The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty

by Clayton M. Christensen, Efosa Ojomo, Karen Dillon

Clayton M. Christensen, the author of such business classics as The Innovator’s Dilemma and the  New York Times bestseller How Will You Measure Your Life , and co-authors Efosa Ojomo and Karen Dillon reveal why so many investments in economic development fail to generate sustainable prosperity, and offers a groundbreaking solution for true and lasting change.

Global poverty is one of the world’s most vexing problems. For decades, we’ve assumed smart, well-intentioned people will eventually be able to change the economic trajectory of poor countries. From education to healthcare, infrastructure to eradicating corruption, too many solutions rely on trial and error. Essentially, the plan is often to identify areas that need help, flood them with resources, and hope to see change over time. But hope is not an effective strategy. Clayton M. Christensen and his co-authors reveal a paradox at the heart of our approach to solving poverty. While noble, our current solutions are not producing consistent results, and in some cases, have exacerbated the problem. At least twenty countries that have received billions of dollars’ worth of aid are poorer now. Applying the rigorous and theory-driven analysis he is known for, Christensen suggests a better way. The right kind of innovation not only builds companies—but also builds countries. The Prosperity Paradox identifies the limits of common economic development models, which tend to be top-down efforts, and offers a new framework for economic growth based on entrepreneurship and market-creating innovation. Christensen, Ojomo, and Dillon use successful examples from America’s own economic development, including Ford, Eastman Kodak, and Singer Sewing Machines, and shows how similar models have worked in other regions such as Japan, South Korea, Nigeria, Rwanda, India, Argentina, and Mexico. The ideas in this book will help companies desperate for real, long-term growth see actual, sustainable progress where they’ve failed before. But The Prosperity Paradox is more than a business book; it is a call to action for anyone who wants a fresh take for making the world a better and more prosperous place.

Genres: Economics, Business, Nonfiction, Politics, Society, Leadership, Entrepreneurship

368 pages, Hardcover

First published January 15, 2019

About the author

Clayton Magleby Christensen was an American academic and business consultant who developed the theory of "disruptive innovation", which has been called the most influential business idea of the early 21st century. Christensen introduced "disruption" in his 1997 book The Innovator's Dilemma, and it led The Economist to term him "the most influential management thinker of his time." He served as the Kim B. Clark Professor of Business Administration at the Harvard Business School (HBS), and was also a leader and writer in the Church of Jesus Christ of Latter-day Saints (LDS Church). He was one of the founders of the Jobs to Be Done development methodology.
Christensen was also a co-founder of Rose Park Advisors, a venture capital firm, and Innosight, a management consulting and investment firm specializing in innovation.

Reviews

[Mehrsa · Rating 2 out of 5]

Oh boy--what to say about this book. I'll start with the history--no, America did not become prosperous thanks to innovators like Ford and Singer. There are many reasons for our prosperity (i.e. we became the empire, we put the world on the dollar standard, we had lots of resources, we successfully created a mixed economy, etc etc). And the poor aren't poor because they lacked innovation--go read Jason Hickel's book or literally any other good development book to look at the root causes of poverty.

Christensen et all propose that innovators create markets where none existed. This can be a good idea in a few of the cherrypicked examples he chose like phone lines in Africa and others. In other examples, it looks like a neat way for entrepreneurs to exploit the world's poor. Selling micro-insurance to "protect" poor people against the death of a loved one? Is this a joke? Some dude becomes a millionaire because he takes premiums from poor people for the risks of poverty? Sorry, no. Maybe this would have been a good time for Christensen to talk about America again--FOR IT WAS NOT Ford and Singer who took the risks out of poverty for Americans. It was the federal government--through social security, WIC, etc. This book made me angry. I really like Christiansen and I think he means well. I think he actually wants to fix poverty, but he is so far down his neoliberal business school well of a worldview that he cannot honestly take stock of the world. I really worry about how many people will read this book and take it seriously and go try to find markets that hustle the poor out of their meager dollars.

[Ebehi · Rating 3 out of 5]

It's taken me a while to write a review of this book (longer than it took me to finish it). But I've finally been able to marshal my thoughts into something semi-cohesive, so here it goes:

The main argument of the Prosperity Paradox is that market-creating innovation drives growth -- good institutions, infrastructure, etc are secondary. Using historical examples from the US, Korea and some contemporary cases in Mexico, Nigeria (and a lot of other countries), the authors challenge us to rethink the history of development through the lens of innovation.

Here's what the book does well: it is very clear in its definitions, and does a good job differentiating between the types of innovation. The case studies are also quite interesting, and the authors illustrate how they fit the framework of their main argument -- innovation is crucial for growth. If this book was geared towards convincing entrepreneurs to seek investment opportunities in developing countries, or to go after market-creating opportunities, I would consider it a success.

But in terms of offering a different approach to development for policy makers, the book is far less convincing.

The biggest flaw is that the book is entirely anecdotal, and policy should not be informed solely by anecdotes. The examples that the authors cite all suffer from survivorship bias. Yes, the singer sewing machine transformed the clothing industry, and yes, the Ford company changed manufacturing and infrastructure in the US. But how likely are similar situations to arise in developing countries today? And more importantly, why aren't tons of these kinds of innovations springing up already? If good institutions aren't necessary to bring about innovation and development, then what is the role of policy makers? What are the initial conditions that make innovation more likely to succeed in bringing prosperity?
For example, Tolaram has made some difference in Nigeria but clearly not enough to raise GDP per capita in any meaningful way. How many Tolarams will it take? Why haven't there been more? What are the barriers to scaling up market-creating innovations? What can policy makers do?

Secondly, the authors assume that market-creating is labor-intensive, but that is not necessarily the case. For example, MainOne has improved internet access for millions of people in West Africa, but the business is not particularly labor intensive.

Finally, for a book about development, it is oddly quiet about China. One could argue that examples from US history do not apply today because the world is far more connected and capital flows away more easily from high-risk areas like developing countries.. China provides one of the starkest examples of millions of people lifted out of poverty and an economy transformed in just a few decades. It would have been more compelling if the authors could show how China's trajectory fits with their theory of innovation as development (government-facilitated or not).

Overall, the book had interesting ideas but falls short in terms of policy relevance.

[Cătălin Teniță · Rating 5 out of 5]

E o carte grea in ciuda tonului foarte relaxat si a numeroaselor exemple. Curge ca un bestseller dar iti pune multe intrebari.
Tocmai d-aia am stat o saptamana inainte sa scriu despre ea, ca sa am timp sa ma gandesc. Adica e o carte prea seducatoare, si e nevoie sa zabovesti un pic asupra ideilor, nu sa le adopti sau sa le respingi in corpore.

Teza principala e ca nu toate inovatiile sunt la fel. Ca exista invovatii care creeaza piete (de pilda aparitia Iphone-ului), inovatii de marketing si conservare de marketshare (de pilda, Iphone-ul care e acum si negru si alb si gri si rosu si mai mare si mai mic) si inovatii de eficientizare (de pilda un proces prin care Iphone-ul se realizeza cu 30% mai putina munca umana).

Christensen spune ca inovatiile care dezvolta societatea sunt cele care creeaza piete noi, care aduc in zona consumului non-consumatorii de pana atunci fie prin oferirea unui produs la un pret substantial mai redus, fie prin scaderea altor bariere (de tranzactionare, de logistica, de comunicare etc). Ideal prin ambele.

