Thematic Report

Theorality 2019

by Shaun Cochran / Sep 1, 2019


To keep investors up to speed with the ever-accelerating pace of change in markets, our fourth Theorality provides updates on the game-changing transformations that will define portfolio performance over the next five years, rather than five months. Exploring the intersection of business theory and reality, we focus on themes that are on the cusp of globally relevant commercialisation.

Perfecting personalisation
In Advanced services, sophisticated, modular AI capabilities have vastly improved consumer experiences and workplace productivity across industries. While eliminating some jobs they also enable the crucial reskilling of workers. Existential questions on the transition to general AI remain academic, but urgency is rightly crystallising around governance and the permissible use-cases. In Internet X.0, big tech is repairing tattered reputations and bolstering privacy is the mechanism of choice. They have also realised that value-add in Rendered realities means focusing on enterprise solutions where high device costs are less of a constraint.

The arduous journey towards value
Synthetic biology, the integration of biology with industry, is challenging the fundamental principles of Nexgen manufacturing. In what can now be called the related field of Healthtech, the high cost of genome sequencing means research is focusing on the highest-value, hardest problems and this is slowing general progress. The same goes for Advanced transport, which has struggled to resolve the edge cases we explored last year. Blockchain, after moving much closer to its deserved legitimacy, is merging with payments, the key finance disruptor.

Shifting focus to augmentation
Our regular readers will know that Theorality addresses two types of themes. Again we examine the three enabling technologies which underpin multiple innovations in virtually every industry: AI, Rendered realities and now a return to Fintech.

  • Artificial intelligence: The AI industry is broadening from the narrow, functional skills of 2017-18 to gradual industry-by-industry adoption in 2019.
  • Rendered realities: Continuing its tortuous journey towards a truly compelling end game, today’s tech is still insufficient to deliver the compelling vision.
  • Fintech: The greatest value in Blockchain and digitising financial services is in getting competitors to collaborate on common protocols, a ‘co-petition’ model.

From theory to business reality
Of course, we need to relate thematic insights to real industries, companies and thus portfolio investments. This is where our sector-based chapters come in. We analyse five industry-specific themes with secular and global significance which also reach beyond their core:

  • Advanced transport: The road-based autonomy industry is facing commercialisation difficulties and hence delays, whereas air-based solutions are progressing steadily and so add a new risk to that mix.
  • Nexgen manufacturing: The digitisation of manufacturing see cumbersome physical processes transition towards software-like approaches, with synthetic biology the most cutting-edge example.
  • Advanced services: Platform models that cannot turn scale into a competitive advantage will struggle, however, smaller disruptors can compete with platforms via improved personalisation.
  • Healthtech: Reviewing disruptions in healthcare leads to one inescapable conclusion: massive potential for cost reduction through automation and human augmentation.
  • Internet X.0: 5G will eventually enable exciting new services, however, today’s burning question for internet leaders is how to gain trust – delivering privacy is the answer and so the most valuable product of the future.