In the preface of The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty, by Clayton Christensen, Efosa Ejomo and Karen Dillon, Professor Christensen writes of Ojomo’s failed efforts to provide fresh water for impoverished African communities:
“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?”
The book then answers those questions in a clear-headed and evidence-based way, overturning some very popular and deeply held (for me, anyway) preconceptions about the “whys” of less-than-fortunate nations. I’m not exaggerating at all when I say this is one of the most important books to come along in decades.
I’ll be brief, because instead of reading reviews, you should read the book. As with many of Professor Christensen’s writing, innovation is a key element of the solution he offers. He always details the particular kind of innovation required for the dilemmas he addresses, and the particular ways to apply them. It’s no different here.
The Prosperity Paradox is focused on alleviating poverty in poor nations. The particular kind of innovation that the authors show to be effective is that focused on nonconsumption – that is, market opportunities in those nations that solve a problem for the masses in a way that allows them to participate in market activity they weren’t previously part of. As examples, the book cites stories from the rise of America, such as Ford Motor Company or Singer sewing machines, and from modern-day struggling countries, such as Toleram’s Indomie instant noodles in Nigeria, or the pan-African telecoms company Celtel.
Those companies, though, all applied their innovations in a particular way: by overcoming the lack of resources and supports that companies in developed economies rely on. A big part of that involves vertical integration, and going into business in seemingly unrelated products and services that are required for the main part of the business to survive and thrive.
What these innovative companies don’t rely on, and can’t wait to rely on, is institutions. I’ve long been a believer that impoverished countries should focus on developing those societal fundamentals that seem to underlie the success of wealthy countries: laws and regulations, as well as mores and a culture of honest business. But the book demonstrates how wrong that notion is – how it’s impossible to push institutions into a country, and how institutions that arise before market innovation takes root will fail to nurture such innovation. Turns out I had it exactly backwards: a culture of innovation will spawn the very institutions it requires over time.
As I mentioned earlier, The Prosperity Paradox is aimed at helping poor nations. But I believe its impact can go far beyond that. I see real value in its prescriptions for aiding the many areas of our own nation that have been left behind by wealth-creating innovations over the past few decades, or for serving disadvantaged groups. (In fact, just a few days ago I read a profile of Robert L. Johnson, founder of BET. He made his fortune by targeting nonconsumption right here in the US.) And at a micro level, its holds lessons even for established businesses. I’ll have a separate blog post soon about its passages that help explain why so many companies’ Continuous Improvement efforts fail.
The real strength of the book lies in its exhaustive research. This is no mere theory; the authors cite endless examples to show what works in the real world, and what doesn’t.
As with all of Christensen’s books, this one is extremely well-written and a pleasure to read. His previous work with Dillon produced the excellent How Will You Measure Your Life? And Ojomo clearly brings much to the table, with his experiences growing up in Nigeria and with his own aforementioned failed efforts to provide aid in Africa. The three make a fine team here.