After getting a few emails about this article in the Guardian, I went back to Professor Clayton Christensen‘s op-ed in the New York Times (h/t Derek Van Bever) and asked myself this question: What kind of innovation is the $300 House really?
I went through the “types” of innovation as described by Christensen:
Empowering Innovation: transforms complicated and costly products available to a few into simpler, cheaper products available to the many, thus creating jobs, because they require more and more people who can build, distribute, sell and service these products. Empowering investments also use capital — to expand capacity and to finance receivables and inventory.
Sustaining Innovation: replaces old products with new models, but creates few new jobs; such innovation has a neutral effect on economic activity and
Efficiency Innovation: reduces the cost of making and distributing existing products and services. Such innovations almost always reduce the net number of jobs, because they streamline processes, reduce capital investments, and eliminate waste.
So what about the Base of the Pyramid? What about the non-customer, the folks (generally poor) that are always under-served?
The result? Let’s define a new term: Impact Innovation – which like Impact Investing – seeks to make a difference.
Impact Innovations are innovations which:
1) solve a major problem (or several major problems simultaneously)
2) are sustainable
3) are affordable (may include hybrid business models)
4) serve the non-customer (new markets that did not exist before).
5) build an ecosystem of products, services, and experiences around the innovation
None of this is especially new, but the language we need to describe the problems we are facing is.
My point is simple: this is going to be the future of development. Governments, non-profits, and business will have to work together. Either that, or we’re in serious trouble.