Making money was the Goldman Sachs agenda in an August, 2013 report. In “The Search for Creative Destruction,” their equity research connected Schumpeter’s creative destruction to investing opportunities. Eight new technologies, they said, would force businesses to “adapt or die.”
- E-cigarettes: As a less harmful substitute for traditional cigarettes, e-cigs are inching towards a greater share of sales. Creatively destroying the market for cigarettes, e-cigs could command 10% of tobacco industry volume and a 15% profit share by 2020.
- Cancer Immunotherapy: Because immunotherapy uses the body’s own defense to fight cancer, it has the potential to replace more traditional protocols like chemotherapy. Citing lung cancer treatment as a primary area, Goldman says that market potential could be close to $25 billion.
- LED lighting: Programmable, long lived, and energy efficient, Light Emitting Diodes will become increasingly attractive to industry and commerce. By 2020, it could have taken over more than half the lighting market.
- Re-insurance: The reinsurers, the firms that insure the insurers, have had their market invaded by pension funds and other traditional investors who have had access to low interest money they want to use in new ways.
- Natural Gas Engines: With liquefied natural gas an alternative, when long haul trucks start to use “natgas” engines, everything from vehicle manufacture to energy transport would be affected. Think natural gas diesel truck stops and the new infrastructure it requires.
- Software Defined Networking: Here we are just talking about more of the cloud where hardware now exists.
- 3D Printing: A new entry to the supply chain that is customizable, flexible, potentially cheaper, being able to form products layer by layer could revolutionize manufacturing approaches. Academia, auto production, medical equipment and aerospace and consumer electronics are current 3-D markets. And now, 3-D printing machines also can make pizza.
- Big Data: An intangible process that could involve hardware, processing and storing the gargantuan quantity of undirected, random but potentially meaningful data has started to develop.
With each innovation, if it all happens, new labor and capital would replace existing products and processes. Consequently, not only do we have the investor’s perspective, but also a tectonic shift in the factors of production. This structural change in the economy typically first channels profit privately to entrepreneurs and the firm but then spills over to society as more consumers and competitors benefit.
Sources and Resources: Instead of the virtually unaccessible Goldman Report, this Business Insider description is available. The Goldman charts they reproduce were a nice complement as was a BusinessWeek 3-D printing food article. For more on Schumpeter, I always like econlib’s biographies.