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

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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 i 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.


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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 i 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.

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

  1. 4 out of 5

    Mehrsa

    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 pover 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.

  2. 5 out of 5

    Ebehi

    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 th 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.

  3. 4 out of 5

    Miebara Jato

    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 Marxis 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.

  4. 5 out of 5

    Terry Earley

    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 themse 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.

  5. 4 out of 5

    Daniel

    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 electri 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.

  6. 4 out of 5

    Cristina Balan

    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 yourse 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.

  7. 5 out of 5

    Farida Ladipo-Ajayi

    So much insight into markets in countries all over the world, learnt a lot of that. The book was too long in my opinion, and I listened to the audio version so it just seemed to go on and on. Nonetheless it was a good listen, provoked some thoughts about what I do currently in my home country

  8. 5 out of 5

    Mark

    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.

  9. 4 out of 5

    Joris

    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 otherw 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.

  10. 5 out of 5

    Deb

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

  11. 5 out of 5

    Mad Hab

    Not his best book, but still better than anything else

  12. 4 out of 5

    Mike Bright

    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.

  13. 4 out of 5

    Luke

    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 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

  14. 4 out of 5

    Heather

    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, 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)."

  15. 4 out of 5

    Charles Nguyen

    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 corr 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.

  16. 4 out of 5

    Ashwin Chhabria

    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 t 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.

  17. 4 out of 5

    Irina Ioana

    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. 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.

  18. 4 out of 5

    Nathan

    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 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.

  19. 4 out of 5

    TEELOCK Mithilesh

    Why have some nations become prosperous while others have remained poor—and in many cases poorer than half a century ago? Harvard Business School professor Christensen (The Power of Everyday Missionaries: The What and How of Sharing the Gospel, 2013, etc.) and colleagues venture some suggestive answers. Prosperity, by the authors’ account, does not mean simply relative wealth, but also access to goods such as education and health care as well as the promise of good governance and upward mobility. Why have some nations become prosperous while others have remained poor—and in many cases poorer than half a century ago? Harvard Business School professor Christensen (The Power of Everyday Missionaries: The What and How of Sharing the Gospel, 2013, etc.) and colleagues venture some suggestive answers. Prosperity, by the authors’ account, does not mean simply relative wealth, but also access to goods such as education and health care as well as the promise of good governance and upward mobility. By these lights, readers may well wonder whether the United States counts as a prosperous nation; be that as it may, an ingredient for prosperity is the ability to see a problem and solve it by opening a market that pulls infrastructure and other social goods up with it. A case in point is Mo Ibrahim, who, 20-odd years ago, saw that in Africa, with its lack of landline infrastructure, lay the opportunity to build a vast cellphone network to serve the continent’s billion people. This, writes the authors, speaks to “nonconsumption,” or unattainability—“there’s no affordable and accessible solution to their problem,” in short—that Ibrahim saw his way through to addressing by innovating in areas such as pay-as-you-go programs rather than fixed monthly fees. No bank would touch his Celtel, which he funded with equity financing, but Ibrahim built an empire overnight that spurred other “market-creating innovation.” All this is of a piece with Christensen’s doctrine of disruptive innovation: Creating markets is preferable to sustaining them (the original iPhone did the former, he writes, while the iPhone X does the latter) and to making innovations in efficiency. Christensen and colleagues serve up examples from business histories (among the most winning of them the Bank of America) around the world, including Mexico, long touted as “the next potential superpower—but it’s always stuck there.” Their extensive notes may seem a touch daunting, but they lend a case-study aspect to a book that will be valuable to business readers. Of considerable interest to investors in emerging economies as well as development specialists and policymakers.

