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Disruption: Facing the future head-on

A shrewd investor always looks to the future. Our role, and indeed our duty, is to support companies that can come up with concrete solutions to the main challenges facing society today. If we are to rise to such formidable challenges, we at CPR AM firmly believe there is one megatrend in particular that must not be overlooked: disruption.

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Disruption refers to breakthroughs resulting from new and emerging services and technologies. We are talking about non-linear, exponential and profound innovations that can radically transform a market while disrupting others. Many sectors have experienced upheaval in the last couple of decades, one of the most poignant examples without a doubt being the arrival of Amazon which has thoroughly overhauled global trade. These days we can see disruptive solutions at work in all sorts of industries and offering huge potential, although we must take care to channel this potential for the good of humankind and our planet. Take the field of biotechnology, for instance. New possibilities have been opened up by the genetic splicing of CRISPR, which recently came under the spotlight thanks to research carried out by Frenchwoman Emmanuelle Charpentier who won this year’s Nobel prize in chemistry; and Neuralink, a company founded by the eccentric yet deeply serious Elon Musk, has developed brain-chip neural interfaces. The ultimate goal here is technological congruence, with multi-application technologies capable of revolutionising entire sections of our economy and society.

Now, in 2020, offering active support to those that create or spur this type of disruption is no longer a matter of choice; it is a necessity. This is because we are dealing with a question of economic sovereignty and need to come up with feasible alternatives to the duopoly established by US and Chinese behemoths.

Above all, it is because the issues facing our society are too vast and too urgent for incremental solutions alone. We are facing all sorts of challenges - environmental, demographic, health, social, energy - and only through disruption will we be able to meet them.

The new world of connected intelligence

We can surely not address this topic without mentioning 5G, which is a prime example of a decisive and disruptive breakthrough. The technology will create higher-speed networks and take the Internet of Things (IoT) into a new era, thereby speeding up innovation in general. 5G will affect industries across the board, especially as it is coinciding with another technological revolution: the emergence of Edge AI chips (processors capable of executing processing algorithms based on artificial intelligence and without the need for a Cloud connection). The two technologies are fully complementary and make it possible to incorporate intelligence into the way we use the resources available to us. And about time too!

Let us consider one of the greatest challenges facing our time: the environment. As things stand today, for instance, cities are incapable of predicting pollution levels. Currently, warnings are issued only after pollution has already reached certain thresholds, thereby triggering responses (such as stopping car traffic) that may have an adverse impact on economic activity. Smarter analysis of pollution levels would enable public authorities to prepare for an imminent surge in pollution and come up with more suitable solutions to deal with it. Similarly, the Smart City concept opens up huge prospects for predicting surges, improving traffic flows and limiting air pollution, which after all kills 7 million people worldwide each year.

Many sectors at a crossroads

Technology is a precious ally when it comes to managing resources efficiently. Many industries are having to rethink their business models as energy reserves are waning while their own energy needs are growing. Greentech companies can greatly improve energy efficiency and they therefore have a decisive role to play here. One example is Solar Edge with its solution for optimising energy capture, which has become the world’s leading photovoltaic inverter; it is just one of several solutions in the process of making solar power the cheapest form of energy in the world.

Similarly, production capacity digitisation, data and connectivity have led to considerable progress in the industrial sector. The Industry 4.0 revolution is already here (a concept referring to new production methods that consume less energy and generate productivity gains).

Healthcare is another crucial area in which disruptive solutions are expected to deliver huge dividends. Major progress has already been made in recent years thanks to interaction between traditional medical research and advanced technologies. New processes and new treatments are more effective and faster-acting, so crucially they are less costly at a time when healthcare spending is on an otherwise unsustainable trajectory on account of an ageing population.

Biotechnologies, immunotherapies, medical technologies, diagnostics... We can already see new disciplines replacing traditional forms of medicine and research. Such new disruptive solutions are less costly and more personalised, and they also allow for a more “prevention is better than cure” approach to medicine.

We will have to make bold and shrewd choices if we are to rise to these challenges. Besides the question of technological innovation itself, there is another fundamental dimension to consider here: changes in mentalities and skills. What exactly is at stake? We are talking about individuals being able to participate in technological progress and helping it flourish. In short, education and disruption are intricately linked. Education and training are going to have to factor in these changing circumstances as new professions take shape and many existing ones die off, so investment will be required on a massive scale. This is indeed one of the key choices we have made here at CPR AM: we firmly believe it is crucial to promote such disruptive solutions and this approach is, moreover, fully compatible with our performance and profitability objectives.

We must bear in mind that finance is a powerful global force that can drive transformation. As investors, we are in a position to work alongside companies and influence the way they manage their operations and the products and services they offer. This collective intelligence is what will deliver the solutions our society needs to face the enormous challenges lying ahead.

Gilles Cutaya , December 2020

Article also available in : English EN | français FR

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