Si vine si povesteste pe larg despre anumite piete din tari in curs de dezvoltare. De pilda asigurarea de viata prin telefonul mobil din India la cativa zeci de centi pe luna, sau hranirea populatiei cu noodles in Nigeria, sau clinicile de diabet cu abonament de 200 dolari pe an din Mexic, sau ochelarii la 10-15 dolari sau clinicile de boli cardiace din India la 1000-2000 de dolari pentru interventii care in alte state (cele dezvoltate) ar costa deci de mii de dolari.

Christensen spune ca aceste inovatii genereaza piete interne puternice. Nu doar ca aduc in zona consumului non-consumatori, dar creeaza si locuri de munca mai bine platite care nu se bazeaza pe ecartul salarial dintre tarile dezvoltate si cele nedezvoltate/in curs de dezvoltare.

Mai mult, autorul sustine ca aceste tipuri de inovatii creeaza infrastructura. De la infrastructura in sensul clasic (utilitati, drumuri), pana la infrastructura in sensul soft (educatie, knowledge si chiar proceduri legale/administrative care imping inspre statul de drept).

In esenta Christensen sustine ca o astfel de abordare (antreprenoriala, de tipul pull cum zice el) este mai eficienta decat una de tipul ajutoare (prin granturi, subventii, de tipul push). Aceasta abordare din urma ar fi neeficienta in termeni economici. Si da exemplul fantanilor din Africa care raman in paragina daca nu sunt asumate de o comunitate sau al toaletelor din India care presupun niste costuri de operare ce le fac prohibitive. Sau al autostrazilor finantate de China in Africa care din lipsa de transport de marfuri inghit bani, nu doar ca nu sustin economia.

Ca un corolar al acestei teorii, Christensen spune ca practic coruptia si implementarea normelor de functionare ale democratiei vestice nu au sanse de reusita fara un background economic suficient de vibrant. Practic daca nu ai cum sa iti rezolvi problemele altfel you "hire corruption".

Si intr-adevar daca ne gandim la societatea noastra gasim o atitutidine care substantiaza aceste teorii.

Personal m-a cam enervat partea asta. E greu sa acceptam teorii care sunt impotriva parerii noastre (coruptia genereaza sub-dezvoltare si nu sub-dezvoltarea genereaza coruptie - desi evident ca e un cerc).

Asa ca am incercat sa gasesc o cale care sa tina cont de aceasta carte (care repet, este fabuloasa - inclusiv prin referirile la inca vreo 10 carti pe care as dori sa le citesc) si teoria mea despre Romania.

Si asta suna ca asa:

E evident ca exista o mare doza de adevar in ceea ce zice omul. Insa in tara noastra, aflata intr-o zona bizara intre tarile dezvoltate si cele nedezvoltate, coruptia este o problema sistemica nelegata neaparat de nedezvoltarea economica. Din contra, daca ne-am lua strict dupa dezvoltarea economica, daca ar exista o relatie bijectiva, noi ar trebui sa stam mult mai bine decat stam in realitate in privinta statului de drept si a coruptiei.

Si atunci de unde vine problema? Dupa mine problema vine din viteza de evolutie inegala a economicului vs viata publica. Practic economicul (privat) a luat-o cu vreo 15 ani inaintea publicului (politic, administratie, disponibilitatea de implicare in civic) datorita boostului primit de aderarea noastra la UE (si la NATO). Datorita investitiilor straine, a crearii unui sector in jurul internetului, a milioanelor de diasporeni.

Si de fapt acum inovatia noastra - la care lucram de cativa ani din mai multe directii (civica, politica) - este acea creare de piata in zona publica. Adica aducerea de resurse (umane, materiale, idei, proceduri) din zona economica (si academica adevarata) in sfera publicului.
Cu alte cuvinte, nu cred ca ceea ce facem noi acum e in contra teoriei lui Christensen, desi ar parea la prima vedere.

E doar cumva mai convolut datorita particularitatilor nationale. Nu se refera direct la economic, asa este, dar tot un fel de market-creating inovation si de generare de infrastructura paralela este.

Pe de alta parte cartea spuna un mare adevar pe care noi (astia care se cred mai cultivati) il ignoram in 90% din cazuri. Vorbim foarte mult de eficientizarea sferei publice (informatizare, digitalizare, reducerea coruptie, proceduralizare), dar nu gandim in termeni de aducere a non-consumatorilor in sfera publica.
Cine sunt acest non consumatori? Pai in primul rand acei oameni care nu au voce. De la tineri carora nu le pasa, la persoane cu mai putina educatie, aflati intr-o stare de supunere cvasifeudala, ale caror probleme nu sunt cu adevarat adresate.
Intrebarea principala pentru a crea o piata mai larga in sfera publica ar fi: care e o victorie comuna care ar aprinde nu doar mintile bulei noastre? Si exemple ar putea fi spitalul creat de Carmen Uscatu si Oana Gheorghiu sau miscarea pentru autostrazi, dupa mine.
Cred ca e nevoie sa gandim in felul asta, de extindere a placintei si mai putin de reimpartire a ei (ex, daca bugetarii castiga, atunci privatii pierd si invers).

[Miebara Jato · Rating 4 out of 5]

For centuries, economists have debated what brings about economic development, what are the best mechanisms for tackling poverty. There are two leading schools: The Keynesian camp that supports state intervention and; the free marketers that argues for a private sector-led entrepreneurial state.

Of course, the world has tested both options and the result isn't completely sound. The 2008 economic crisis gives us enough reason to be wary of free-market's promises. And the inherent crisis of Marxism is a subtle and loud sign of danger.

For third world countries, the development policies for tackling poverty are mostly crafted by Development institutions located in Washington and pushed down. In addition to these externally imposed policies are the so-called development aid or donations.

But have these development policies and aid worked? You guessed it right, they've failed. In this book, Christensen and his colleagues overturn the current foreign-aid development paradigm of externally imposed, predominantly government-funded capital- and institution-building programs and replace it with a model of entrepreneur-led innovation. The authors contend that “enduring prosperity for many countries will not come from fixing poverty. It will come from investing in innovations that create new markets within these countries.”

"Market-creating innovations do exactly what the name implies—they create new markets. But not just any new markets, new markets that serve people for whom either no products existed or existing products were neither affordable nor accessible for a variety of reasons. These innovations transform complicated and expensive products into ones that are so much more affordable and accessible that many more people are able to buy and use them. In some cases, they even create entirely new product categories".

A good example of market-creating innovation mentioned in the boom is the Singapore-based Tolaram Group, that created the instant-noodle market in Nigeria, pushing out 4.5 billion packets annually and generating revenue of almost $1 billion a year. This and numerous other examples cited in the book is to illustrate the point that "development takes root when innovation harnessed to the entrepreneur’s ambition pulls in the resources society needs to become prosperous."

But if all it takes for countries to prosper is to undertake market-creating innovations, why are they not doing it? The problem, as the authors pointed out, is how to spot these innovative opportunities and going after them. To spot innovative opportunities, the authors make the case for harnessing the power of "entrepreneurs to develop more and more market-creating innovations, this can—and indeed does—lead to better and better governance."

In section 3, the authors discussed the barriers to prosperity. And the author's premises are indeed paradoxical and head-scratching. Take, for instance, their arguments that "corruption is not the problem; it's a solution". Therefore, instead of trying to eliminate corruption, the right question policymakers should ask is: Why does corruption persist in the first place?

Christensen and his co-authors supported their arguments with plenty of examples and empirical evidence. It's a serious book that makes you reconsider any long-held view about development policies. I recommend it for policymakers.

[Donna · Rating 4 out of 5]

Genres: Nonfiction/Economics

I like this author. I like how he gives food for thought in his books. He manages to shed light on things I haven't quite thought about in his way. Dialogue and action are necessary in bringing change and he shows that.