  20. 5 out of 5

    Austin

    The subject matter of this book is difficult to beat in importance, and in signature Clay Christensen fashion, the approach and analysis to an enormously complex problem is made accessible and almost deceptively simple. The authors' core argument is that a certain kind of innovation, called a "market-creating innovation," can help lift nations out of poverty by generating profits, creating jobs, and by orienting culture in more prosperous ways. The plan of the book is: first, to describe the var The subject matter of this book is difficult to beat in importance, and in signature Clay Christensen fashion, the approach and analysis to an enormously complex problem is made accessible and almost deceptively simple. The authors' core argument is that a certain kind of innovation, called a "market-creating innovation," can help lift nations out of poverty by generating profits, creating jobs, and by orienting culture in more prosperous ways. The plan of the book is: first, to describe the various kinds of innovation, from efficiency, to sustaining, to market-creating; second, to review the history of economic development through these lenses; and third, to explore how to grapple with the various barriers to development--including by vertically integrating to account for more infrastructure and externalities than required in a 'developed' nation. The kicker here is that once a player invests in such things, they can often charge rents to those who wish to utilize them, thus achieving an even higher return on the cap-ex. My favorite quotes: --"In a sense, market-creating innovations democratize previously exclusive products or services." pg. 27 --"Investing in both affordability and availability is paramount to the success of a market-creating business." pg. 83 --"A company should develop an interdependent (integrated) business model when it cannot depend on suppliers for specifiable, verifiable, and predictable inputs." pg. 87 --"We see a different, perhaps more helpful, definition of infrastructure as the most efficient mechanism through which a society stores or distributes value." pg. 243

  21. 4 out of 5

    Kes

    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 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

  22. 5 out of 5

    Meredith

    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. Innovatio 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.

  23. 4 out of 5

    Ronald J.

    Alleviating poverty is not the same as creating prosperity. We can’t end poverty by focusing on poverty. I was bit surprised by how this book never just says that wealth is the only known antidote to poverty, and how poverty needs no explanation, it’s the natural condition of mankind. What needs explaining is wealth. That said, this book does explain how to create that wealth, by creating market-creating innovations that are sustainable. I believe Deirdre McCloskey, George Gilder, Michael Novak, Alleviating poverty is not the same as creating prosperity. We can’t end poverty by focusing on poverty. I was bit surprised by how this book never just says that wealth is the only known antidote to poverty, and how poverty needs no explanation, it’s the natural condition of mankind. What needs explaining is wealth. That said, this book does explain how to create that wealth, by creating market-creating innovations that are sustainable. I believe Deirdre McCloskey, George Gilder, Michael Novak, among others, offer a better theory of how and why innovation occurs (McCloskey’s focus on rhetoric and Gilder’s on an information theory of capitalism, which is the most innovative theory I’ve ever read), at the macro level. This book is more at the micro level, but it’s still a worthwhile contribution. I only wish it would have built a stronger moral and ethical case for free markets. Extreme poverty has decreased from 35.3% in 1990 to 9.6% 2015, 730 million from China alone, 66.6% in 1990 to less than 2%. Yet in Sub-Saharan Africa poverty actually increased, from 1990, 282 million (55% of population), to 2013, 401 million (42% of population). Since 1960, $4.3 trillion spent on developmental assistance in poor countries. Name one that’s developed because of aid? Not one, which I was also surprised the author’s never delved into. I’ve always appreciated Clayton Christensen’s attachment to the importance of theory—there’s nothing more practical than a good theory! He’s also very precise in the words he uses, and in defining his terms, such as: Prosperity: The process by which more and more people in a region improve their economic, social, and political well-being. A country can be rich, but not prosperous (e.g., the resource curse). Innovation: A change in the processes by which an organization transforms labor, capital, materials, and information into products and services of greater value. They create jobs, profits, and change culture (innovation is not the same as invention, something new. Innovations are usually borrowed country to country). Three types of innovation: Sustaining, efficiency, and market-creating 1. Sustaining: improvements to existing solutions on the market. Substitutive in character (Lipton Tea flavors, Camry best-selling Toyota), but don’t represent major growth in economy. Most innovations are sustaining in nature. 2. Efficiency: Do more with fewer resources, usually process innovations. Tend not to create jobs (resource extraction, fracking, fewer inputs, greater output). Both Sustaining and Efficiency free up cash for future investments. 3. Market-creating: 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. Democratize products and services (turn luxuries into necessities). Less about the product and more about the value network and business model: Ford’s Model T: roads, schools, restaurants, hotels, oil refining, etc., etc. Changed culture. MC Innovations pull in resources, not push like NGOs and aid (price signals!). No one gets fired for building a well in a poor village, or building a school. But where are the kids employed when they graduate? There’s not just one strategy (theory) for development. Japan, South Korea ($200 per capita income 1950s, $27,000 today; high suicide rate, 2.5 times OECD average; highest hospitalization for mental illness), Singapore (60 years ago, 1/5 GDP of sub-Saharan Africa’s), Taiwan, Hong Kong, all developed in different paths, but the common denominator was market-creating innovation. The authors point out that Mexico has been mostly efficiency and sustaining innovations, but a serious lack of market-creating innovations. There are a lot of examples of entrepreneurs who are making a dent in these poor countries with market-creating, from mobile phone networks, electronic payments and banking, health care, food, flooring, and many others. They also deal with infrastructure, which is more a medium for moving value rather than creating it, and corruption. Corruption, like poverty, needs no explanation. What needs to be explained is why some countries have less of it than others. Entrepreneurs are good at identifying nonconsumption, which is the authors’ theory for market-creating innovations. They conclude that “We can solve this problem. Not because we’re eternal optimists, but because we have done it before.” I agree, there’s simply no excuse since we have a much better understanding of how wealth is created. But the focus on the “root causes of poverty” persist, which has always amazed me. What would we do if we learned the “root causes” of poverty? Create more of it? But the poverty bureaucracy is entrenched, as the great movie Poverty, Inc. explains. Perhaps this book will get more entrepreneurs to innovate rather than simply providing charity. I hope so.

