Book Review: Market creating Innovations- a Must for Nations seeking prosperity, but not ENOUGH ?

Here is the key paradigm authors put forth as Nations' route to prosperity. Innovation directed at non-consuming population would spur socio-economic development, through multiplier effect as its impact span economic activities across several sectors including logistics, infrastructure and financial services. Further the infrastructure, both social and physical that gets created to serve the new set of economic activities is likely to be more sustainable as its upkeep would be better taken care of by the beneficiaries by paying directly for use or indirectly through taxes.

As strong advocate of Innovation and with vast body of work behind him in this field, Clayton along with his co-authors, has brought out role of innovation in spurring the overall development of the country in an emphatic manner, supported by good number of illustrative cases. However, innovation focusing on tapping non-consumption segment, as single dominant factor contributing to difference in prosperity levels between South Korea (who focused on market creating innovations) and Mexico (who focused on efficiency innovations) looks far-fetched.

Besides, not every innovation focused at non-consumption market is successful- take example of Nano, which was positioned at rural market two wheeler riders who cannot afford full-priced traditional car. Similarly, infrastructure directed at efficiency gains are as sustainable as those created to serve new markets or deliver to new customers (pull strategy). In fact most of the flyovers or bypass in cities are paid for by common commuters or funded by governments as it saves them travel time which may be used for any purpose, including using part of saved time for generating economic outcomes. China has traditionally created infrastructure first and then invited economic players than the other-way round!

Most of the examples talk about the entrepreneur who came up with product or service that targeted non-consumption segment, and then how it turned out to be a big success at a scale that created huge social and economic surplus for the society. While entrepreneurs may have their own motivation to grow and distinct approach to meeting with challenges en-route to scale (through multi-directional integration for example), national governments have role to play in cultivating entrepreneurs and minimizing impediments to their growth.

Hands-off approach by government in early stages of market creation may create monopolies or wrongful practices that would cost societies too dear later. At the same-time China hybrid approach of mixing of support and vigilance for the start-ups through often direct stake, is a delicate balance, with mixed outcomes. It is with respect to the role of Government in supporting prosperity process that needs greater clarity.

Book does a great job of providing guidelines on how to identify non-consumption markets and supports this with sample of such opportunities in Appendix that can make any entrepreneur or marketer think of possibilities that are normally not so obvious.

While book remind development practitioners and economists on the importance of supporting more market creating innovations, it would be great read for entrepreneurs and business strategists, struggling to identify opportunities that holds immense potential for growth, impact and prosperity for self, organizations and nations.