I liked this one. I listened to the audio and I thought it was going to be long winded. Gratefully, I never had that feeling. So 4 stars.

[Mircea Petcu · Rating 5 out of 5]

Prosperitatea reală și durabilă nu este generată de volumul imens de resurse pe care le turnăm direct în țările sărace pentru a îmbunătăți indicatorii sărăciei, precum educația de slabă calitate, serviciile de sănătate sub standard, lipsa infrastructurii și proasta guvernare. În schimb, prosperitatea începe să se înrădăcineze într-o economie în care investim în inovația creatoare de PIAȚĂ, care servește ca un catalizator și ca bază pentru crearea unei dezvoltări economice durabile.

Inovațiile sunt de trei feluri: de susținere, de eficientizare și creatoare de piață.
Inovațiile creatoare de piață fac ca produsele și serviciile scumpe, complexe și indisponibile anterior să devină accesibile unei noi clase de consumatori care nu și le permiteau, prin aceasta creeând o piață nouă. Inovațiile creatoare de piață generează profituri mari, creează numeroase locuri de muncă locale și stimulează schimbările culturale.

Un exemplu de inovație creatoare de piață este introducerea telefoniei mobile în Africa. Companiile de telecomunicații mobile asigură în Africa peste 1 miliard de linii telefonice. În prezent (2020), se estimează că această industrie susține 4,5 milioane de locuri de muncă, furnizează taxe de 20,5 miliarde de dolari și va adăuga 214 miliarde de dolari economiilor africane. Telefoanele mobile au creat valoare și în alte industrii, precum tehnologiile financiare, unde companiile folosesec acum arhivele abonaților telefonici ca substitut pentru bonitatea financiară, avansând credite către miliaoane de persoane solvabile care, altfel, nu le-ar fi putut obține. Iar compania MicroEnsure oferă asigurări doar pe baza numărului de telefon.

Cartea mi-a adus aminte de Hans Rosling, autorul cărții "Factfulness", cel care la fel vedea Africa drept un tărâm al oportunităților.

Recomand

[Daniel · Rating 5 out of 5]

Christensen tackles the national development this time. Well known to the business world as the Innovation Professor, he asked why foreign aid never worked in alleviating poverty in developing nations. He used the example of well building in poor regions in Africa: it works for a while and when it dries up or breaks down, no one has the expertise or the parts to fix it. So the broken well becomes a monument showing how aid does not work. Or computers sent to communities where there is no electricity. Even the great economist Jeffrey Sachs could not do it (Nina Munk wrote about it in great detail). Instead, Christensen suggested that business innovation with local conditions in mind will bring true economic development. For example, Mo Ibrahim founded Celtel, to supply mobile networks in Africa, when most companies would have written off such investments. He had the vision to sell prepaid cards for less than US$1 to poor people as well as financing to people, build the infrastructure, train the engineers. Many other examples including Singapore was given. When Singapore was founded, it was poor and Lee Kuan Yew built the Economic Development Board and it sent representatives to the West to ask for Investments, not aid. The rest is history and now Singapore is one of the richest countries in the world.

A great book from a great professor. However the whole Business School suffer from the Survivorship bias. That is, winners are studied for their winning strategies. However sometimes it might just be the right timing and good luck. For example, Singapore received investments from the West when China was still in turmoil and closed for business; Lee said so in his book. Sometimes continuing to use the same strategy which was useful in the past will cause once great companies to be disrupted, as Christensen himself pointed out in his seminal book ‘The Innovator’s Dilemma’. Every country wants to develop economically, but not all countries succeed because of many many reasons. Nonetheless it is a good book of ideas.

[Terry Earley · Rating 4 out of 5]

https://ssir.org/articles/entry/to_sp...#


I am not sure I agree with all of Christensen's premises that creating markets will lift 3rd world counties out of poverty. He provides plenty of examples, and research, mainly from his colleagues at Harvard.

What I did enjoy and saved was his chapter on corruption. He posits that each year, the world pays between 1.5 and 2 trillion USD in bribes. That puts a huge dent in the world economy. He writes that much of this is from ordinary people finding themselves with no other options to simply feed their families. When an Indian policeman gets a $200/month salary, but it costs $400 to just make ends meet, he is compelled to "hire" a bribery demand strategy. He has some creative examples about how to reduce corruption significantly.

Worth reading.

[Cristina Balan · Rating 5 out of 5]

Outstanding! I am so grateful to have been able to read this book, and so sad that professor Clayton M. Christensen is no longer with us. Such a loss!
Every page of the book shows his passion for innovation and love of people.
Food for thought, ideas that could emerge simply by looking into the right direction (i.e. non-consumers, processes that need and can be improved) - everything is in there. With real life examples, one can learn from both successful initiatives and huge failures.
Do yourself a favour and read the book.

[Marcin Zaremba · Rating 4 out of 5]

Nowa książka Claytona to rozwinięcie teorii innowacji na państws i lokalnych ekonomii. Konkretnie: jak market creating innovation wpływają kaskadowo na poprawę jakości życia.

Christensen wykorzystuje znane ze wcześniejszych swoich dzieł idee na zupełnie nowym gruncie - i robi to na swój analityczny i empatyczny jednocześnie sposób.

Pokazuje różnie między podejściem pull (firmy które są zintegrowane i budują same potrzebną infrastrukturę) a push (firmy które opierają się na inwestycjach państwowych w infrastrukturę). Te pierwsze mają większe szanse na sukces gdyż inwestycje państwowe w krajach rozwijających się są nietrafione i nieekonomicze - jak słynny niedokończony most w Cape Town.

Jednak najmocniejsza teza książki to dla
mnie non-consumption - czyli idea, że faktyczne miejsce do rozwoju to sprzedaż rozwiązań do grup, które nie konsumują bo próg (finansowy, czasowy, dostępności itp) jest dla nich zbyt duży. Ogromne rzesze cukrzyków w Meksyku nie może nic zrobić ze swoją przypadłością bo terapia jest dla nich zbyt kosztowna... ale odpowienia innowacja jest w stanie odblokować ten rynek i uratować mnóstwo żyć.
Dlaczego to się do tej pory nie stało? Bo skoro nikt nie konsumuje to nie ma to liczb, więc ten rynek „nie istnieje” - dlaczego mamy wchodzić w coś co nie istnieje? Dopiero przez okulary non-consuption widać wyraźnie że to właśnie oznacza żyzną glebę a nie pustynię

Reasumując książka mnie niczym nie zaskoczyła: to ciągle ten sam dobry Clayton, ale zaaplikowany w nowej dziedzinie. Teoria ciągle broni się dobrze

[Kes · Rating 4 out of 5]

This is a book about market innovation - and focuses largely on private companies leading the way in development. It's a very well-structured book: we start with the idea that there are three kinds of innovation: sustaining innovation (improvements to existing solutions on the market), efficiency innovation (companies can do more with fewer resources), and market-creating innovation (targetes non-consumption). The latter is the most important, and the book focuses on that.

Perhaps it's the nature of this book, but after a while, I felt that it focused too much on the private sector's role in market-creating innovation. Governments are secondary in building infrastructure; in fact, it is private companies that lead the way, and when there are enough resources, governments eventually step in and formalise the arrangements. For example, roads and railroads in America were privately funded. Another example he cites: legal institutions came about because of private companies needing a way to resolve disputes.

On one level, this makes sense - after all, if there is no demand for the resource, then providing the resource without understanding the market for it can lead it to a lack of demand for it. The resource must meet a need of the people (the consumers).