  24. 5 out of 5

    Clay

    Prosperity depends on market creating innovation producing services and products that are affordable. That means focusing on non-consumers, and making them consumers; like when cell phones were first brought to Africa and other poor places; and life insurance, Indomie noodles (Nigeria), and m-pesa (Kenya). Unlike strategies that push resources to reduce poverty, this type of innovation pulls resources, like education and training and health care for essential workers and transport and distributi Prosperity depends on market creating innovation producing services and products that are affordable. That means focusing on non-consumers, and making them consumers; like when cell phones were first brought to Africa and other poor places; and life insurance, Indomie noodles (Nigeria), and m-pesa (Kenya). Unlike strategies that push resources to reduce poverty, this type of innovation pulls resources, like education and training and health care for essential workers and transport and distribution infrastructure. By contrast, when resources are pushed before there is demand, they may not be maintained or even used. Market creating innovation is different from efficiency innovation (eg outsourcing for cheap labor), and sustainability innovation (enhancing existing products). The question to ask is not: How can we end poverty? rather, ask: How can we create prosperity? Gives many examples from USA, that in 1850 was poorer than Angola today: singer sewing machine, Model T car, Bank of Italy (became Bank of America)== all businesses focusing on non consumers. Also examples from Japan: Sony, Toyota. honda; and South Korea: Kia, Samsung. Mexico: the diabetes health provider Clinicas del Azucar is a good example of market creating innovation, but many examples of efficiency innovation haven't had the same leverage. Argentina: Iguanafix brings informal building contractors into formal economy by showing them the advantages. Brazil: DrConsulta provides low cost high quality health care. A good section on institutional innovation argues for more pull and less push. A good example is the Colleganza in medieval Venice, where poor traders were given a means to trade by a system of democratizing risk. This opened up new opportunities for non consumers, and vastly increased trade and the overall economy with knock on effects of better more inclusive and accountable institutions. Market creating innovation should come first, and then this will pull in better institutions that can work in the local context. It usually doesn't work the other way. Institutions are a process, not an event. In Venice, the richest traders pushed back against the new, inclusive institutions, and forced Venice into a long term decline. On corruption, the message is to foster innovation to create markets and wealth first, to reduce the incentive for people to be corrupt. Also companies should vertically integrate to get more control. Gives example of Roshan phone co in Afghanistan, that organizes it self to minimize risk with a government relations department. Doesn't explain how that works but I can imagine. And Spotify defeated music pirates globally. On infrastructure, the advice is: when they come, build it. ie, it should be demand led. That is nice when it happens, but often it doesn't. The examples of demand led infrastructure in the USA are correct, but conditions in many poor countries are very different today. There is ample evidence that building roads creates development along the roads. Government funded IITs in India produced the brainpower that made the tech industry possible. So at the end of all this, market creating innovation has led the way in the US, Europe, Japan and South Korea to a sustainable, country wide high level of prosperity. Is that enough to make this a model for prosperity elsewhere, given the radically different contexts? The authors give examples of it working in other countries on a small scale, but not enough to produce sustainable prosperity for all. Among the many challenges not covered much here is income and wealth inequality within countries. Too often, creating prosperity ends up being for a tiny few, leaving out the rest. The authors point out that the USA 1850-1900 was poor like the poorest countries today, despite all the market creating innovation underway; the reason is that nearly all the income growth went to the top 1%. It was only in the 20th century that this wealth started to be more widely shared in the USA, through progressive taxation and government programs. Without that crucial step, just creating prosperity doesn't do the trick.

