Editor’s note: The following is a transcript of the episode. It’s been edited for clarity.
Boyd Matheson: Global poverty is one of the world’s most vexing problems. For decades, billions of dollars have been raised, donated and spent on poverty efforts with little long-term success or gains. Is there a better way to improve lives and sustain freedom and prosperity? The answer may be found in what is called “The Prosperity Paradox.” Lean in and learn how innovation can lift nations out of poverty and propel entrepreneurs to sustainable success on this episode of “Therefore, What?”
“Therefore, What?” is a weekly podcast that breaks down the news while breaking down barriers, challenges you and the status quo, explores timely topics and timeless principles, and leaves you confident to face what’s next. I’m Boyd Matheson, opinion editor for the Deseret News, and this is “Therefore, What?”
I’m very excited about this episode of “Therefore, What?” We’re going to talk about a new book by Clayton Christensen, Efosa Ojomo and Karen Dillon, “The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty.” We’re very excited today to be joined by Efosa and Karen. Efosa Ojomo worked side by side with Clayton Christensen as a senior fellow at the Christensen Institute for Disruptive Innovation, where he leads the organization’s global prosperity practice. His work has been published in the Harvard Business Review, The Guardian, Quartz, and the host of other places. He’s a graduate with an MBA from Harvard Business School in 2015. Karen Dillon is the former editor of the Harvard Business Review and co-author of The New York Times bestseller, “How Will You Measure Your Life?” and “Competing Against Luck.” She is a senior research editor for global prosperity at the Christensen Institute and a graduate of Cornell.
We’re very excited to have both Efosa and Karen with us in studio. This is a topic that I am super excited about. The book’s extraordinary because it talks about the principles and innovation in a way that lifts people out of poverty. We know that there have been billions and billions of dollars funneled all around the world trying to improve the plight of those that are trapped in poverty, and you took a very different approach to it. So Efosa, let’s start with you. Where did this all begin?
Efosa Ojomo: Yeah, thanks, Boyd. It’s really good to be here. I think for me this story began about 10 years ago. I was living in Wisconsin at the time, I stumbled upon a book. I read about a 10-year-old girl in the book. Her name was Americh and she’s from Ethiopia. She had to wake up every morning at 3 a.m., fetch firewood, walk miles, sell in the market. And I was thinking about what I was doing when I was 10. And her story really gripped me. And at that time, I realized I had to do something about it. I didn’t know exactly what but I got some friends together. We started a nonprofit organization. I went to Nigeria, which is where I’m originally from, and we started building wells, given out microloans, doing a few other things. But Boyd, we built like five wells and virtually all those wells broke down. And so something that started with such excitement and enthusiasm really ended with, you know, sort of broken wells and broken dreams is how I describe it. And I said, I gotta figure out a better way to do this. And that’s what led me to Harvard Business School. And at Harvard, I met Professor Clay Christensen and took his course. And his course really has a way of making you see the world differently. And after I took the course he said, Hey, how about you come work with me, and let’s write a book about how innovation really can have a significant impact in lifting people out of poverty. And so that’s sort of the Cliff Notes version of how we got here. And we’re very excited about the book, “The Prosperity Paradox.”
BM: Karen, you’ve done a lot of the deep dive research over the years. As you started down this path, what were some of the things that surprised you early on as you were getting going? What were some of the findings or some things you thought, wow, that’s just not how I thought this was going to play out?
Karen Dillon: Many things, actually. But I think I was probably most surprised and awed by what some of these individual entrepreneurs and innovators were able to accomplish in truly amazingly difficult circumstances. The fact that enormous growth and opportunity and the creation of something in what you would say would be some of the most inhospitable places in the world to do business. That really did surprise me that there were some really fabulous success stories where you would never think to look.
BM: That’s great. So I want to go back to the wells here. The well that went dry, because we often talk about this idea that often in these kinds of projects, you run out of energy before you run out of opportunity. And innovation plays such an important role in terms of how do you actually do something that is sustainable? I mean, there’s so many things that start big, start grand, but they’re just not sustainable. So what did you learn about that?
