WE ARE AT THE DAWN OF AN AGE OF DISRUPTION as innovation triggers exponential change across industries. The opportunities this environment creates extend far beyond technology and health care — and to every geography and market cap. From changing consumer behavior to the ubiquity of “big data” to adapting to climate change, we believe investors need to harness the numerous long-term structural trends driving innovation. For example, the decarbonization of the US power grid will likely require a roughly US$4.5 trillion investment over the next 10 to 20 years.1
As the world rapidly evolves, we’re looking to invest in where we think it is heading. In our view, the future for nearly every sector of the economy will look very different. We think there are extremely few companies that don’t have the potential to be disrupted or disruptive in their industries. If a company is not driving or leveraging progress, we believe they are likely to be left behind. Importantly, though disruption isn’t a new concept, the pace of change is quickly accelerating. For example, the telephone took 75 years to reach 50 million users, Pokémon Go took 17 days. In addition, we think there is untapped value in underappreciated firms creating or benefiting from nonlinear change. These opportunities are crucial as we expect a structurally lower-growth environment over the long term.
In this paper, we outline our definition of innovation and answer questions about our views on the breadth and depth of the innovation opportunity, how we identify and compare disruptive companies across industries, and the importance of robust research capabilities — including a private-equity mindset and strong ESG…
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