  25. 5 out of 5

    Sumit Srivastava

    There are few who can equal Clayton at digging into conventional wisdom. This is one more gem of a book. Given unlimited wealth, how would you remove the poverty of a poor nation? Is it not obvious that the people be provided for, directly, with what they lack? The authors call this as "push" strategy. The authors argue that, while the push strategy feels good, are more satisfying, and even morally acceptable; they do not really solve the fundamental problems. They contend the popular-belief that There are few who can equal Clayton at digging into conventional wisdom. This is one more gem of a book. Given unlimited wealth, how would you remove the poverty of a poor nation? Is it not obvious that the people be provided for, directly, with what they lack? The authors call this as "push" strategy. The authors argue that, while the push strategy feels good, are more satisfying, and even morally acceptable; they do not really solve the fundamental problems. They contend the popular-belief that having good institutions, laws, and infrastructure is prerequisite for development. They further argue that the belief of them being prerequisite have led the developed nations to try and push institutions, laws, as well as infrastructure onto developing nations. And most of these push strategies have failed miserably. They propose a "pull" strategy, according to which the prosperity has to be pulled into an economy. They further argue that the institutions, laws, and infrastructure should develop in context of the culture, and their goodness is just a symptom of the goodness of the economy, not the cause. For example, creating more schools per capita without creating a market for utilization of the educated people leads to schools being ineffective in their purpose. This is so because, it is not the infrastructure of the school which matters, but the value it offers in form of education. So, how do we pull-in prosperity? (a) They differentiate prosperity from richness: Prosperity is the process of improving social, economic, and political well-being. (b) Identify non-consumption, and create market around the non-consumption. The pull solutions lead to other pulls leading to cascading. (c) Therefore, in such economies, market creating innovations are essential. They have to be developed in the context of the nation. Market-creating innovations are usually targeted to people who are non considered consumers till now. These innovations usually allow better performance, enable masses to access the solutions, or change the way a business is approached. Finally, what causes non consumption? It can be caused by limited amount of (a) skill (b) wealth (c) access (d) time. In each of these four limitations, people are pushed to hunt for a solution due to the inconvenience. However, the push has to be enough to let them (a) leave their habit (b) overcome the anxiety of doing something new. The innovative solution offered to pull the people out of the non-consumption should be good enough to help them get rid of these inhibitions. They explain their observations in context of corruption, which they call as "instrument of economy, not of morality". They observe that people hire corruption when it is easier to get something done by corruption compared to getting it done by regular process. More effective than institutional control of corruption would be to make the system work better without corruption, than it works with corruption. As the nations develop, the culture moves from overt and unpredictable corruption towards covert and predictable corruption, towards transparency. The culture develops as people attempt to solve the problems in the context, and chose the best available solutions and improve on them. It is good to end with a quote of Robert Kennedy, mentioned by the authors:  "GDP doesn’t register the beauty of our poetry or the strength of our marriages, or the intelligence of our public debate . . .GDP measures everything except that which makes life worthwhile.”