On the other, I did feel that the role of government was understated (except in the appendix). The author talks a lot about infrastructure being created by private companies, but public transport, for example, tends to be funded and created by government. Companies rarely initiate that (although countries nowadays have public-private partnerships).

4/5 stars

[Meredith · Rating 3 out of 5]

This book would make a great article. Not enough new opinions/theories to make a full book. Runs on market-worlder philosophy that market innovations can save the world (which I may just be too disillusioned by after reading Winners Take All to be impressed by the nuance offered here).

The basic tenants are that that specifically innovations that turn non-consumers into customers of products/services previously inaccessible, too expensive, too complicated, etc. for them to be relevant. Innovations like efficiency innovations that make a product marginally better/cheaper do not create this transformative change. Uses examples like Ford, Kodak, Bank of America, CelTel, a Nigerian instant noodle company, and a bunch of companies in the rest of the emerging markets thrown together in an appendix at the end.

Also talk about how development only works when it’s ‘pulled’ by the end users rather than ‘pushed’ by the donors/‘experts.’

My favorite part was about corruption and how it’s not actually about leadership, ethics/morals, institutions as many moral high ground westerners often espouse. His perspective is that it is more looking at the ‘job’ people are ‘hiring’ corruption to do, and if there were an easier or cheaper way to do that job, then people would be open to alternatives. Used Napster/Spotify as an example.

Anyway, it had some good points/concepts, but I would have preferred to read them in shorter articles or in a more strategically/logically presented way. As is, it feels a bit haphazard.

[Jite · Rating 3 out of 5]

This was a really interesting insight into one perspective of how innovation can more or less save the world. The book nuances this argument by describing how it is not just “any” kind of innovation that has this capacity, rather, it is the innovations that create markets that can transform society, lead to sustainable development and generate prosperity and value for all.

According to this book, a market-creating innovation is one that target non-consumers, provides an enabling technology and a new value network/chain, is based on an emergent strategy, etc etc. In essence, the bar is quite high to be the sort of innovation intended by the authors but they provide endless examples of how innovation in the US, South Korea, and Japan, lifted those nations out of poverty and created prosperous societies with high levels of development benefitting all their citizens. It also gives lots of real-world examples of what works and what doesn’t work as a market-creating innovation and has an appendix full of promising potentially high impact market-creating innovation oppotunities for budding innovators and investors to comb through for inspiration.

On the surface, this is a really hopeful book that proposes tangible solutions to address all the ways overseas development assistance, philanthropy, and even government policies and programs have failed to secure development and support societies where everyone thrive. On the other hand, I feel like in some ways this argument, the major argument of the book, is a little simplistic and lacking in nuance and in its almost doctrinal approach to believing innovation will solve all problems including knotty issues of inequality, oppression, violence and corruption. I took issue with the book’s lack of engagement with thorny complex historical and social issues like colonialism, legacies of slavery, exploitation and expropriation, profit and not really caring about public goods. The proposition of flagrant growth without thinking of human or environmental impact. The lack of engagement with how some of the growth examples mentioned came from societies built on the exploitation of others where inequalities continue to thrive was to me problematic.

Moreover, a pet peeve was the way African expertise was linked to institutional allegiance… for example anytime an innovator from Africa was featured it always had to be said that they were a “Harvard-trained” this and an “MIT-trained” that… The underlying discourse being that Harvard-trained is a proxy for “knows their onions,” can be trusted as expert, and is likely to produce a successfully market-shaping innovation because of their proximity to US institutions of privilege. This is at odds to a central premise of the book which speaks of the importance of really understanding the market in the way only an indigene can.

Another issue I had with this book is it’s laissez-faire framing of the world around markets and profits and situating the neoliberal capitalist profit paradigm as not only inevitable, but the right order of things, and unequal societies that exploit the poor as leverage for the success of a market-creating innovation. The book minimizes the role and importance of social safety nets and emphasized the importance of private sector led infrastructural development which opens itself up to inequalities of who can have access (leaving it up to profit rather than need), as well as to exploitation where access to basic human needs are based on the market rather than on… we’ll need.

In this book, even corruption is said to be solved by innovation and the market and a compelling argument is provided for this even though ultimately even legal systems that allow lobbying are ignoring the fact that money is used to peddle influence in a legally-sanctioned way and that those systems run to benefit interests with the most money rather than what is best of humanity. Of course in this libertarian paradigm, the role of government is minimal and more or less to support innovation and markets to create an enabling environment for economic growth. For government, the incentive of development is a larger tax base not the well-being of society, after all prosperity primarily of those creating markets but in fairness secondarily of those they hire, is key.

The examples in this book follow the frame that innovators did something no one else had tried or was doing and that is not the case… e.g. Singapore reaching out to the West for investments rather than handouts… but this oversimplifies things- multiple countries have reached out to the West for investments over handouts but with limited results when there are historically colonial and expropriatory relationships that exist, there must be more nuance.

Overall, I think if you’re an intrepid innovator or work in the market-shaping, market-creating space or in development, this is a solid read. There are lots of ideas and examples in this for inspiration. I however think that if read without nuance and without taking into account historical contexts of what enabled many of these world-changing innovations and lasting legacies of oppression and colonialism that exist in many parts of the world, it can become doctrine and can lead to the supposition that this is the only solution to global development challenges, rather than one approach that needs to be wielded with nuance and care. I enjoyed reading it, it’s very practical and has lots of examples and makes compelling arguments, I just wish it had been a little more balanced and had engaged with proposing solutions with a little more nuance and accounting for inequalities and dismantling the root causes that reproduce them.

[Mark · Rating 4 out of 5]

This is an important book! I just hope that those who have the clout to implement its principles actually read it and put it in to practice! Throwing money at poverty has never worked in the long run, but creating business and opportunity does.

[Joris · Rating 5 out of 5]

Christensen is known for his economic theories on innovation, and in this book he looks specifically at innovation that drives growth in developing regions -- somewhat related to my field of work (building new technology products for emerging markets) so very interesting to me.

His main case is that "market creating innovation", that is innovation that creates entirely new markets by targeting non-consumers (say, inventing a new type of low cost motorbike and selling it to people who would otherwise not own any means of transport) is the strongest driver of economic growth. It's the invention of new products that find strong local market traction, and so get "pulled in" by the keen demand from consumers, that drives nations forward.

He contrasts this to the "push" model of developmental aid, such as building wells or schools, which often fall in disrepair or low use as they don't fit the local market needs and realities as neatly. He is similarly critical of infrastructure investments that aren't driven by the market, and argues the right infrastructure often gets built (either privately or in collaboration with government) as it's needed by innovators to build and grow their local business. He talks about the role of institutions (law, politics, agencies, etc.) in a similar manner: they need to get shaped by local market needs, rather than externally imposed.

The authors stretch their praises for innovation quite far in this book, probably to a fault. But it's compelling food for thought for anyone interested in economic development and innovation.

[Dave Menconi · Rating 3 out of 5]

Generally, "The Prosperity Paradox" is where a person is prosperous in objective terms but doesn't feel prosperous because his neighbor is a little more prosperous. Able has a Lexus but Ben has a BMW so Able feels poor. I was looking for more information about that when I got this book.

This book is not about that at all. I would call this book "The Poverty Paradox" because it's really about the fact that countries like Nairobi are poor even though much aid has been given to them.

Some of this is well understood.

Stories abound of aid workers pouring into a country and building things only to discover that the things they built didn't help the people of the country or even didn't work in the country or the climate.

And I'm sure we've all heard that capitalism is the road to prosperity. I've read several books which has this as a theme.

