Efosa Ojomo on Market-Creating Innovation

Efosa Ojomo on Market-Creating Innovation

Efosa Ojomo is Senior Research Fellow and Lead of Global Prosperity Research at the Clayton Christensen Institute for Disruptive Innovation. As a keynote speaker at IIL’s Leadership & Innovation 2019 Online Conference, he shared impactful theories and models that left us thinking about innovation in an entirely different way.

We received so many great questions during the 15-minute Q&A that we didn’t have time to get to them all. Thank you to Efosa for taking the time to answer each and every question. This blog post is a compilation of some of our favorites.

The recording of Efosa’s keynote, and all other speaker presentations, are available to watch on demand through June 9. Log in or register here.

Of the three types of innovation [market-creating, sustaining, efficiency], how do you determine which one to focus a team’s energy? Or how to split their time between the three?

This depends on your organization’s existing business. A general rule of thumb is 20% market-creating (future), 40% sustaining (present), 40% efficiency (improving the past). I think the main thing about market-creating innovations is that they must have their own metrics if they are to be successful. Organizations can’t measure them the same way the success of other types of innovations are measured.

By developing these [separate business] units [for market-creating innovation], is this a means to bypass the shortfall of efficient innovations (i.e. a backdoor to keep jobs even though the organization is pushing innovations that would ultimately reduce the workforce)?

Not really. I think the reason to develop these units is to keep the organization viable for the long-term. If a company focuses only on efficiency innovations, it is bound to be disrupted someday. Other organizations are also doing the same. Investing in market-creating innovations give you the biggest chance for success.

Creating new markets does include expansion into economies without or with small such markets; does this represent disruptive innovation? Is the process of bringing an innovation from one economy to another economy without considered disruptive?

Creating new markets is sometimes considered disruptive. In Chapter 2 of our book The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty, we explain the relationship between market-creating and disruptive innovations.

How do we utilize these principles in operations driven businesses?

These principles are key for operations driven businesses but are also less obvious. For one, I would consider the value chain within which your business functions and see if your suppliers or those you supply to are market-creating, sustaining, or efficiency. This is important because if any of them loses out, so do you. This happened to Intel. As smartphones slowly became the dominant electronic gadgets of the day, Intel missed out on this opportunity because it was focused on sustaining and efficiency innovations in the PC industry.

What would you do differently to change from a push strategy to a pull strategy, knowing what you know now? In other words, the current business models are built on push strategies. What would you recommend to change cultures? 

First of all, I would be patient. I wouldn’t rush in to build the well* or simply invest in the most expedient solution. Second, I would work to identify entrepreneurs in the community so that I can hand over whatever investment I make to them. This is the best chance of making the solution sustainable. Third, I would check to see if there is a business close by that needs access to water. They are most likely going to be the ones most incentivized to keep the well going.

*Background: In his keynote, Efosa speaks about building a well for a poor village in Nigeria and how that demonstrates a push strategy: “where we go in, often with the best of intentions, and we push what we believe is the right solution onto people.”

How do you feel about innovation through acquisition? 

I think innovation through acquisition holds a lot of promise. However, the fundamental principles remain true. For an innovation to truly be a new growth engine for a company, it has to target nonconsumers. Here’s a great Harvard Business Review article about M&A in organizations.

Do you see disruptive innovation affecting greater social equity?

By their very nature, because disruptive innovations democratize products and services, they have the potential to reduce inequality.

How do we manage the balance between the risk and benefit of new, disruptive innovation? 

(This question was also answered during the live Q&A.) I recommend a great book titled Innovator’s Solution: Creating and Sustaining Successful Growth. It discusses this exact issue. It is a tough balance, but companies must anticipate that their existing strategy will someday be obsolete. As such, the risks associated with disruptive opportunities begin to look different once they are viewed with this lens.