  26. 5 out of 5

    Jorge Vela

    The authors did a great job in tackling a difficult problem, namely how to tackle poverty and create long-term economic and social prosperity. The Prosperity Paradox team's answer is simple, yet powerful: even if it sounds counterintuitive, 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. The book is effective in spelling out support for its thesis. Starting with the idea th The authors did a great job in tackling a difficult problem, namely how to tackle poverty and create long-term economic and social prosperity. The Prosperity Paradox team's answer is simple, yet powerful: even if it sounds counterintuitive, 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. The book is effective in spelling out support for its thesis. Starting with the idea that every nation has the potential for extraordinary growth - what the authors call "nonconsumption" - the book goes on to detail examples where nations (e.g. Singapore, South Korea, Japan) and innovative organizations (e.g. Aravind in India, Celtel throughout much of Africa, etc.) have taken advantage of this potential. What the authors do so well, however, is not just to list out examples of innovative companies and policies, but rather to devise a complete framework based on those successful examples listed that can in turn be replicated in other cases. For instance, the authors argue that infrastructure development should be pulled in alongside to support a market-developing innovation rather than pushed down via institutions in the absence of that innovation, go on to list positive examples, and then analyze exactly why pulling worked better than pushing. In developing their framework for how nations can aim towards prosperity, the authors are doing policymakers a great favor. Another aspect which I appreciated about the Prosperity Paradox was the intuition and empathy with which the researchers approached development. Take the chapter on corruption, for instance. The authors argue that corruption can often times accompany development simply because, in some situations, it can meet people's needs and their desire for progress better than legal means. If policymakers can focus on offering their populations alternatives that are more attractive than corruption (e.g. jobs that pay sufficient money, upward mobility, etc.), then those states would have a chance to tackle corruption long-term. This stands in stark contrast to common belief that simply investing in strict anti-corruption initiatives or electing governments that promise to end corruption will in fact end that corruption. Most importantly, though, the authors profess hope for nations in poverty. As they state in the last chapter, the authors believe that the Prosperity Paradox can become a Prosperity Process that is sustained by a continuous commitment to innovation. The examples in the appendix only provide more hope of a brighter future, as we can witness entrepreneurs all around the globe working with limited resources in different, challenging environments to solve the real problems faced by people daily. On this basis, it's not hard to see why The Prosperity Paradox is currently an Amazon best seller.

  27. 4 out of 5

    Rutuja Ramteke

    💍The Prosperity Paradox By Clayton.M Christensen, Efosa Ojomo & Karren Dillon 💍Category: Socio-economic 💍Publisher: Harper Collins . Introduction: 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. Essentially, the plan is often to identify areas that need help, flood them with resources and hope to see change over time. . My Opinion: After alot of analysis I a 💍The Prosperity Paradox By Clayton.M Christensen, Efosa Ojomo & Karren Dillon 💍Category: Socio-economic 💍Publisher: Harper Collins . Introduction: 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. Essentially, the plan is often to identify areas that need help, flood them with resources and hope to see change over time. . My Opinion: After alot of analysis I am composing this review, this is a very strong read talking about the dark depths of the nations & the social problems faced by any nation has a solution in this book. The thought process of the book goes like; beginning form the infrastructure facilities to education, healthcare & eradication of corruption, the book has a flow of knowledge along with very specific examples of various country including various people who are willing to bring a change & are working to bring a change. On one hand there are people who behave like corrupt dogs & on the other sides we have our authors who are constantly involved in the thought evoking process of how to help any nation to eradicate poverty. The content is proof & example based & nothing is like dreams of castle in air. The subtle flow of every problem or any probable problem, along with it's cause, ways to prevent & even if it rots the government system, then the authors provide a eradication method which is real & knowledgeable. The cover is really beautiful. . Pros: The best part of the book is: it's full of knowledge, the only thing is it has to be supplied to the right hands to bring a required change. The example based content is unique & has involved alot of efforts & thought process of the authors. The book has socio-economic problems but it didn't felt boring at all. Lastly, the language was very up to mark & the book should be picked by every curious citizen or someone who is willing to work for betterment. Cons: No cons, variable variants were welcomed. . Rating: 4🌟

