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The innovation route out of poverty

Nigeria features admirably in a critical new Harvard study on the prosperity potential and destination of market-creating innovation in bleak conditions. Nollywood and its creation are one of three case studies of how innovation creates entirely new markets and brings several benefits including infrastructure, new laws and regulations and new markets. More than ever before, Nigeria needs innovators to jumpstart activities in several areas and excite the markets.

A Harvard University team led by the renowned Prof Clayton M. Christensen and featuring Nigerian Efosa Ojomo and Karen Dillon unveiled the highlights of their study in “Cracking Frontier Markets” in the January-February 2019 issue of Harvard Business Review. The emergence of Nollywood features as one of three such innovations that helped create entirely new (frontier) markets. The others are Richard Laffey’s MicroEnsure that enables access to insurance for the poor based on his experience in Zambia and how Liang Zhaoxian created a demand for microwave ovens in China and made Galanz one of the leading appliance firms in the world.

The authors note that Kenneth Nnebue released Living in Bondage straight to video. The norm before then was to release films to cinemas first. There were no longer cinemas in Nigeria in 1992, the economy was down but the entrepreneur needed to use his stock of cassette tapes. He invited professionals, and they wrote an exciting story, Living in Bondage, that played to the theme of the pursuit of wealth through rituals common in urban folklore. The $12000 budget film earned massively and sold hundreds of thousands of copies across Africa and the Black Diaspora.

That brave move by the entrepreneur fostered the crystallisation of a new market and industry, that of straight-to-video films using available technology and lowering costs of production as well as access to consumers. It established a standard and model for the film industry in resource-poor African countries who looked up to and adopted the Nigerian model. Was Nollywood via Living in Bondage “a lucky anomaly”?

No, the authors say. The Harvard researchers assert that Nollywood is among scores of entities that have realised enormous growth by creating entirely new markets where they might be least expected. They call it the power of market-creating innovation. Nollywood comes under the analytic lens of marketing experts for its contribution to knowledge in the area of routes to market, product development and market entry.

More significantly for today, “Cracking Frontier Markets” submits that what happened with Nollywood is replicable and scalable. The power of market-creating innovation generates new growth for companies and catalyses industries that buoy frontier economies. Innovation provides a strong economic foundation as it offers many people access to a product or service that was previously unaffordable or otherwise unattainable if it existed at all. They also leverage business models and value chains that focus on profitability before growth. They do this borrowing technology and inserting it into a different business model. Nnebue did this by using VHS tapes to launch a video-based film industry.

Market-creating innovations are generated by and for a local market—or at the very least; they are designed with a local market in mind. Innovators must do the arduous work of understanding the ins and outs of that market and making a product simple and affordable enough for it. Market-creating innovations generate local jobs, which fuel the local economy. These jobs arise specifically to serve the local market; you cannot easily outsource them to other countries. They might include, for example, positions in design, advertising, marketing, sales, and distribution. Nollywood now generates at least one million jobs annually.

Market-creating innovations can be scaled up. Because they make a product affordable and straightforward, bringing it within many people’s reach, scaling up is a fundamental part of the process. As Nollywood spread across the continent and to Africans in the diaspora, it created more jobs, supported infrastructure development, and helped Nigeria develop its fledgeling institutions. The impact is beneficial for countries and companies.

Key messages include the assertion that every nation has within it the potential for extraordinary growth. Nigeria has shown this in several areas including the explosive growth of the telecommunications market, films and entertainment including music. They suggest that “most existing products have the potential to create new growth markets if we make them more affordable while a market-creating innovation creates a system more than just a product or service.”

Innovation overcomes obstacles of corruption, institutional voids and lack of infrastructure. Focus on the process by which innovators create new markets would help our entrepreneurs in the search for new products or services that would make a serious impact. The needs are many, the circumstances and environment poses challenges. Nigeria is an innovators laboratory, as it were. BusinessDay commends all those creating new consumers and markets in various activity areas. Innovation will propel our country and dispel the shadow of poverty.



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