At the Christensen Institute, when we discuss Disruptive Innovation Theory or any of our theories, we emphasize circumstance because context matters. We also try to emphasize that disruptive innovation isn’t necessarily better or worse than other types of innovation because, again, context matters. When I say context matters, I mean your country, your sector, your company, your struggle, and your goal should all be questioned and thoroughly considered when designing an innovative solution.
Now that I’ve said all that, I’ll make a rather general, not very context-specific, statement.
Regarding development, anticipatory action is just as important as reaction.
I recently read an opinion piece on Devex titled “Aid competes with long-term solutions to Sudan’s hunger crisis.” It made me think about and categorize prosperity creation as an anticipatory action and poverty alleviation as a reaction to global development struggles.
The Devex piece is about Sudan’s food crisis and how it’s part of a global trend where conflict and climate change drive recurring food crises that only anticipatory actions can help avoid. Anticipatory actions would mean investing in long-term food production and agriculture, not just providing emergency food aid. A balance of both anticipatory actions and reactions could end cycles of dependency.
In 2022, I wrote about a similar topic: Somalia’s food crisis. In that piece, I emphasized that to address donor fatigue in relation to food crises (and also in relation to development efforts, generally), both emergency assistance and investments that create long-term solutions were needed.
The idea in these two pieces remains the same. Although anticipatory action is commonly thought of as part of a disaster’s risk management cycle, it can also be applied more generally to a cycle of poverty and related struggles.
If governments, foreign aid organizations, or any development stakeholders just focus on providing resources to alleviate current problems, there will never be long-term sustainable improvement. But if they invest now in creating a solution that could mitigate and one day end future similar issues, then they could break a cycle of poverty and have a chance at creating prosperity. However, you can’t do one without doing the other.
As the title of the piece I referenced above suggests, aid competes. Foreign aid and disaster relief funds are limited, while crises are not. As I write this, 783 million people are facing chronic hunger worldwide, and neither current climate change, conflicts, nor politics are ameliorating the situation. But right now, available funds can’t all be allocated to prevent the next crisis because too many people facing the current ones would suffer. Some funds, however, have to be allocated to prevent the next one. And what better way to prevent crises caused by conflict, climate change, politics, and poverty than by investing in the creation of prosperity?
There may be multiple ways to create prosperity, but I’m an expert in one.
Market-creating innovations as an anticipatory action
Market-creating innovations transform complex and expensive products and services into cheaper, simpler, and more accessible ones so that people who previously didn’t have access—nonconsumers—gain access. These innovations create markets, profits, jobs, and inclusive opportunities for further prosperity.
Foreign aid funds compete, and, well, market-creating innovations have competition too. Except it’s the best kind of competition: an untapped market, which translates to incredible growth potential. Market-creating innovations compete against nonconsumption, against barriers keeping people from accessing a certain product or service. These barriers are often poverty-related and could be associated with money, time, or skill. This means that in poverty, there is already a built-in opportunity to create prosperity.
Market-creating innovations don’t have to be a completely new invention. In fact, they are often not; think of Celtel, the sewing machine, a home service platform, or even bread. These innovations were not new products or services. Still, they were products and services that weren’t previously accessible to people in Africa, Argentina, Mexico, and even Americans back in the 1850s. Access to these products created markets, wealth, and a domino effect of opportunity across sectors. I can’t tell you what disasters they prevented, but I can tell you that livelihoods changed.
If development stakeholders allocate some of their funds to invest in market-creating innovations, they’ll not only prevent future crises by creating prosperity but also break a cycle of dependency by increasing economic development and helping elevate nations that receive aid into nations that become significant trading partners.
I don’t want to diminish the help that people in Sudan, Somalia, Palestine, Ukraine, Haiti, and many other nations need right now, but I do want to emphasize the point of this recent Devex piece and the point of my two-year-old piece: long-term solution investments are just as necessary as emergency aid.
So yes, although context matters, when it comes to development, I will confidently say that anticipatory actions, such as investing in market-creating innovations to create prosperity, are just as important as the reactions to alleviate the current symptoms of poverty.