EO: Well, if we take a step back, I’ll explain what I learned through the lens of an idea that we write about in the book. It’s actually the title of chapter 4. It’s called “Push versus pull: a tale of two strategies.” See, Boyd when I walked into that community, first thing I saw was a group of women who were by the banks of the river washing clothes, and I came to learn and that there was no water in their village. And so they’d walk miles, a lot of times with their kids, to go fetch water to take back to the community or to wash clothes. And instantly, like I knew the answer to the problem. It was build a well. I mean, I just knew it. And so we raised money, got some friends together, we did that, we built a well, but a few months later the well broke down. I was very well-intentioned, and a lot of my friends were, but we call that strategy a push strategy. This is essentially where organizations design programs that are well-intentioned but they go into communities and they really get at the symptoms of the problems. They focus on the symptoms and not the root cause and so they push solutions onto the communities. A different strategy we talk about, which has innovation at the core, is really what we call a pull strategy of development.
I’ll illustrate the story here and how it differs with an example using instant noodles. I don’t know if you like noodles, but I love me some noodles. So in 1988, 30 years ago, roughly, Nigeria was much worse off than it is today. We were under a military regime, about 80 percent of the population lived on less than $2 a day, we didn’t have electricity infrastructure, transportation, telecommunications even, so many of the infrastructures you’d look at a country for and say I’m going to go in and invest, we didn’t have. But these two brothers, they looked at Nigeria and instead of looking at all these deficiencies that they had, they said, what if we introduce of food that’s very easy to cook, that’s flavorful, and that you pair it with an egg or something like that for some protein and that would be a delicious, nutritious meal. And so they decided to bring in instant noodles to Nigeria.
You’ve got to understand, this is West Africa. We thought noodles were worms. We really did. But they persevered. And they said, Look, we believe that we can fit the taste to these folks, and they did. And I had those noodles growing up, Indomie noodles. But here’s the kicker — 1995 they start building manufacturing plants in Nigeria. Well, in order to build the plants, we didn’t have electricity so they built electricity plants. They built water treat treatment facilities. And then they realized, Oh my, when I want to get the product from the plant to the warehouse, sometimes I send 100 cartons and only 80 makes it, so they said we have to take care of our distribution. So they built warehouses. They bought a bunch of trucks, hired a bunch of drivers. And then education. They started thinking, well, we need engineers, we need mechanics. We need electricians, we need all these guys. The education system wasn’t that good. So they started training people so that they could fill these jobs. And that’s a fundamentally different strategy than a push strategy that goes in and tries to solve the symptoms of the problem. This is a pull strategy, because of the market that they created, they were able to pull in so many things into the economy. And what’s fascinating about that is we see similarities between that pull strategy of what the noodle guys did and what entrepreneurs like Henry Ford did, Isaac Singer, who really helped get America where it is today.
BM: Yeah, fantastic. That’s great. Karen I want to have you kind of give us a framing for “The Prosperity Paradox.” Give us the core — Efosa’s just shared one of those important principles, the push versus pull strategy. Give us kind of the high level look. What is that paradox? And then how do we start applying those principles?
KD: Sure. So “The Prosperity Paradox” refers to the fact that, as Efosa was talking about, you see poverty primarily through the lack of resources, lack of water, lack of education, lack of health care, we see what’s lacking, and we so desperately want to help, we want to solve it, provide those resources and that will solve poverty. The paradox is the thing we’re most naturally inclined to do, and the thing as you said earlier, we’ve been spending billions of dollars for years and years and years trying to do is solve, is solving poverty isn’t actually going to solve poverty in the long run. It’s going to make it easier, might make it better. It doesn’t turn into prosperity, which is a self-sustaining engine that really can grow countries, individuals lives, the prospects for everyone to have a better life. So the paradox is that what we’ve been doing for so long and seems so logical is not the way, we believe, to solve it long term. Long term, you have to think of the question differently, not how do we solve poverty? How do we generate prosperity? They’re two different things.
