Redefining innovation in the EU and building instruments for third world development

Photo by Diego PH via Unsplash. Edited by Opulens

INNOVATION. Ibrahim Mo, against all odds in the mid-1990s, set up a telecom business in the middle of nowhere in Central Africa, only to completely change the way of life in that part of the planet 10 years later. This is a wonderful example of what market generating innovations are about, and this is the way they can reshape the third world. Instead of aiming at something new they aim at the adaptation of existing technology to new settings, at addressing the needs of so-called non-consumers, i.e. people that for a variety of reasons have not yet benefited from a particular product or service, or are not even aware of its existence.

Can adaptation qualify as an innovation, you may ask? Indeed it can! Innovation is the generation of new added value. It may be related but is far from identical with the idea of an invention that is centred around newness and novelty and not added value. If they are often confused, it may be because of the one-sided academic dominance over the area of innovation. Indeed academia understands and practices well the invention idea but perhaps not so much that of innovation.

Market generation innovations are mostly about adaptation to context and circumstance, and contrary to what some may think this is no easy feat at all. If we indeed accept this definition, then what can ever be more innovative that even be more value-adding that the above example. Or what Richard Leftley did for the Zambian poor. He was trying unsuccessfully for many years to introduce low-cost insurance schemes until one day his team realized that the limited response was only because the three information fields requested for registration to his service were too much and that people in that part of the world were not at all comfortable disclosing their age.

This slight change opened up a huge market in front of him, and that was an example of a true disruption: a spectacular case of a market generating innovation, one that created 55 million new consumers in the broader region and also pulled in social infrastructure for their support. This powerful dipole of the new market generating innovation and its linked support infrastructure is what can result in a unique impact on poverty relief.

Market generating innovation, inspired by the realities of the emerging economies, and because of the social infrastructure it gradually generates, would be the most decisive and far-reaching help that the EU could ever deliver to these countries. Instead of the usual handouts that often turn out to be a sheer waste of money, market generating innovation comes with all sorts of multipliers that generate massive local impact and prosperity.

I would even add that market generating innovation is the type of innovation the most relevant to public research because it contributes to social well being more than any other type of product or process innovation. This is why it is quite sad to notice that market generating innovation does not show up as a priority in the EU research and innovation (R&I) agenda.

Typically it may be considered as a welcome by-product, at best hidden behind more conventional types of innovation. Market generating innovation is not even acknowledged as something necessarily distinct in the mainstream definitions; and this, perhaps surprisingly, applies also to OECD/Eurostat that is very active in the area of defining innovation, in its widely referenced Oslo Manual. This is although for OECD the development of the third world has special relevance; it would have been most natural for this organization to prioritize market generating innovations that are so relevant for the prosperity of the third world.

Harvard Professor Clayton Christensen first introduced the concept of a market generating innovation in his breathtaking “The Prosperity Paradox” (2019). Unfortunately, Clayton passed away in January 2020 but has left a strong legacy behind him. This legacy has much influenced me in my attempt to critically review the EU R&I agenda from a multitude of perspectives in my recent book: Publicly Funded Research & Innovation in the EU – Unlocking its public value, in the EU and beyond that can be downloaded from Scribd or purchased on Amazon.