Efosa Ojomo is a senior researcher at the Clayton Christensen Institute for Disruptive Innovation. He spoke during the afternoon session of NEXT19 on 20th September 2019.

Watch the full video here

In 1997 Clayton Christiansen wrote the book on disruptive innovation. But can innovation play a role in helping people live ore prosperous lives? The Institute team decided to find out.

The consumption and non-consumption economies

Let’s think about the economy differently; think of it as having two sides: consumption and non-consumption. The smallest number of people have the most wealth and therefore the best access to good resources. Many companies start by targeting this circle. You’d then think of ever larger circles, bringing in people with less wealth – and less access. These are people who would benefit from access to some resources – but they don’t have it. Often, it’s just down to money.

There are four main barriers:

• Lack of access – it’s just not available. The Nigerian President went to Germany for healthcare, because the particular treatment wasn’t available in his country.
• Lack of time – it takes too long for someone to consume the product
• Lack of money – the most obvious
• Lack of skill – some products require a certain level of skill for people to consume

How do we overcome them?

Not all innovations are created equal

Who is an innovation targeted at? Its value lies in its ability to democratise access. If we target the rich, it makes it unavailable to the poorer. How can we democratise access? Virtually everyone here has a computer in their pockets. 60 or 70 years ago, that was not the case. Computers filled rooms, and needed a highly skilled team to operate them. But we have democratised access first via the personal computer and then the smartphone. To do this, they needed to create new business models and ecosystems.

This leads us to three styles of innovation:

1. Market-creating innovations – which make products affordable and accessible. They create growth and jobs, and lead to economic development. But they need capital to create the ecosystem to support them.
2. Sustaining innovations – they make good products better. They keep economies vibrant, but they create little net growth. Look at new cameras on phones. The phone company does not need to hire new people or build new facilities to do that.
3. Efficiency innovations – they make good products cheaper. They also eliminate jobs and can negatively impact geographic regions. But they do free up capital.

This is a cycle. The final stage frees up capital for the first.

Some Examples

For example, look at mobile phones. 20 years ago selling them in Africa seemed impossible. But one man figured out a way of creating a business model that would work. When that new market emerged, it pulled in other investors and entrepreneurs, and capital. It created transformative development.

Some examples of innovations leveraging digital technology:

• Kobo360 – handing distribution and logistics by creating a truck specific to the African market, and using digital technology to connect drivers to clients.
• max.ng – they’re trying to make motorcycles safer.
• MicroEnsure – a business model to target lower income people for insurance via their phones
• Medsaf – addressing the counterfeit drugs market

Henry Ford said that the highest use of capital is not to make more money, but to do more for the betterment of life. That’s one of their guiding principles.

Watch the full video here