“A global development wake-up call in 2024”, a Devex article I recently read, expresses the pressing need for a new global development model because atop of the mounting humanitarian crises, this is a year of elections in many donor countries putting foreign aid funds in a precarious and unpredictable position. As I read the piece I couldn’t help but dread the new challenges in the year ahead, but as the article suggested ways of constructing this new development model, I also couldn’t help the hopeful yes, yes, yes…and.
At the Christensen Institute and more specifically in Global Prosperity, we often, loudly, and repeatedly write and talk about the power of market-creating innovations (MCIs) because we truly believe in the impact they have had and can have on global development.
Market-creating innovations transform complex and expensive products into simple and more affordable products, making them accessible to a wider segment of the population, and in doing so create jobs, increase wealth, and generate taxes. Successful market-creating innovations typically employ pull strategies because these innovations respond to the struggles of everyday consumers. These strategies and innovation solutions tend to be more sustainable and impactful to development in the long term, not only because they are tied to a market but because as they evolve they pull in infrastructure, capital, and resources furthering the growth of their surrounding environments.
Now, back to our current and urgent need for a new global development model. According to the Devex piece I reference above, to ensure success the new global development model must put funding directly in the hands of local leaders and community based organizations, and would greatly benefit from alliances between the government, private sector, and philanthropies.
If this doesn’t sound familiar, it should.
Market-creating innovations have similar characteristics. These innovations respond to everyday struggles, to the Job that nonconsumers need to complete in their respective circumstances meaning they are best developed on the ground, amongst local leaders and members of the community who understand what progress needs to be achieved. Investing in market-creating innovations is therefore investing in local development.
Furthermore, these innovations are also most successful when they are supported through partnerships. Most market-creating innovators we’ve worked with often bring up two struggles. One is working with their governments, and the other is getting funded. This is why last year we launched the Market-Creating Innovation Bootcamp for Policymakers. Understanding how to create an enabling ecosystem for MCIs is crucial if governments want to advance development in their jurisdictions. The other struggle – of financing MCIs – is also why this year our research will be heavily focused on finding the right financial vehicle for market creation. This is all to say that market-creating entrepreneurs are powerful for development, but their impact is even greater with supportive government policies and patient capital, whether that capital comes from private or public funds.
But, don’t just take my word for it.
Let’s examine the impact of a market-creating innovation that was developed on the ground and supported by a private-public alliance.
In 1995 ten million Philippine citizens did not have access to safe water so a national water crisis was declared. In 1997 Manila Water was born, a public-private partnership between the Metropolitan Water Works and Sewerage System, and Ayala Corporation, the Philippines’ oldest conglomerate. Manila Water understood that the Job they were being hired for was easy and convenient access to water at an affordable price. They developed their workforce, reshuffled their organization structure, and built the necessary infrastructure to support their mission, and by 2016 they served more than 6.5 million customers massively alleviating the country’s water crisis.
This development success for the Philippines simply wasn’t possible without this public-private alliance. The water had always been there, as had the technology, and the customers’ need, but it was addressing that everyday struggle collaboratively through a market-creating innovation that got the Job done.
So if a new development model is urgent now more than ever, then I urge you to get a head start and look towards market-creating innovations.