What the author offers that is new and interesting is the idea that market forces work best when they serve a market the doesn't already exist. Cellphones for people who (everyone said) can't afford cellphones. Cheap, easy to prepare noodles for people who don't eat noodles.

The book is really about innovations that put together unserved markets with technologies that already exist.

He even has an appendix full of ideas for innovators who would like to find some of these new markets.

I found the book to be somewhat interesting, once I got over my disappointment.

[Sambasivan · Rating 4 out of 5]

Excellent thoughts by the authors on how one can think about market innovations. They have created a template to address big issues like poverty, communication , sanitation etc at a global level. The examples provided are very appropriate and hard hitting. Well annotated with notes that exemplify the depth of research.

Discussed this book along with my friend over the weekends and therefore could get multiple perspectives. Could appreciate the book better.

[Deb · Rating 5 out of 5]

Such a great book on how innovation can lift an economy. Great examples. Sound insights. Super inspiring. Will need to own and mark up.

[Mad Hab · Rating 5 out of 5]

Not his best book, but still better than anything else

[Major B · Rating 5 out of 5]

This was a very eye opening book and has helped me see the world in a different way. I’ll be keeping this book around as a reference for my future goals.

[Randi · Rating 4 out of 5]

Very interesting book...learned a little about a lot of different places and companies in the world. Kind of book that gets you thinking creatively.

[Andrew Wyman · Rating 5 out of 5]

Very Inspiring book. Sparked an idea for me.

A book version of Nassim Taleb quote that “if you want to save the world, start a business, not an NGO”

The Chapter on America and the one on the difference b/ween Korea and Mexicos growth make it worth it alone

As an American, I think this book should be read by all of us to see how we got to where we are and how we need to keep that going and not forget it

[Mike Bright · Rating 5 out of 5]

Great book on the failures of most current development efforts in third world countries. The emphasis is on innovation that targets unreached consumer populations. There is a lot of good theory behind their claims (from authors with great credentials), and also a lot of practical examples of innovations that served new populations, created jobs, developed infrastructure and had lasting impact. The focus is on creative solutions that pull development in, rather than pushing from the outside.

[Luke · Rating 4 out of 5]

Was drawn to read this book after having Clayton Christensen's other book, How Will you Measure Your Life. However, this was more of an academic read rather than a personal read. Good analysis and case studies of what has and has not worked in raising nations out of poverty. However, left with the feeling of 'what can I do'. Perhaps this book will come to me if ever placed in a position related to urban development or choosing what sort of endeavours to support

[Julia Brethenoux · Rating 5 out of 5]

Such an excellent read!
It outlines in simple accessible terms solutions to developing more prosperous societies and economies. With so many real life examples.
It actually validates local entrepreneurs innovations solve global problems from local solutions. It’s the fundamental basis and drive of my work!

[Heather · Rating 5 out of 5]

This is a great book focusing on market-creating innovations and seeing opportunities and potential instead of problems and poverty. This creates change.

"I witnessed firsthand the devastating effects of poverty: I lost friends to preventable illnesses and saw families routinely having to make impossible choices among putting food on the table, educating their children, or supporting the older generation. Suffering was a part of daily life... I am happy to say that when I visit South Korea today, it bears no resemblance to the South Korea I remember... South Korea's transformation in just a few decades is nothing short of miraculous. Unfortunately, such a dramatic transformation has not been possible for many other nations that resembled South Korea a few decades ago (p. vii)."

"Prosperity, it turns out, is a relatively recent phenomenon for most countries. Most wealthy nations have not always been prosperous (p. viii)."

"Since 1960, we have spent more than $4.3 trillion in official development assistance trying to help poorer countries. Unfortunately, many of our interventions have not had the impact in poor countries that we'd hoped they would. In fact, many of the world's poorest countries in 1960 are still poor today (p. x)."

"'Water is life. It's why there are so many water projects throughout the world.'... In a similar vein, when you visit a poor country, the lack of quality education, unpaved roads, bad governance, and other poverty indicators are painfully obvious. Isn't it reasonable to assume that the answer to solving poverty lies in providing one of all of those things (p. x)?"

"There are more than fifty thousand broken wells across Africa alone... The experience was profoundly disheartening for Efosa, who was so eager to help alleviate suffering. His failure raised some difficult questions for him. If these vexing problems couldn't be solved by an injection of resources and goodwill, then what would help instead? Why do some efforts succeed and not others? Why do some countries fare better than others (p. xi)?"

"Alleviating poverty is not the same as creating prosperity. We need to start thinking differently (p. xii)."

"We have written this book with four stakeholders in mind... for those in the development industry who are working diligently to rid the world of poverty... for investors, innovators, and entrepreneurs looking to build successful enterprises in emerging markets... for the policy makers seeking to institute policies that spur development in their countries.... for the ten-year-old children all over the world...who deserve a better life... for the fathers and mothers who work tirelessly to provide for their families, but are unable to rise above a life of subsistence... for the increasing number of youth who...feel their hopes extinguishing because their world seems devoid of opportunity (xiii)."

"'Serious people laughed at me when I told them I wanted to build a telecommunications network in Africa twenty years ago. They told me all the reasons the project would never succeed. Somehow I just kept thinking, I know there are challenges but why can't they see the opportunity (Mo Ibrahim, p. 3)?'"

"What if, instead of trying to fix the visible signs of poverty, we focused on creating lasting prosperity (p. 4)?"

"At the time, mobile phones were seen as an expensive toy for the rich, a luxury that the poor could not afford, and more important, did not need... But Ibrahim, to his credit, saw things differently. Instead of seeing poverty, he saw opportunity.... [he] did not say How will millions of Africans, for whom three meals a day is often a luxury, afford a mobile phone? or How can you justify the investments in infrastructure for a market that does not exist? He focused on the struggle to accomplish something important for which there were few good solutions. For Ibrahim, struggle represented enormous potential (p. 4)."

"Today Africa is home to a sophisticated mobile telecommunications industry, with numerous mobile phone companies...providing more than 965 million mobile phone lines.... Ibrahim saw what others did not (p. 6)."

"It may sound counterintuitive, but our research suggests that enduring prosperity for many countries will will not come from fixing poverty. It will come from investing in innovations that create new markets within these countries. True and lasting prosperity...is not reliably generated through the flood of resources we are directly pouring into poor countries to improve poverty indicators such as low-quality education, subpar health care, bad governance, nonexistent infrastructure, and many other indicators in which an improvement would suggest prosperity. Instead, we believe that for many countries prosperity typically begins to take root in an economy when we invest in a particular type of innovation--market-creating innovation--which often serves as a catalyst and foundation for creating sustained economic development (p. 6)."

"What might happen if we flipped the emphasis to innovation and market-based solutions rather than conventional development-based solution (p. 7)?"

"Good theory is the best way I know to frame problems so that we ask the right questions to get us to the most useful answers (p. 9)."

"Investing in innovations, and more specifically market-creating innovations, has proven a reliable path to prosperity for countries around the world (p. 10)."

"Our definition of innovation refers to something rather specific: a change in the processes by which an organization transforms labor, capital, materials, and information into products and services of greater value (p. 10)."

"Market-creating innovations can ignite the economic engine of a country... they create jobs... they create profits... they have the potential to change the culture of entire societies (p. 11)."

"For example, instead of developing a business model where customers had to pay monthly cell phone bills, as is the case in wealthier countries with citizens with higher earning power, Ibrahim introduced prepaid cards (p. 12)."

