Market-Creating Innovations: A Path to Prosperity
Market-creating innovations are the driving force behind new growth opportunities for companies and the creation of entire industries that support thriving economies. They simplify complex and costly products, making them affordable and accessible to previously underserved segments of society who were unable to purchase these goods or services. Market-creating innovators identify ways to break down these barriers, forging new markets in the process. This represents the pinnacle of capitalism, where both consumers and companies benefit.
Since 2008, over 200 Harambeans have launched high-impact ventures across Africa, making lasting social and economic contributions. These ventures have attracted more than $400 million from investors and created over 3,000 jobs. The experiences and success stories of Harambeans, along with other entrepreneurs in developing economies, offer valuable insights.
1. Every market holds immense potential for growth
Innovators must recognize that frontier markets—those that are underdeveloped—are filled with significant opportunities. These markets differ from those in more developed economies and should not be approached in the same way. Often, they contain many “non-consumers.” Though the market may not be immediately apparent, it signals vast potential for market creation.
2. Market-creating innovation is more than just a product or service; it’s a new business model
Successful organizations in frontier markets understand that they must rethink their entire business model. These models may not resemble those of similar businesses in more developed economies. The key lies in the entrepreneur’s ability to design a model that gives the business a chance to succeed.
3. On technology: borrow first, invent later
There’s a misconception that companies in frontier markets must invent new products and technologies. While existing products may be too expensive, innovation doesn’t always require new inventions. Innovation involves changing processes to create greater value from labor, capital, materials, and information. In frontier markets, innovations—such as technology—are often borrowed from other markets and then improved.
4. Don’t wait for perfect institutions and infrastructure. Successful innovation can help create them.
Many companies hesitate to invest in developing economies until institutions like capital markets, education, healthcare, and electricity are well-established. However, history shows that market-creating innovations can trigger the development of these very institutions and infrastructures. Initially, this might involve basic “workarounds,” but eventually, more sophisticated systems emerge. When a profitable market is created, the stakeholders—investors, entrepreneurs, customers, and governments—are incentivized to invest in maintaining these resources, resulting in sustainable prosperity.
Harambeans, in particular, focus on building businesses that not only serve their customers but also thrive long-term, contributing to the development of their countries.
Adetayo Bamiduro H’15: A Prime Example of Market-Creating Innovation
Adetayo Bamiduro H’15 exemplifies a market-creating innovator. During a summer internship with the e-commerce platform Konga in Nigeria, while studying at MIT’s Sloan School of Management, Bamiduro identified a significant challenge with last-mile delivery. After graduating, he and his MIT Sloan classmate, Chinedu Azodoh, founded MAX (Metro Africa Xpress) to address this issue with a more efficient, technology-driven platform.
They realized that to create reliable last-mile delivery infrastructure, they needed to build more infrastructure, including a network of licensed and trained drivers, a payment system via mobile wallets, and ways to help drivers finance and purchase vehicles. Bamiduro describes their initial perception of the opportunity as just the tip of the iceberg: “Our frustration with the non-existent infrastructure forced us to innovate and go down the value chain. Once you dig in, you discover there is so much missing.”
MAX’s Growth and Future
MAX has expanded beyond last-mile delivery to offer messenger services and transportation for individuals needing quick transport. “Each time we developed a new layer, we found another layer that was missing,” says Bamiduro, and this continual process led to substantial business growth. At the time of writing, MAX employed 85 full-time staff and had contracts with 1,100 drivers, with plans to triple this in the next six months.
With the help of strategic investors from the US, Europe, Asia, and Africa, MAX has raised $9 million, including $7 million from an elite group of backers. MAX is also supported by the newly launched Harambeans Prosperity Catalyst, a co-investment fund by Cisco aimed at accelerating market-creating innovators within the Harambe Entrepreneur Alliance.
Bamiduro emphasizes, “This isn’t just about building mobile apps. It’s about creating financial, technology, and operating infrastructure where it never existed.”
Conclusion: The Role of Innovation in Building Prosperity
Karen Dillon, former editor of Harvard Business Review and co-author of The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty, alongside Clayton Christensen and Efosa Ojomo H’17, underscores this essential point: true innovation requires more than just the development of technology; it demands a comprehensive approach to building the necessary infrastructure and business models that can drive long-term prosperity.