  28. 4 out of 5

    Elijah Elkins

    Just finished a genuinely transformative and perspective-shifting book called ‘The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty’ by Clayton Christensen, Efosa Ojomo, and Karen Dillon. They challenged many assumptions I had about the necessity of good governance and infrastructure prior to economic growth and development. They flipped the question from how to eliminate poverty to how to create prosperity. They came to the answer of market-creating innovations (MCIs). If you'v Just finished a genuinely transformative and perspective-shifting book called ‘The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty’ by Clayton Christensen, Efosa Ojomo, and Karen Dillon. They challenged many assumptions I had about the necessity of good governance and infrastructure prior to economic growth and development. They flipped the question from how to eliminate poverty to how to create prosperity. They came to the answer of market-creating innovations (MCIs). If you've known me for awhile, you know that I have a heart for other cultures and am fascinated by new technology, startups, emerging markets, and developing nations. The sheer potential for market and value-creation through entrepreneurship and innovation is incredible due to the talent in these countries and so much untapped opportunity. It's part of why I joined CEO & Founder Mark Sears at CloudFactory 2.5 years ago and moved to the UK. CloudFactory's mission is to help 1M people become leaders worth following by providing digital work in developing nations (like Nepal and Kenya). I've seen so much talent from the teams and people I've interacted with in Nepal and Kenya. Genuinely incredible people. Like other impact-focused companies working in developing nations, we believe talent is equally distributed, but opportunity is not. We're using technology to bring opportunity to really talented people. I digress. Back to the book. This genuinely is an incredible book that I strongly encourage you to read if you have an interest in how nations develop, charity in developing nations, how innovation can be used to increase prosperity and decrease poverty, how innovation can combat corruption, etc. There are so many reasons to read this book. I've tried to give a sampler appetiser of the full course meal of innovation wisdom and insight that's available to anyone that chooses to read 'The Prosperity Paradox.' Enjoy! Click Here for Full Review!

  29. 5 out of 5

    ANDY

    "Knowledge, like air, is vital to life. Like air, no one should be denied it." -Alan Moore, V for Vendetta Being a student of social science opens the door in understanding the intricate balance between matter and mind. Our rational and irrational thoughts drive us in understanding global and local issues of time ago and ahead. Hence, research and published work on these themes attract me deeply. The current situation of my own country pushing me more to a deeper divulgence in the matters. My intro "Knowledge, like air, is vital to life. Like air, no one should be denied it." -Alan Moore, V for Vendetta Being a student of social science opens the door in understanding the intricate balance between matter and mind. Our rational and irrational thoughts drive us in understanding global and local issues of time ago and ahead. Hence, research and published work on these themes attract me deeply. The current situation of my own country pushing me more to a deeper divulgence in the matters. My introduction to The Prosperity Paradox was through the recommendation of an enlighted economist. The book is a collaborative work of Clayton M. Christensen, Efosa Ojomo, and Karen Dillon, eminent figures in economic development revealing a paradox at the heart of most approaches to solving poverty. Global poverty is one of the world’s most vexing problems. From education to healthcare, infrastructure to eradicating corruption, the vast majority of 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. Stagnancy of current solution leads into understanding one has to focus on just not innovation but on the right kind of innovation. 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. The book deals with ideas of long term sustainable progress ideologies and provides a newer perspective to prosperity. I absolutely recommend this book to anyone with similar interest grounds and to anyone looking newly into understanding the dynamics of a running economy better.

  30. 5 out of 5

    VENKATRAMAN C K

    This book is key principles that can contribute to economic development of a Country. Very relevant to India. The book is both intellectually stimulating as well as emotionally inspiring. The author ( actually three of them bit lead by theClayton Christensen) describes case studies across multiple industries from various countries from 18th century America to 20 th century Mexico, Africa, India, Bangladesh , Brazil etc. to underscore the his theory . The industries range from Food, Transportatio This book is key principles that can contribute to economic development of a Country. Very relevant to India. The book is both intellectually stimulating as well as emotionally inspiring. The author ( actually three of them bit lead by theClayton Christensen) describes case studies across multiple industries from various countries from 18th century America to 20 th century Mexico, Africa, India, Bangladesh , Brazil etc. to underscore the his theory . The industries range from Food, Transportation, Healthcare, Education, Financial Services and Communication. The core proposition is; historically it is proved that pushing developmental aid of billions of dollars into low or middle income countries does not create sustainable Prosperity for its people. Only Market Creating Innovations lead by entrepreneurs can do that. These innovations target non-consumers of a product or service & a affordable solution will not only unlock huge value but also create Jobs & pull in Infrastructure & can impact the culture of the society in a positive way. That is , Market Creating innovation happens first followed by Infrastructure & Governance. He shows how to spot opportunities by his famous “Jobs to be done” principle. I liked the way he defines Infrastructure as “a mechanism to store and distribute value “. Seen thus way, value creation comes first followed by infrastructure. The whole book is about using new lens to spot opportunities & convert them into mega economy impacting projects . You will love the case studies . Overall, a powerful inspiring book.

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