“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,” Mo Ibrahim recalls of the reaction he got when he shared his plans to build a pan-African mobile phone company 20 years ago. “Somehow I just kept thinking, I know there are challenges but why can’t they see the opportunity?”
But Ibrahim, to his credit, saw things differently. Instead of only seeing the obstacles, he saw opportunity. In just six years, Celtel built operations in thirteen African countries—including Uganda, Malawi, the two Congos, Gabon, and Sierra Leone—and gained 5.2 million customers. At the openings of many of Ibrahim’s stores, it wasn’t uncommon to see eager customers line up by the hundreds. In 2005, when Ibrahim decided to sell the company, he did so for a handsome $3.4 billion. In such a short time, Ibrahim’s Celtel unlocked billions of dollars’ worth of value.
To understand why Ibrahim’s Celtel thrived, you need to understand the power and enormous potential of innovation – specifically what we call market-creating innovation. Not only do market-creating innovations develop new growth engines for companies, they can create entirely new industries upon which economies can build and thrive. Market-creating innovations transform complex and expensive products into simple and more affordable products, making them accessible to a whole new segment of people in a society whom we call “nonconsumers.” Nonconsumers are individuals who have not yet been able to buy a product or service that might help them solve a struggle in their lives simply because that product is not affordable or accessible to them. Market-creating innovations find a way to change that and in the process, create new markets. They represent the best version of capitalism: both consumers and companies win.
That idea has been the central subject of my book The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty with Harvard Business School professor Clayton Christensen and Efosa Ojomo H’17. Our research demonstrates that market-creating innovations can ignite the economic engine of a country. Successful market-creating innovations have three distinct outcomes. First, by their very nature, they create jobs as more and more people are required to make, market, distribute, and sell the new innovations.
Second, they create profits from a wide swathe of the population, which are then often used to fund most public services in society, including education, infrastructure, health care, and so on.
And third, they have the potential to change the culture of entire societies.
But if that’s so obvious, why haven’t more entrepreneurs seen and seized the opportunity to do that? For some people, the perceived obstacles to starting a business in developing economies are enough to deter them from even trying. But as Ibrahim showed, market creating innovators see those obstacles, but find creative “work arounds” so that they don’t deter what can be enormous opportunity to create new markets and growth businesses. The work arounds are often, at first, rudimentary. But they get the job done.The Harambe Entrepreneur Alliance has many examples of companies doing just that, more importantly, Harambeans, as the innovators in the Alliance are called, are demonstrating the enormous potential of new markets in the process.
Harambean Dr. William Mapham H’18, founder of Vula Mobile E Referral, developed what was initially a very basic app to help provide specialist aid to rural healthcare workers in South Africa. The idea was born out of his own experience making long road journeys, in difficult conditions, to see patients in rural hospitals and clinics, in some cases, hours each way. The burden on rural healthcare workers is enormous – they see on average, a staggering 3000 patients a month, or about 1 every 8 minutes. For many of these patients, a problem can be diagnosed or even treated swiftly with access to the right specialist. But in reality, there is virtually no way for them to be referred to a specialist without that referral and subsequent travel being extraordinarily difficult. There is, on average, just one specialist for every 18,000 people in the country. So in effect, adequate healthcare was denied to these patients because of the lack of developed healthcare infrastructure in rural areas.
But Mapham, using his own admittedly basic technology skills, figured out how to create an app that any community healthcare worker could download on her phone to relay questions to specialists in their area. The healthcare workers use the app for free, the revenue comes from healthcare companies who wish to reach those workers. Initially he focused on eye care, but with time and interest from both specialists and others in the healthcare arena, Mapham’s prototype has grown to offering help in 23 specialties and more are being added each month. Vula has become a sophisticated and well-used app, helping thousands of patients every month. To date, Vula has helped over 150,000 patients – and the goal is to nearly double that number in 2019 alone. And perhaps more importantly, it’s demonstrated the potential of this market – and worked around the infrastructure deficiencies with the help of mobile phones and a basic app and community enthusiasm.
“We set out to solve a problem and using new technologies makes new solutions possible. Being a small company is an advantage in that you can move quickly, however it also helps to work with large established companies in order to get wider reach and traction. When we all work together we can make a bigger difference, in a way 1+1 can equal 3”.
Monique Baars, H’19, too, saw limits of institutions and infrastructure in her native South Africa, but in those limits, she saw the opportunity not only to develop an affordable and accessible product for a new market, she saw the chance to change lives in the process. After spending years at global consulting firm BCG working, in part, on a mobile financial services project, she saw clearly what was needed to create that market, including the role of telecos, banks, and retailers. After heading to London Business School to hone her knowledge and ideas, she launched Fineazy, a mobile service designed to teach consumers about financial concepts, such as banking services, loans, insurance and investment. A true understanding of these concepts was traditionally reserved for the highly educated “elite”. According to Baars, two out of three people globally are considered financially illiterate. But at the same time, new types of loans, credit cards, and other lasting financial obligations are increasingly being pushed to a group of consumers (“nonconsumers”) who have little understanding of the long-term consequences of those products. “Providing access to financial services without educating and empowering people to make good financial decisions is actually exploitation,” Baars says. On the other hand, the right kinds of financial opportunities –with a proper understanding of the consequences—can also be life changing. So Baars set out to change things by finding ways to educate the public, picking Ghana as her initial target.
But she knew that her solution had to be affordable and accessible – a key foundation of any market-creating innovation. In-person training would be expensive to scale and even a conventional app could be prohibitively expensive for users because anything that relied on using data for access would quickly become a financial burden. “We knew that if our solution had too many barriers for people engaging with it, they wouldn’t use it,” she says. So instead, she created a mobile service to teach financial concepts using “chatbot” technology, which is essentially a computer program that simulates human conversation, or chat, through artificial intelligence. Using texting apps such as WhatsApp, Fineazy adopted the rich African tradition of learning through story-telling. She and her team created characters with rich and engaging lives, and stories of them going through life and having to make every day financial decisions that users can follow along with interest. “We even created love triangles to keep things interesting!” she says.
The character Yoofi, for example, is a bit of a ladies man. He’s at university, and constantly trying to find ways to impress the women in his life, but that requires money. He gets a job and the employer requires bank details to pay him, details he doesn’t yet have. This is how his journey with financial services starts, and then he navigates his way through the decisions along the way. What to do with his first paycheck? Should he spend money on a new outfit to impress a date when money is running low? Borrow money for it? And so on.
To date, Baars and her team have developed over 120 topics of content, 4 story lines for the Ghana market, and 2 for the South African market. Fineazy is free for consumers, but Baars’ paying customers are financial services companies that want to work with more educated consumers. It’s still early days for Fineazy, but Baars and her colleagues will be helping bridge the gap between the existing institutions and the very real needs of “nonconsumers” in a growing economy. The challenge is enormous, but Baars is not daunted. “Growing up in South Africa, I learned to innovate every day. I have no expectation that things will work, and when they do, I’m pleasantly surprised,” she says. “I really believe in innovating around any problem. Anything is possible.”
Karen Dillon is the former editor of Harvard Business Review and co-author of The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty with Clayton Christensen and Efosa Ojomo H’17.