Excellent report by Citi GPD: Global Perspectives and Solutions. Disruptive innovation is a term that was first coined in 1995 by Harvard Business School Professors Clayton Christensen and Joseph Bower and explains how “a market or sector is transformed by introducing simplicity, convenience, accessibility and affordability where complication and high cost are the status quo.” For the most part, when people think about disruptive innovation, technology is the first thing that comes to mind — smartphones, flat–screen TVs, MP3 players — things that have come on the market that have totally replaced products that we had and make us think “how did we ever live without this wonderful machine”. But disruption can be so much more than just a better way to listen to music. Disruptive innovation can be found in both products and processes — i.e. how we do something is just as disruptive to the status quo as the new technology that enables us to do it. Going back to the advent of the ATM machine, both the technology itself was disruptive, but so was the process — we no longer had to go to a bank to deposit a check or withdraw cash. In this same vein, mobile phones as a technology were disruptive to fixed telephony, but the ability to conduct banking transactions and to pay for goods and services over this new technology is a change in process that has disrupted many industries. In this new report, Disruptive Innovations II, we take a look at some new sectors where new products could potentially disrupt a market. Four of the ideas that we highlight are related to themes we introduced in our April 2013 report. Following up on personalized medicine, we analyze the $35 billion opportunity in immunotherapy which uses the patients’ immune system to fight cancer cells and has the potential to transform cancer from a deadly disease into a chronic disease akin to HIV. In technology, we progress from 3D printing to 4D printing by adding the dimension of self–assembly to a 3D printer–generated object. In solar technology, we note the recent rapid uptake of solar in Germany and Japan and how new technologies in energy storage are emerging that should remove more of the cost barriers for solar adoption and also reduce the cost of electric vehicles. Finally, in banking we expand our thoughts on mobile payments and look at how mobile payments have digitalized banking in general and raised financial inclusion, especially in emerging markets. There are also some different areas of innovation in this new report. Typically thought of as a sleepy industry, insurance wouldn’t normally be thought of as a place where you would find disruptive innovation. But the latest surge in insurance securitization through the issuance of insurance–linked securities (ILS) has disrupted the market and forced industry players to consider potentially radical changes to their existing strategies. The emergence of digital advertising could breathe life into an industry that was becoming commoditized while farmers are looking to new technologies to greatly enhance productivity in one of society’s oldest professions. Other innovations may change how we do basic things in the future: how we drive (possibly with electric vehicles), what we use for cash (digital currency) and who our colleagues are at work (maybe R2D2 and CP3O). Read the full report here.
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April 8, 2024
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