"For instance, instead of seeing the roughly six hundred million people in Africa who don't have electricity as only a sign of their immense poverty, we should see them as a vast market-creation opportunity waiting to be captured. It should be a call to innovate, not a flag of caution (p. 13)."

"This book is about celebrating the power and potential of innovation to change the world (p. 14)."

"'One of the things people don't understand is that markets are creations. They are not something which we can [just] find. A market has to be created (Ronald Coase, p. 17).'"

"When a country's prosperity is not improving, in spite of what might seem to be a lot of activity within its borders, the country might not have a growth problem. Instead, we believe it might have an innovation problem (p. 17)."

"Sustaining innovations are all around us, and in effect, are a critical component of our economies... But they have a very different impact on an economy than the other two types of innovations--market-creating and efficiency (p. 20)."

"Steady Camry sales do not represent a new growth engine for Toyota.... Sustaining innovations range from faster processors in our computers to more memory in our phones (p. 23)."

"Efficiency innovations, while good for the productivity of an organization, are not always good for existing employees (p. 25)."

"Efficiency innovations free up cash flows, but they rarely add new jobs to an economy... Neither efficiency nor sustaining innovations are inherently bad for a country. In fact, they are good for our economies, but they play very different roles in fostering sustainable economic growth and job creation (p. 26)."

"Market-creating innovations...create new markets...that serve people for whom either no products existed or existing products were neither affordable nor accessible for a variety of reasons. These innovations transform complicated and expensive products into ones that are so much more affordable and accessible than many more people are able to buy and use them (p. 26)."

"Market-creating innovations have the potential to create what we call local and global jobs (p. 27)."

"Another virtue of investing in market-creating innovations is that when local entrepreneurs develop innovations and reap the rewards from the innovation's success, the returns are more likely to fund future innovations locally (p. 28)."

"Market-creating innovations...provide us with one of the most viable strategies for creating prosperity in today's poor countries (p. 29)."

"Here is a helpful frame of reference for five attributes that entrepreneurs and managers should look for as they consider creating new markets.... business models that target nonconsumption....an enabling technology....a new value network.... an emergent strategy.... executive support (p. 30)."

"Ford's innovation...was not simply a car. It was an entire business model born out of his vision to create an entirely new market for the automobile (p. 34)."

"For a market to be created and then sustained, it must create profits... jobs... cultural change (p. 35)."

"We have found markets to be a powerful force that has the ability to pull into societies many of the components that make societies safe, more secure, and more prosperous (p. 36)."

"How...do you spot these opportunities, much less go after them (p. 45)?"

"'We realized we weren't competing with giant insurance companies; we were competing with apathy (p. 47).'"

"Innovating for a market that does not yet exist can feel risky (p. 49)."

"Nonconsumption offers a powerful clue that there is enormous potential for innovation. But spotting nonconsumption requires putting on a new set of lenses to see what others might be missing (p. 50)."

"There are primarily four barriers or constraints that prevent people from consuming a solution that will help them make progress. They are: skill, wealth, access, and time (p. 50)."

"Innovators need to walk in the shoes of their prospective customers to create a product that is so much better than the existing alternatives that people hire it--even when the competition is nothing (p. 54)."

"We do not have all the answers to the struggles in the world. But we do know that one rarely finds what one is not looking for (p. 68)."

"Every year we spend billions of dollars in an attempt to help low and middle-income countries develop. These funds are primarily used to push resources into poor countries in order to help them being their march toward prosperity... We believe that many of these attempts are missing a critical component for development: innovation. Development and prosperity take root when we develop innovations hat pull in necessary resources a society requires (p. 73)."

"Building toilets is not enough. By mid-2015, the government found that a majority of the toilets were not being used (p. 74)."

"Investing in both affordability and availability is paramount to the success of a market-creating business (p. 83)."

"A pack of Indomie noodles is simply a 20-cent packet of instant noodles. How can it matter so much? It matters because Indomie noodles represent the process by which poverty, through innovation, can become prosperity (p. 85)."

"If we create a market that successfully serves a growing population of nonconsumers, that market is likely to pull in may other resources an economy requires. This is the simple, yet powerful, mechanism of pull (p. 87)."

"If pulling seems to be a more effective strategy than pushing, then why don't we dedicate more of our resources toward pull strategies?... What could happen if we changed our emphasis from push to pull?.... 'We are the first generation in human history that can end extreme poverty'.... He may be right--but this will not happen if we continue focusing our efforts on ending poverty. That's the paradox at play (p. 93)."

"Considering where it once was, America's transformation into an economic powerhouse is extraordinary. But as we will explore, at the heart of America's transformation story is the same force that has driven many economies around the world from poverty to prosperity: market-creating innovations (p. 99)."

"Of course these innovators did not single-handedly develop America--the country has benefited from the innovation of scores and scores of entrepreneurs whose work improved our lives. But collectively they demonstrate the transformative power of a culture of innovation that allows prosperity to take root and flourish (p. 100)."

"For transformative development to happen, innovators must first imagine a different world, one that is filled with possibilities that many others can't begin to imagine (p. 109)."

"Ford's decision to target nonconsumption and create a new market for the automobile in America and the market's need to develop and pull in many new resources were critical to the development and prosperity of America, including roads (p. 111)."

"At the core of any market-creating innovation is a business model that profitably democratizes an innovation so that many more people--nonconsumers who can benefit from using the innovation--gain access to it (p. 115)."

"America was once a fixer-upper, too, but through trial and error, and investments in market-creating innovations, we've built a culture of innovation.... 'Every success is the mother of countless others.' Collectively, they changed America's destiny (p. 120)."

"'The mission of Sony is to design products for markets that don't exist yet (Akio Morita, p. 129).'"

"Investing in innovation, regardless of the circumstances in which a country finds itself, is possible (p. 132)."

"Entrepreneurs with an eye for local needs are necessary to drive market-creating innovations (p. 132)."

"Integration is necessary when countries are at an early stage of development (p. 132)."

"The proliferation of efficiency innovations in Mexico is not creating prosperity because efficiency innovations are typically targeted at growth that has little or nothing to do with markets in the country (p. 167)."

"Mexico and many other nations that are not yet prosperous have the ability to become thriving nations. But for prosperity to come about...we have to think about how to create new markets that serve the vast nonconsumption (p. 169)."

"The lack of 'rule of law' and 'institutions' is a plague that affects poor countries. These countries can't hope to make progress until they fix their institutions--which often means they should adopt Western-style systems, conventional wisdom suggests.... Institutions are pushed onto these countries with the best of intentions.... Effective institutions are not just about rules and regulations. Ultimately, institutions are about culture--how people in a region solve problems and make progress. At their core, institutions reflect what people value (p. 181)."

"Culture is a way of working together toward common goals that have been followed so frequently ad so successfully that people don't even think about trying to do things another way. If a culture has formed, people will autonomously do what they need to do to be successful (p. 186)."

"Market-creating innovations make historically expensive, complex, and out-of-reach products and services accessible to a new class of consumers who could not afford them, thereby creating a new market for the democratized solutions (p. 190)."

"Innovations, especially those that create new markets, typically precede the development and sustenance of good institutions... institutions must be built with the local context in mind... innovation serves as the glue that keeps institutions together (p. 193)."

"Prosperity is a process, not an event (p. 194)."

"How can we eliminate corruption?... Why does corruption persist in the first place (p. 205)?"

"The vast majority of individuals in society want to make progress.... every individual, just like every company, has a cost structure (p. 209)."

"We all want...a society where trust and transparency are valued (p. 211)."