BM: Yeah, that’s so fascinating. And I’m going to ask you a slightly political question. This is not a political book. This is not a political program. But it seems to me that the United States, for many years, has taken a similar approach in terms of freedom and democracy. Where they kind of, as a policy strategy, they’ll go and they’ll dump a bunch of money into a country and prop up a little democracy. And that works for a little while. But eventually things start getting stolen, the distribution doesn’t work. It breaks down and they start sliding back towards socialism or communism. And so then the United States goes in and dumps in more money and tries to prop it back up. But it seems to me that what you’re saying in this prosperity paradox is that it really is the entrepreneurship, it’s the innovation that ultimately drives freedom. And if I’m totally out of left field, you can say Boyd, you’re way out in left field.
EO: Well, Boyd, I wish there were many other ways to slice it. But if you don’t have the entrepreneur at the center of your economic development policy, it’s incredibly difficult to get a country where there’s prosperity and there are freedoms. You know, we to some degree at least, we celebrate China over the past 40 years, you had a country that had GDP per capita of about $100 a year to now over $8,000. But what happened? The umbrella for the country is still communistic. But you see the entrepreneurial drive and energy. And you see many of these companies now gaining ground. A similar thing happened in South Korea, we see Samsung, Kia, we see a Hyundai and Pasco, all these companies. And so it’s incredibly difficult to have countries where there are increase freedoms without investing in entrepreneurs. So if we care about freedom in this country and many other parts of the world, I would say man, let us figure out how to get resources to entrepreneurs in those countries. I guarantee there would be democracy and freedom everywhere.
KD: I agree, I think that it basically boils down to, you know, teach a man to fish. It’s when the innovation and the growth and the prosperity comes from within, it becomes self-sustaining. It’s not sort of just given from the outside. And that’s really powerful. We know that through history, lots of examples, the United States being one of the best ones, actually. We were as poor as Bangladesh is today in the late 1800s. And so the fact we forget how far America has come, and all the freedoms and all the things that we do enjoy now as a consequence of that, and that the start of that engine really was innovation and innovators, great innovators who began the chain of events that led to America’s prosperity.
BM: Yeah. I always say that the Founding Fathers were really just a bunch of entrepreneurs who were tired of being overtaxed that over-regulated. Really just wanted a new business model. Definitely. Very good. Karen, I’m gonna stick with you for a second. Share with me, maybe one example from the book or some of these experiences that you’ve all had in doing this research that maybe was one of those lightbulb innovation moments for you, where you could kind of connect those dots a little bit.
KD: Sure. I think my favorite example in the book is a company called MicroEnsure, which is a company, I’m not going to call it an insurance company because it’s sort of the middleman between insurance companies and customers and, as I’ll explain, mobile phone companies, but it’s a company that’s figured out that in some of the most impoverished parts of the world, countries in Africa and parts of India, a single economic event can wipe out a family, a town, a community. Fire, disaster, someone having AIDS and dying. Those can be life-changing events, and those people are never given the opportunity for insurance for anything. And so the entrepreneur who started this, a guy called Richard Leftley, just observed looking at the actuarial tables where the most natural disasters happen versus who we actually insure. And it just seemed so wrong to him that we can’t figure out some way to help people who probably need insurance more than anybody. And the fact of the matter is that you don’t need Western dollar levels of insurance to make life-changing amounts.
So this entrepreneur figured out really cool ways that he can provide microinsurance by getting mobile phone companies who wanted to sort of upsell their customers, you know, a few more minutes. And as part of the bonus, when you buy a few more minutes, we’ll give you basic insurance for the month. Then in turn, he collects that, and then they connect it with an insurance company. And so for what seems like no extra outlay of cash to those customers, they suddenly start to get the idea and get the reality of insurance that could make a huge difference in their life. And I’ll give you a specific example that I think is just so groundbreaking. He recognized that for so many people in these really poor parts of the world, getting medical care when they needed it required cash and they didn’t have a lot of cash. And he met a woman whose child had died when she had taken her to a local hospital and didn’t get a chance to see a medical professional for days because it was a public hospital. And she finally asked in desperation, can I get my child treated elsewhere? And they said yes, there’s a private clinic x miles away, but you’ll need $5. They will charge you $5. So the woman was so poor, she went home, left her child there in the hospital, and sold her possessions so she could come back with $5. And by the time she came back, her child had died in the hallway of the hospital. It’s just heartbreaking. So he has created a product that has had millions and millions of subscribers now, where using only your mobile phone as the connection. I don’t know anything about you but your mobile phone number, but I know that you’ve signed up for insurance. If you have been hospitalized for two days, we will send you $50. So knowing that you’ll get $50 you could borrow the money for a day or two if you needed to, but you could get your child seen or yourself seen, and so $50 to us is a copay, right? $50 dollars for that market is life-changing, the difference between getting treatment or not. That’s created whole new market in a place that you would never think would be a fertile territory for insurance products.
