Where there’s disruption, there needs to be innovation
In Andy Macken’s Whitepaper “Who are the businesses of the future?”, he explained the online technology platforms (OTP) concept, arguing “by implementing this model in software – which results in an effective zero cost of marginal production; and online – which results in a near zero cost of global production: owners of successful online technology platforms often generate enormous economic profits stemming from a number of advantages which are both powerful and sustainable”.
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And this got me thinking about the disruption we are witnessing as consumers are being delivered a better product or service at a fraction of the “conventional cost”. Over the past decade or two, we have seen these forces rip through several industries including music, newspapers, books, magazines, newsrooms, data sites and department stores, to name a few. With increasing acceptance of sharing service companies, e-commerce businesses, robots, drones, autonomous vehicles, artificial intelligence and 3D printers, many conventional business models and brands have little defence.
The deterioration of pricing power, the relocation of manufacturing to low cost locations, digitisation and the casualization of labour all play a role in causing disruption, distress and deflation. And despite all the talk of innovation, Australia has slipped four spots to number 23 (of 127) on the 2017 Global Innovation Index (GII). The annual GII was developed ten years ago by INSEAD Business School as a way of benchmarking countries and their innovative capacities. The index, which is now jointly developed by INSEAD, Cornell University and the World Intellectual Property Organisation, measures innovation from 81 indicators, including the political environment, government effectiveness, infrastructure, environmental performance, education, new business density, high tech exports and business sophistication.
Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
