Accelerating prosperity through the Market-creating Innovation Bootcamp
This piece is co-authored by Dina Sherif, Executive Director of the Legatum Center for Development and Entrepreneurship at MIT.
2020 was an incredibly difficult year with the COVID-19 pandemic exposing the precarious economic foundation in most emerging economies. In addition to the significant debt burden many low-and middle-income countries now face, estimates suggest that as many as 150 million people will slide into extreme poverty in 2021. As major global development organizations such as the World Bank provide emergency aid to help emerging economies recover, now is a good time to pause and consider the best way to tackle poverty. Research shows that a particular type of innovation—market-creating innovation—can help countries build back better.
The power of market-creating innovation
Market-creating innovations transform complicated and expensive products into products that are simple and affordable, making them accessible to a whole new segment of people for whom there was always underlying demand, but no adequate solution on the market. This segment of the population is referred to as “nonconsumers.” In many emerging economies, the population of nonconsumers for most products and services far surpasses that of consumers. As a result, when entrepreneurs develop market-creating innovations, the societal impact is immense.
For example, in the early 1900s few people in the United States could afford cars. It was an expensive toy for the wealthy until American entrepreneur Henry Ford developed the Model T, an affordable car for the average American. Once the car became affordable and accessible, not only did millions of Americans purchase it, but this market-creating innovation led to significant development.
For instance, to make the Model T affordable, Ford had to build steel mills, iron ore mines, gas and service stations, rubber and paint factories, and dealerships. The culmination of these investments was the creation of tens of thousands of new jobs and a significant increase in tax revenue, which funded (and still funds) America’s roads. In addition, the mass consumption of cars increased attendance in schools, led to more productive farming and transportation, and the construction of suburbs. Ford’s Model T ultimately created an automobile market that now adds more than $500 billion to the US GDP annually. His innovation—along with countless other market-creating innovations from innovators during that time—changed the economic trajectory of the United States.
A market-creating innovation is more than just a product or a service, it’s an entire system—and it’s possible in Africa. Over the past couple of decades, the proliferation of mobile telecommunications, affordable renewable energy, and fintech services has boosted growth and incomes for many. A few market-creating innovations however, won’t trigger widespread prosperity in Africa; many will. And that is the reason we are launching the Market-creating Innovation Bootcamp.
The Market-creating Innovation Bootcamp
The Market-creating Innovation Bootcamp, a new collaboration between MIT Legatum Center and the Clayton Christensen Institute, is designed to empower early-stage, emerging market innovators with the principles and frameworks necessary to create new markets that make products affordable. Drawing on innovation insights from the late Clayton Christensen, whose extensive body of work influenced business leaders such as Steve Jobs of Apple, Andy Grove of Intel, and Reed Hastings of Netflix, the Bootcamp will be anchored around the ideas in his last book, The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty.
With a focus on Africa, the Bootcamp will not only introduce participating entrepreneurs to Christensen’s most powerful insights on innovation and market creation, but will also offer coaching sessions from seasoned entrepreneurs. Upon completion, participants will have the opportunity to have their ideas shared with investors in the Bootcamp’s network.
Entrepreneurship, by its very nature, is a difficult undertaking. From conceptualizing an idea and convincing investors to fund it, to finding product market fit and building an effective organization, entrepreneurs must overcome significant challenges to succeed. In Africa, where entrepreneurs get access to barely one percent of global venture capital and private equity investment, and operate in a difficult business environment, the challenges entrepreneurs face are amplified. The Bootcamp is designed to create the support structure necessary to increase the chances of success for Africa’s market-creating innovators—resulting in widespread, lasting prosperity.
Africa has had too many false starts. From the wave of independence that swept across the continent in the 1950s and ‘60s, to the never-quite-realized Africa rising narrative that captivated citizens and observers in the 2010s, the continent still struggles to emerge. The economic devastation from COVID-19 has set the continent back, but Africa still presents one of the best opportunities for investment and growth due to its young, vibrant, and entrepreneurial population. The Market-creating Innovation Bootcamp is a bold step towards harnessing the continent’s entrepreneurial prowess. Join us.
To learn more, visit: https://legatum.mit.edu/mci/