Economic Growth: Innovations that Create Market Opportunities Locally & Globally

By Allen Kendunga
On 13 March 2020 at 01:06

In their book, The Prosperity Paradox, Christensen, Ojomo & Dillon describe market-creating innovations as “ innovations that not only create new markets but also serve people for whom products/services were never created or they were not affordable.” This phenomenon is not foreign to our own Rwanda where the majority of the population has been left behind by some of the biggest innovators who target the middle and upper class citizens hence creating what the book calls “sustaining innovations” and “efficiency innovations.”

Rather than creating products and services that even the poorest person can afford, most innovations target the persons who can pay the most which in a long run may actually not yield the most growth results.

When Tap&Go was first introduced in Kigali in 2015, sure everyone was questioning it and suggesting that “this kind” of innovation would never work in Rwanda where the majority of the population could barely afford three meals a day, let alone buy a smart card for transportation.

As true as it was and the basis for doubt was legitimate, the critics missed something - Tap&Go was an innovation that was here to create markets that would create growth which meant making their products affordable and accessible to even the lowest income earner. And that’s exactly what Tap&Go did when it came to the market.

What does it take to create-market innovations

Recently, AC Group, the parent company that championed Tap&Go was hosting an event with a theme: “Starting Local and Going Global.”

During the discussions, one of the speakers made a comment and said, “ to go global as a company, you must have speed.” What this meant was that for a company to create a product/service that impacts not just the local market, they must have the speed to take their products to other markets.

While this is true especially in the case of Tap&Go’s expansion to other African countries, there is a fundamental truth that has been left out and that is the fact that Tap&Go is a market-creating innovation.

How Tap&Go has created new markets

The unserved market: When AC Group set out to solve inefficiencies that were in the public transport sector, they automatically tapped into the market that had been ignored by other innovators.

The majority of the public transport users are low-income earners who because of their low purchasing power are not the target market for innovations. By introducing the Tap&Go card, AC Group targeted this market segment. Today, even the poorest person, previously left behind by banks can use the Tap&Go card to pay for their daily commute.

Creating local & global jobs: Any market-creating innovation does not only create jobs locally but also globally. These jobs can range from software development to hardware and so forth. When Tap&Go started, jobs ranging from tech to marketing, operations, and administration were created locally to help get the company up and running.

These were not the only jobs created, globally, people were being employed to manufacture hardware (POS and Bus Validators), transport them from wherever they were being manufactured to Kigali. These types of jobs have not only impacted and lifted communities in Rwanda but beyond and will continue to do so.

This is what creating innovations that create markets and bring economic growth is all about. It is about creating innovations that create job opportunities both locally and globally.

Finally, apply enabling technology: Companies that set out to disrupt the economy and change lives use technology as an enabler.

They know from the very beginning that they want to lift people from poverty, enhance processes and do it all within a limited time. Using technology as an enabler makes a company like AC Group not use people to improve technology but instead use technology to improve people’s lives. People become the center of innovation.

Conclusively, it is true that not all innovations are meant to serve the same purpose, some are meant to create sustainability, others to increase efficiency while others are meant to create new market opportunities.

There is no one innovation better than the other, but it is key to understand that they each serve different purposes. My advice is that before creating any innovation, one should ask themselves what the purpose of that innovation is going to be, is it going to sustain the already existing markets, create efficiency or create new markets?

Rwanda needs all three but for it to grow and achieve its goals of being a middle income country, we need more innovations that target people who are often left behind, create job opportunities both locally and globally, and use technology to improve and empower communities.