"Corruption is not primarily about the lack of good leadership... Corruption is about 'hiring' the most expedient solution for what seems to be, in the moment, the greatest good of the options available to us (p. 214)."

"Development often precedes successful anticorruption programs, not the other way around (p. 220)."

"What if we stopped focusing all our effort on fighting corruption? Without simultaneously providing a substitute for what people can hire, corruption will be incredibly difficult to minimize (p. 224)."

"Market-creating innovations have the ability to pull in what's needed, regardless of the existence of sound institutions or the state of corruption (p. 229)."

"'Between the ocean and the mountain [in Cape Town], there's the unfinished highway. It is an odd-looking landmark in a beautiful city: sections of elevated road left suspended in mid-air when construction stopped in the 1970s. Four decades later, the hulking slabs of concrete still end in precipitous drops (The Economist, p. 235).'"

"Poor infrastructure is one of the most visible signs of poverty and is one of the primary reasons poor countries cannot escape their cycle of poverty.... What sustains successful infrastructure development (p. 235)?"

"'Most of the things worth doing in the world had been declared impossible before they were done (Louis D. Brandeis, p. 261).'"

"While the path to prosperity will look different for different countries and will ultimately depend on their current economic circumstances, we believe that the Prosperity Paradox can become the Prosperity Process, one that is sustained by a continuous commitment to innovation (p. 261)."

"Over time, an organization's capabilities shift primarily from its resources toward its processes, with the business model determining what it must prioritize (p. 265)."

"What is the point of your product if it is affordable but not available (p. 267)?"

"If we can solve these problems in health care--one of the most complex sectors--imagine what we can do for food, transportation, finance, housing, and a host of other industries.... Innovators who have had the biggest impact did so by creating the processes that enabled them to democratize products and services so that many more people would have access to them (p. 269)."

"Market-creating innovations can begin to solve many of our biggest problems, and in the process they can ignite the economic engine of many countries currently struggling to prosper (p. 270)."

"Every nation has the potential for extraordinary growth within it (p. 271)."

"Most products on the market today have the potential to create new growth markets when we make them more affordable (p. 272)."

"A market-creating innovation is more than just a product or a service (p. 272)."

"Focus on pulling and not pushing (p. 273)."

"With nonconsumption, scaling becomes inexpensive (p. 273)."

"Innovation really does change the world (p. 274)."

"The Wright brothers created an industry, and that industry, in turn, changed the world (p. 275)."

"Why do we do things this way? Why do we believe what we believe? What if we thought about things differently? What is our mission and why? Why are we in this business? Why do we do development this way (p. 276)?"

"Unless we can convert the strong emotions these images trigger into intelligent action, our efforts will amount to putting Band-Aids on a wound that never heals. And over time, we will develop compassion failure (p. 276)."

"'Entrepreneurship is the most sure way of development (Paul Kagame, p. 279).'"

"Every industry would do well to have outsiders--or those that are not yet experts--in it (p. 279)."

"'We must choose not to see the economically poor exclusively through the lens of their needs, but also through their potential (p. 302).'"

"Prosperity, by itself, does not solve all of a society's problems (p. 318)."

[Charles Nguyen · Rating 5 out of 5]

Really nice book on push vs. pull when trying to solve problems, with emphasis on developing regions. With the constant desire to solve the world's problems, we keep pushing our solutions without regard to the long-term sustainability model. The solution is to seek solutions that can be maintained. This progress can and should be made by "local" innovation and entrepreneurs. The chapter on corruption was also quite enlightening, applying the same concepts of local problem solving to address corruption. Great read.

[Ashwin Chhabria · Rating 4 out of 5]

Clayton Christensen is one of my favourite thinkers. He has great structure in writing and takes a lot of time and care to deliver seminal insights in simple words. This book talks about innovation and how under-developed markets can be viewed as a great opportunity for new businesses (provided they are offering a real need). The authors of this book discuss, in great detail, the opportunities and progress in 5 different nations- Africa, India, South Korea, Japan and America amongst many other things that stress on innovation. The common theme is that enduring prosperity for less developed countries will not come from fixing poverty, but rather from investing in innovations that create new markets within these countries

Did you know South Korea’s economy was struggling in every possible way, only 50 years ago. The country has had a miraculous transformation. Clayton dives into the hows.

Learnings-

1. Innovation and its types- With words like innovation, disruption and digital being used so loosely in today’s construct, Clayton details and categorizes innovation into 3 types which I found to be very seminal-

a) Sustaining innovations-
Innovations that are focused on retaining the relevance of a particular business are usually the ones that come under this category. These are innovations that improve the existing product and are the result of either a proactive intention to retain the existing customer base or a strategy to wade threats from competitors. Think about the time when cars started adopting the power-steering feature or electric windows. These kinds of innovation make existing customers happier but do not lead to massive increase in sales, operations or even employment for that matter. They keep the vehicle moving and retain relevance of businesses.

b) Efficiency innovations-
Efficiencies that are focused on reducing time and/or costs. Think about the assembly line production by Henry Ford (which reduced production time of a car from 12.5 hours to 2.5 hours) or Manila’s average labour rates (major destination for outsourcing call center operations). These innovations are ‘we do it the cheapest so give it to us’ and is a very tenuous thread to hang on for the retention of business. It only takes another place to charge a dollar lesser for the ‘efficient’ innovators to lose business.

c) Market creating innovations-
Market creating innovations are the innovations that lead to the creation of new markets. They serve a new market which Clayton refers to as ‘the non-consumer market’. The potential to scale, grow and employ is much higher in market creating innovations than it is with efficiency and sustaining innovations. A good example of a market creating innovation is how the Africa got its major telecom provider. The CellTel network was launched by Sudanese born, Mo Ibrahim, in Africa. Despite seeing Africa as a country that was struggling with basic needs of food, shelter and water, Mo Ibrahim identified the hardship of no-connectivity for the residents of Africa and was bold enough to follow through and build up towers, satellites and a fresh network from scratch (despite having no investment/VC backing owing to the fear of a corrupt system in Africa). The result of his determination was a thriving business which connected 24 million subscribers across 14 countries in Africa (as of 2005). Ibrahim later sold Celtel to Zain (formerly a mobile telecom company) for $3.4 billion.

2. Need based innovations- Innovations that come about to serve an actual need (pull) last longer and better than innovations that are merely pushed onto a country (push) because of their proven value. An example will be helpful, here. When the founders of Indomie noodles (the ‘Maggi noodles’ equivalent of Nigeria) realised that 20% of Indomie’s produce was being stolen on the way to its distribution centers, the founders invested in building a novel trucking system that they could trust, in. When they found deficiency in the skills of local labour, they invested heavily in technical skilling. Today, every new business in Africa benefits from these skills and trucks. Had there been no Indomie, the novel trucking system would not have had a demand enough to sustain itself. Skilling workers, who’d have no place to apply the acquired skills, would also be an investment waiting to reap returns for years. Indomie pulled innovations to sustain itself in the country thereby facilitating the sustenance of the innovations that it brought, with it. . Without a real need, most institutional investments perish.

[Irina Ioana · Rating 5 out of 5]

What a difference between Milton Friedman's neoliberal free market policies (where a business would own just the brand, and everything else is sub-rented, privatised and ends up corrupt due to revenue margins) and this take on what makes a business, society and country prosperous. Investing in the production chain and people.
The greatest example given in the book is South Korea.

