Appetite for Disruption

Technologies that shake things up are creating new opportunities for business and investment.

Imagine if you could travel back in time to the early 1990s and invest in the technology that drove the internet, knowing what you know today about how it would shape the future.

In time, you would become very rich from your time travel investment. But consider the leap of faith required to make that decision without any foresight, and without much understanding at all of the strange new computer technology that seemed to invisibly connect people across the globe.

It is difficult for anyone, aside from great visionaries and creative minds, to imagine new ways of living that have yet to be conceived of, or encountered.

Such significant changes can challenge how we see the world and what we think is possible.

The dawn of the internet is a good example of what we now refer to as 'Disruptive Innovation'.

As you may have guessed, the clue is in the name.

Disruptive Innovation is caused by the introduction of technologically enabled new products or services that permanently change an industry or economic sector by providing greater simplicity, accuracy, customisation and accessibility while driving down costs.
- ARK Invest

Investing in a brave new world?

Disruptive Innovation may be a buzzword across many industries today, but the concept is nothing new.

Long before the internet shook things up around 1996, history was rich with examples of great ideas that changed the world - including the steam engine in 1781 and the mobile phone in 1977, just to name a few.

If we segue into the future, two interesting areas of innovation that could claim their own place in the history books of tomorrow are Deep Learning and Mobility as a Service.

Deep Learning, put simply, describes the processes used by a new breed of machines that are smarter than ever before. These machines are capable of learning, with advanced technology that is modelled on the biological brain. They are a more evolved form of Artificial Intelligence - which is based on deductive logic, and more advanced than Machine Learning - which is based on statistical inference. Recent Deep Learning advancements have benefitted technologies such as speech recognition; image classification and accuracy in predicting disease. This technology has potential implications in sectors such as pharmaceuticals, automotive and agriculture.

Mobility-as-a-Service (MaaS) describes a future transport mode that utilises autonomous vehicles, otherwise known as driverless cars, to quickly and efficiently transport people from place to place. The vehicles include advanced navigational technology and the ability to interpret road conditions, signage, traffic conditions and road regulations. By removing the potential impact of human error, which is a major cause of road accidents, MaaS should greatly decrease road fatalities and injuries. It is also expected to reduce the need for people to buy cars of their own, while greatly reducing the need for parking and possibly eliminating the need for insurance and registration payments on personal vehicles.

If we put aside all of the other Disruptive Innovations at various stages of implementation and development and just consider Deep Learning and MaaS alone, their combination is enough to create a futuristic impression of what tomorrow might hold, with brainy machines and cars that drive themselves. Could this perception be a barrier that gives investors pause, leading them to pass up innovative opportunities in favour of more familiar terrain?

Psychological barriers and the unknown

It may take a psychological leap for many investors to understand the burgeoning possibilities of Disruptive Innovation. This is partly due to the complex and seemingly fantastical nature of the advancements themselves, which sometimes seem more like the contents of a science fiction novel than any practical roadmap for the future.

They contain ideas that have fed our imaginations, fears and fantasies for decades - lifelike robots; machines that think; cyborgs; Jetsons style ease of living and driverless transport. There has always been a clear line between that imagined fantastic future and the real world, and the two were always far enough apart to keep us comfortable and ensconced in the familiar. But they are now merging closer together - and the future looks set to be a disruptive one.

The more we know and understand about the technologies that look set to change so many aspects of our lives, the better placed we will be to make the most of opportunities emerging from their imminent arrival. That includes the opportunity to invest in a range of exciting technologies, including robotics, big data, machine learning, blockchain, cloud computing, energy storage, and DNA sequencing.

With 1996 far behind us, it will be the opportunities of the future that have the most to offer, whether through investment strategies, increased understanding, or a positive mindset when it comes to embracing a bold new future that may be closer than we imagine.

Morgan Stanley Wealth Management has partnered with Nikko Asset Management and ARK Invest to offer their clients an attractive opportunity to invest in Disruptive Innovation stocks. For information please contact your Morgan Stanley Financial Adviser.

  • Important Information

    All material on this website has been prepared by one or all of Morgan Stanley Australia Limited (ABN 67 003 734 576, AFSL 233742), Morgan Stanley Australia Securities Limited (ABN 55 078 652 276, AFSL 233741), a participant of the ASX Group and Chi-X Australia, Morgan Stanley Investment Management (Australia) Pty Limited (ABN 22 122 040 037, AFSL 314182) and/or Morgan Stanley Wealth Management Australia Pty Ltd. (ABN 19 009 145 555, AFSL 240813), a participant of the ASX Group (collectively “Morgan Stanley”), for informational purposes only and is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. Unless otherwise stated, the material was not prepared by the Morgan Stanley Research Department and is not a research report as defined under ASIC guidance.

    This communication provides market commentary and strategy ideas to clients of Morgan Stanley and its affiliates. Such commentary and ideas are based upon generally available information. Although the information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, and such information may be incomplete or condensed. All opinions and estimates included in this document constitute our judgment as of this date and are subject to change without notice.

    The material on this website contains factual information only and is not intended to reflect any recommendations or financial advice, nor is it an offer or solicitation in relation to any particular financial product. To the extent this document does contain any general advice, it has been prepared without taking into account your objectives, financial situation or needs, and because of this, you should, before acting on it, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs, and if the advice relates to the acquisition of a particular financial product for which an offer document (such as a prospectus or product disclosure document) is available, you should obtain the offer document relating to the particular product and consider it before making any decision whether to acquire the product.