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The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty

... The Power of Outsiders

tomato paste
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Every industry would do well to have outsiders—or those that are not yet experts—in it. Outsiders are able to ask simple questions that many experts, often for good reason, may not think to ask.

These outsiders are not yet immersed in a pool of expertise and assumptions that sometimes leads to cognitive capture or cognitive tunneling, a phenomenon of inattentional blindness where observers are too focused on particular tasks and not on the environment.
Consider, for instance, the case of Malcolm McLean. Many of us have never heard of him, but we owe a lot of our ability to more efficiently trade globally to this former truck driver–turned-millionaire who only had a high school degree.

McLean was a North Carolinian truck driver who found himself waiting for hours at a loading dock the day before Thanksgiving in 1937 when inspiration struck. As McLean was thinking about how fast he could leave the port to get home in time for Thanksgiving Dinner, a time-honored tradition in the United States, he realized that the dominant shipping method at the time, break-bulk cargo, was very inefficient and quite dangerous. McLean thought, surely there had to be a better way.

He asked a foreman, “Why don’t you just take my whole truck and put it on the ship?” The foreman, a bit unsure of what that would even entail, laughed at McLean. At the time, every shipper knew that the fastest way to move products from one place to another was to build bigger and faster ships. But McLean thought the key to a more efficient transport system was not to build faster ships, but to build faster docks. Since McLean was not an expert in shipping, he wasn’t taken seriously. But it was precisely because McLean was an outsider that he could see what the others could not.

Today it seems obvious, but it wasn’t until twenty years later, after McLean bought his own shipping company and built a special boat and equipment for loading and unloading containers, that several others began to buy into his vision. McLean’s innovation—containerization—reduced shipping costs from approximately $6 a ton to just 16 cents, and he reduced the loading and unloading time of a ship from one week to eight hours. Safety on shipping docks was also a big concern, but McLean’s technology of shipping whole containers without unloading drastically reduced injuries on shipping docks.

When McLean died, he had not only revolutionized global trade, but he was also worth roughly $330 million. Not bad for a high school graduate from North Carolina.

Containerization, a process that seems so obvious in hindsight, was laughed at because it went against the norm. It was not how things were done. But McLean and containerization are not alone when it comes to going against conventional wisdom, especially when it has such great potential in fundamentally changing the way we do things in society.

In a similar way McLean saw things differently, an entrepreneur in Nigeria is currently doing the same. Here’s the story of Tomato Jos.

Nigerians love tomatoes. From the internationally popular dish jollof rice, to the country’s many soups that use tomatoes as a base, Nigerians have become the largest importers of tomato paste in the world. The West African country imports 100 percent of the tomato paste it consumes, amounting to approximately $1 billion of tomato paste imports annually. At the time of this writing, no single can of tomato paste was produced in the country, which is populated by 180 million people. What’s particularly striking about the Nigerian tomato market today is that Nigerian farmers grow over two million metric tons of tomatoes annually, but more than half their harvest rots before getting to the customer. This goes back to our point about the fact that a product must be both affordable and available in order to adequately target nonconsumption and create a new market.

Also, the average Nigerian spends more than half their income on food, making access to tomatoes somewhat of a luxury, with more than half the Nigerian market for tomatoes underserved. Considering Nigeria’s low per capita income, infrastructure challenges, and the fact that the country’s middle class isn’t growing as fast as experts thought, conventional wisdom suggests there is either no opportunity here, or whatever opportunity exists is too risky. But when we use a different lens to assess the landscape, we see vast market-creation opportunity that can be addressed.

One Nigerian company, Tomato Jos, has begun capitalizing on this opportunity. Mira Mehta, CEO of Tomato Jos and Harvard Business School graduate, understands the significant potential of this market. First of all, Nigeria need not import tomato paste. That by itself represents a $1 billion opportunity. Second, improving the affordability and availability of tomato will increase the actual size of the market as more people, especially nonconsumers, will get access to fresh tomatoes and tomato paste. At the moment, this production gap between what the country can consume and what is produced is valued at more than $1.3 billion. Third, Nigeria is a microcosm for other African and low-income countries. If Mehta’s Tomato Jos is able to capitalize on this opportunity, she will transform the lives of many people in Nigeria and will also make her investors very happy. In 2018, the company closed a $2 million investment round.

 

Clayton M. Christensen, Efosa Ojomo, Karen Dillon.

Christensen, Ojomo and Dillon are of the Clayton Christensen Institute for Disruptive Innovation

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