[Nathan · Rating 4 out of 5]

Insightful book by the late Harvard Business School giant that focuses on the subtitle: how innovation can lift nations out of poverty. Where governments or corruption or other obstacles have failed or blocked prosperity historically, Christensen explains how innovation, non-consumption markets, "pulling" strategies, and a focus on solutions for local needs can and does transform nations and lift them out of poverty. This in turn paves the way for infrastructure, the reduction of corruption, and the explosion of other industries and jobs.
A few notable points and examples:
• Successful market-creating innovations emerge from unfulfilled jobs to be done, and they solve problems that formerly only had inadequate solutions, or no solutions at all. See, e.g. Celtel, which in 2005 (when it was sold to Zain) had 24 million phone/plan subscribers in 14 African countries where there were previously no telecommunications or telecom infrastructure. (Pt. 3, Sec. 1)
• Investing in both affordability and availability is paramount to a market-creating business. (Pt. 4, Sec. 1)
• Many times, localizing an innovation is necessary for success. (Pt. 4, Sec. 1)
• If a new market is created that successfully serves a growing population of non-consumers, that market is likely to pull in many other resources an economy requires. See, e.g. Tolerant Noodles company story. (Pt. 4, Sec. 1)
• A company should develop an interdependent integrated business model when it cannot depend on suppliers more specifiable, verifiable, and predictable inputs. This could be access to reliable electricity, or quality raw materials. See, e.g. M-Pesa, the African mobile phone-based money transfer service. (Pt. 4, Sec. 1)
• Innovators should dedicate more of our resources toward “pull” strategies. E.g. The new African water wells that broke after a few years and were left to crumble because they were “pushed” on the locals who had neither the resources nor the know-how to fix them. (Pt. 4, Sec. 1)
• “We are the first generation in human history that can end extreme poverty.” Jim Kim (former World Bank pres.) But this cannot happen if we continue focusing our efforts on ending poverty. THAT is the paradox at play. (Pt. 4, Sec. 1)
• Eastman Kodak transformed an industry once limited to the rich to one in which millions of cameras and film were sold to all Americans. Same with the Ford Motor Co. How? A business model that focused on the principles of Customer, Mass production at low cost, Worldwide distribution, and extensive Advertising. The impacts were large and wide: new technologies and industries, new infrastructure, new markets, and new wealth. For instance, Ford also invested in and ran steel blast furnaces, timberlands, coal mines, rubber plantations, a railroad, freighters, gas stations, sawmills, and glass works companies. (Pt. 5, Sec. 1)
• Henry Ford once remarked that his wage increase to his factory workers (from $2 to $5 per day) was the smartest cost-cutting move the Company ever made. Ford was also largely responsible for cutting a 6-day workweek to a 5-day one. Other companies followed suit on both accounts. All because Ford wanted to keep his factories open and chose to innovate. (Pt. 5, Sec. 2)
• An over-reliance on “efficiency” innovations (as opposed to non-consumption innovations) can only take an economy so far, as seen in the example of Mexico’s or Russia’s economies, because they must target existing consumption markets and compete for market share with their competitors. (Pt. 7, Sec. 2)
• “Emerging markets are peppered with ample opportunities to create new markets that can yield significant returns, if you know where to look for them.” But the creation of new markets requires patience as non-consumers are found and understood and then served. (Pt. 7, Sec. 2)
• Prosperous countries can generally depend on the rule of law and the enforcement of contracts, thus engendering trust among citizens and between citizens and the state. (Pt. 8, Sec. 3)
• Innovations, particularly those that create new markets, typically precede the development and sustenance of good institutions. Institutions must be built with a local context in mind so that they don’t become useless to those they purport to serve. Innovations serve as the glue that keeps institutions together. Prosperity is a process, not an event. See, e.g. the story of Venice and its economic ups and downs in history. “Innovations can be a great equalizer.” (Pt. 8, Sec. 3)
• The net worth of the 153 Chinese Communist parliamentarians topped $653 billion in 2017, larger than the GDPs of Norway and Finland combined. This is the case even though China has over 1,200 laws and rules against corruption. (Pt. 9, Sec. 3)
• In America, corruption was largely filtered out because “the equation about how average and rich Americans could make money, make progress, and make a living for themselves and their families began to change.” Development often precedes successful anti-corruption programs. (Pt. 9, Sec. 3)
• What can we do to reduce corruption? Two suggestions: 1- Stop focusing on fighting corruption unless there is an available substitute that people can “hire” (by enabling the creation of new markets, for example); and 2- focus on what can be controlled by integrating and internalizing operations in order to reduce opportunities for corruption to occur. (Pt. 9, Sec. 3)
• There’s no better way to curb corruption than the creation of new markets. See, e.g. the American music industry at the turn of the 21st century (pirated vs paid music). (Pt. 9, Sec. 3)
• Market-creating innovations can pull in what is needed, regardless of the level of corruption or absence of sound institutions. Those institutions will follow the new markets. (Pt. 9, Sec. 3)
• Innovation typically precedes infrastructure, rich and poor countries alike. See, e.g. Microsoft & Facebook’s joint 4,000 mile transatlantic sub-sea cable from Virginia to Bilbao, Spain (not funded by government). (Pt. 10, Sec. 3)
• When infrastructure is pushed into a local economy before it is ready, it rarely succeeds. (Pt. 10, Sec. 3)
• History is full of examples of innovators and entrepreneurs finding a faster path to creating the infrastructure their businesses need, long before the government is able or willing to step in. See, e.g. the private companies in early America that built most of the roads, rails, and canals. (Pt. 10, Sec. 3)
• “Ultimately, we must do the hard work of first creating the value that we intend to store or distribute on a particular infrastructure. If we don’t, we fall victim of to the doctrine of ‘Infrastructure-First,’” in which we may find ourselves having built a house without anyone being able to afford to live in it. (Pt. 10, Sec. 3)
• At the outset, an organization survives because of its resources. But in the long-term, an organization thrives because of its processes. See, e.g. Narayana Health, now the 2nd largest hospital network in India. Narayana reduced the cost of bone marrow transplants from ~$27k to ~$8,900, brain surgery to ~$1,000, and spinal surgery to ~$550, thus sparking a major medical tourism move in India. (Pt. 11, Sec. 4)
• The innovators that have the greatest impact created the processes that enabled them to democratize products and services so that many more people would have access to them. (Pt. 11, Sec. 4)
• Singapore has become one of the world’s richest nations in the span of only about 60 years. Singapore was successful by prioritizing jobs through innovation. One way was that Singapore set up an economic development board (EDB), which focused on attracting foreign investment in the country in order to create employment (not handouts, but investments). Singapore focused on innovation and not just industrialization or exports, and thus the nature of foreign investment has changed from industry (textiles, etc.) to biotech, pharma, etc. Singapore shows that we must continually learn new things if we want to keep making progress. (Appendix)
• “Investing in innovation and creating a new market is one of the most important things we can do to not only reap outsized returns, but to also sustainably develop [poorer] regions. The world is full of opportunity if you just know what you are looking for.” (Appendix)
- Recap (from Pt. 11, Sec. 4):
 Every nation has the potential for extraordinary growth within it. (Non-consumption, or a signal that opportunity lies within)
 Most products on the market today have the potential to create new growth markets when we make them more affordable. E.g. electric cars in poorer countries.
 Market-creating innovation is more than just a product or a service; it is a whole system that often pulls in new infrastructures and regulations and has the capability to create new local jobs. E.g. Celtel in Africa.
 Focus on pulling and not on pushing. ‘Pull’ strategies ensure that a ready market is waiting. This has an impact on long-term and sustainable prosperity.
 With non-consumption, scaling becomes inexpensive. The first step is identifying an area of non-consumption. How? Focus on re-framing the problem (the “why’s”). E.g. the Wright brothers vs Langley.