Chapter Seven - Innovation for Poverty Alleviation
A lot of rubbish has been written about innovation, some of it by us. During the breathless dot.com boom, companies everywhere were being exhorted to act more like entrepreneurs, to take bigger risks and to forget everything they thought they once knew. Of course, most of it turned out to be nonsense. The entrepreneurs that were held up as heroes mostly failed, and the companies that most embraced innovation have gone out of fashion. If we are to make progress on profitable poverty reduction, which is really only a special case of innovation, what lessons can we learn from the varying fortunes of the idea of innovation? How can we develop truly valuable opportunities and implement them effectively in a company without risking our own careers or the company’s profits?
We do not underestimate the difficulty of all this—one of our friends has just been promoted to his first really serious job in a major multinational and been told he’ll be sacked unless he meets his annual targets. It’s hard for him to focus on corporate reputation or long-term profitability or, for goodness’ sake, poverty reduction when his mortgage and his kids’ schooling and his status in the industry depend on how much profit his small bit of the company makes over the next 12 months. He cannot act like an entrepreneur because he doesn’t have the same incentives as an entrepreneur.
For our friend’s benefit, we like to talk about ‘conservative innovation’. We use ‘conservative’ not only because it makes a nice contrast with ‘innovation’, but also because we specifically want to draw on the work of conservative thinkers who have analysed the proper balance between change and continuity. Our aim is to help you think through what might realistically work in your company with its specific history, skills and culture—not to give you a lot of high-risk stuff which seems to have worked for other people.
So first of all, we’ll clear the air about what we mean by innovation and what’s desirable and realistic to achieve in a large company. Then we’ll talk about what innovation means in the specific context of poverty reduction. What do we want to be innovative about? What’s the relevance to the core business? Then we’ll talk about structures and methods for achieving innovation. Finally we’ll complete the circle by discussing how innovation in developing countries can be re-adopted back into developed country markets.
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Chapter 7 – links and resources
Cemex, the Mexican cement company, has thrived by innovating around how poor customers learn about, purchase and finance their products.
The Innovator's Dilemma
‘Value Innovation: the Strategic Value of High Growth’ by Renée Mauborgne and Chan Kim in Harvard Business Review (January/February 1997) talks brilliantly about reinventing the combination of value and cost for consumers. It is available as a paid download at http://harvardbusinessonline.hbsp.harvard.edu . Their book, Blue Ocean Strategy
From Global to Metanational
Open Innovation
Global Champions from Emerging Markets by Jayant Sinha of McKinsey gives examples of companies that are developing robust, low-cost innovations in developing markets and transferring them back to developed countries.
