the hype). Interesting question is, how/can we distinguish true game changers from fads?

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