Throughout history, significant innovations have changed
the status quo, creating completely new industries or forcing
incumbents to radically change strategies. The banking
industry was changed by the introduction of ATMs, followed by
internet banking and more recently, the widespread use of
smartphones, allowing banking on the go. Business editor Dene
Mackenzie and Craigs Investment Partners broker Chris Timms
look at the disruptive innovations now redefining the term
''outside the box''.
There are six potentially disruptive innovations which have
the ability to drive growth by either creating a new market,
improving the efficiency of current processes or disrupting
an existing market, Craigs Investment Partners broker Chris
The innovations were now at a stage where they were being
implemented within industries, rather than at the early stage
of the development cycle.
''We believe a number of these innovations, while already
being implemented, have the potential to significantly
scale-up in terms of usage.''
1. 3-D Printing - a new layer of manufacturing.
The ability to print custom parts in small lot sizes, with
complicated geometries, remained applicable to many different
industries and the trend was expected to continue, Mr Timms
As a result, additive manufacturing was used in a wide
variety of end markets. As the technology developed, it moved
further away from the prototype markets and into the
functional parts market.
A combination of falling prices for hardware, easier-to-use
software with more complex design capabilities, and the
internet, had allowed 3-D printing to be used more widely
among both industrial companies and individuals.
The average selling price of an industrial additive
manufacturing system was about $US70,000 ($NZ80,317) but
could cost $US600,000 or more.
''While still in a relatively early phase of implementation,
there is genuine scope for 3-D printing to become a viable
application in the industrial, design, healthcare, aviation,
transport and food sectors.''
Other advances had come in the raw materials, Mr Timms said.
And a wider variety of materials, including metals, were
allowing for the use of 3-D printers in more industries.
Companies like General Electric and United Technologies used
to fabricate prototype parts for their aircraft engines using
plastic until they recently moved to 3-D printing for
metallic materials. GE used 3-D printed parts in machines
meant for medical applications.
''Some of the systems manufacturers also sell materials. The
fact these makers have a captive audience is one of the
strong points of their business models and helps to explain
their high margins.''
2. Digital marketing - billboard in your hand.
By 2017, there were expected to be four billion internet
users, up from 1.4 billion today.
The shift to digital devices had not only made everything
available at a user's fingertips but also had given
advertisers more information about their customers -
improving their ability to target specific segments of the
As more people had access to smartphones and the internet, it
was likely more advertising dollars would be diverted towards
digital channels. Research by IDC showed worldwide digital
advertising would represent a market of $US167 billion by
Mr Timms said during the next 10 years, it was likely an
acceleration of the shift from PC to mobile would be seen.
Total internet traffic growth - measured in minutes - on
desktop from 2010 to 2013 in the United States was 4%. Mobile
traffic in the same period was up about 500%.
''This is also reflected in the significant declines in PC
sales - a trend we expect to continue as consumers shift to
smart devices. Platform shifts create new winners and losers
and we believe the best-positioned public consumer internet
companies are Google and Facebook.''
3. Digital banking - any place, any time.
Digital banking, and more specifically mobile payments, had
the potential to drive the next shift in the way consumers
paid, he said.
Much of the developed world had seen a shift from paper
(cash) to plastic (eftpos cards) and was now poised for the
next phase of change.
With high mobile penetration rates in the developed world,
easy availability of the internet and advancements in payment
security, a large amount of investment was being seen in new
forms of mobile payments.
Innovators like Apple, EBay, Square and Stripe were working
to connect consumers and their devices to the cloud to drive
While those firms had the opportunity to grow in the
software-based payment market, the large network players,
such as Visa and MasterCard, were well positioned, as they
remained entrenched in the value chain and access to big data
provided an opportunity for value-added services, Mr Timms
''Visa and MasterCard will continue to benefit as electronic
payment companies continue to use the existing card networks.
In addition, since the networks have access to critical
payment data, they should be able to monetise the data
through value-added services such as geo-targeted offers,
coupons and loyalty programmes.''
4. Immunotherapy - redefining cancer treatment.
Cancer was the world's leading cause of death, followed by
heart disease and stroke. There were an estimated 14.1
million cancer cases around the world in 2012 with an
economic cost of $US200 billion, including $US80 billion for
total healthcare costs.
Immunotherapy leveraged the body's immune system to eliminate
or slow the growth and spread of cancerous cells. Through
significant advances in tumour biology, immunotherapeutic
medicines are being designed to make cancer cells more
vulnerable to the body's own immune system, while offering
the patient fewer side effects.
Several pharmaceutical companies were working on developing
checkpoint inhibitors to detect and attach to specific
proteins in the body's immune system - turning them off so
the immune system was able to identify and target the cancer
Key players in the immunotherapy market included Bristol
Myers-Squibb, Roche, AstraZeneca and Merck.
5. Precision agriculture - the delivery of just the right
amount of input at just the right time in just the right
Precision agriculture revolved around the applications of new
technologies to the day-to-day management of farms or crops
and was focused on improving long-term production, efficient
productivity and profitability, while minimising the
unintended impacts on the environment.
While it was not a new concept, the wireless capabilities and
technology involved with collecting, interpreting, sharing,
transferring and managing the information had improved
significantly in their speed, simplicity and effectiveness
over time, Mr Timms said.
Software was available to track and analyse the soil, crop
yield, water and fertiliser needs of each plant and also
organise it into a system to help a farmer make a plan for
The systems also equipped tractors with GPS, allowing the
machine's onboard computer to drive it across a field and
plant seeds or apply fertiliser ideally for each specific
On the farm, that had led to a reduction in input and labour
costs, increased production and the improved utilisation of
land and water resources.
In the US, which currently had the highest penetration rates
for precision farming, the precision agriculture market was
estimated to be worth up to $US2 billion a year and was
projected to double by 2018, as second-generation products
were commercialised, he said.
In North America, and other advanced agricultural regions
like New Zealand, Australia, Europe and Latin America,
farmers were seasoned users of first-generation products
including GPS-related equipment, yield mapping, soil sampling
and mapping and fleet management.
In recent years, agriculture-related companies and
universities had been developing second-generation products,
such as localised weather services designed to provide
field-specific temperature and precipitation projects,
allowing the farmer to schedule daily activities based on
6. Robotics - new innovations in automation.
The use of robots was already strongly entrenched in the
manufacturing industry, usually undertaking tasks seen as too
difficult or dangerous for humans, Mr Timms said.
Through large technological advances, and a significant drop
in the costs of creating robots and automation equipment, the
capabilities robots now possessed could open up new markets.
There had also been a large increase in interest from a
financial sense, including acquisitions.
Research firm McKinsey & Co estimated the application of
robotics across healthcare, manufacturing and services could
generate a potential economic impact of $US1.7 trillion a
year, rising to $US4.5 trillion by 2025.
According to the International Federation of Robotics, China
was set to become the largest industrial market for robotics
Reasons for that included the significant increase in labour
costs, a peak in the working population and a trend towards
higher-skilled, higher-paying jobs over factory labour.
The healthcare market was estimated to become one of the
largest markets for robotics and automation, he said.