BM: Wow. That’s fantastic. That’s great. Efosa, what stands out for you in some of these stories and experiences?
EO: Well Boyd, I moved to the U.S. from Nigeria about 19 years ago, and when I moved I told people I was never going back. The way I explained it is like you get a get out of jail free card you get out of prison. Why would I ever willingly go back? Because I just thought we were, there was no infrastructure, the governance was not good, and all those things. But then we started doing research for this book. And I realized, wow, that’s sort of where we all came from. The United States was extremely poor at one point, Europe was extremely poor, life expectancy in these regions were barely 40, 45 years. And so for me, learning about all these entrepreneurs who in the midst of difficult circumstances, were able to create businesses that started this sort of engine of economic prosperity was the most inspiring part of writing this book. And so you know, I wish I could say it was this entrepreneur or that, but I think for me this book, if I had to pick one word it represents, is hope. It has given me hope that even in our difficult circumstances, many countries in the world that are poor, struggling, that are corrupt, that don’t have infrastructure. You can still make it. And that’s huge for me.
BM: Yeah, just having that hope is a big part of the process for sure. Karen, let’s talk about this idea that you talked about in the book that not all innovation is equal, because that’s an important part of this whole thing isn’t it?
KD: It is indeed. So innovation is a word that’s very broad. And people use it to mean lots of things. And of course, our co-author Clayton Christensen is famous for the term disruptive innovation. So he partly triggered this complete obsession with the word innovation. But he has continued to think about innovation and what it means to innovate and what types of innovation companies really do in a way that’s really helpful, I think. So the idea is that there are three broad types of innovation that we just talked about in this book. And they all have important roles in a company. There’s something he calls efficiency innovation, which is basically how do we make this product or service a little more efficiently so we can free up some cash capital so that we can invest in other things. And that’s when you see manufacturing plants outsource to Mexico or to parts of Asia, that’s in the attempt to be more efficient and free up cash. Common thing, trying to make the company more profitable or invest in new opportunities, companies do it all the time.
There’s sustaining innovation which is heated seats in your car or new colors of the iPhone or new bells and whistles in whatever your product is. Keep the customers, maybe add a few more, maybe even charge a little bit more. Those are normal parts of doing business and keeping the company going on track. But those things are not going to catalytically move the needle. You’re not going to create something wholly new, find entirely new customers from those two types of innovation, generally.
This third category is the one that will and his focus on it has been through his work with Efosa on how do we actually grow things? Not just sustain, but grow. So we’ve come up with this third category called market creating innovation and everything we describe in the book is a market creating innovation. It means there wasn’t even a market there before. You didn’t identify customers before, you didn’t see prospects for building this business at all, but through your idea, your innovation and the way you create the business model around it, I just explained the unique business model of the mobile phone company and the insurance products, you have been able to create a product or a service and thus a whole market. And then when you create a market, lots of good things happen. That’s what we talked about, that infrastructure and institutions get pulled in, things that are required for you to get your product or service out the door and then scale and grow, that has a really powerful knock-on effect in the economy in which you’re operating, and it can begin to spread from there.
BM: That’s great. I want to spend just a minute just talking about Clayton and his work and your interaction with him. Clearly one of the great thinkers of our time and really has changed the way most business executives think about themselves and think about their businesses. Give us a little behind the curtain, Efosa, your experience working alongside Clayton on a project. This is one of those projects I think will be one we we’re all going to look back on and say that was a game-changer moment.
EO: Professor Christensen is brilliant. I mean, I there’s no debating that. But I think what strikes me the most about him is his compassion and kindness. It really is out of this world because to have somebody so brilliant like that be so compassionate, kind and generous with his time, with his brand, if you will, and to pull you into his circle to say, Efosa, what can I do for you? Like, how can I help you be better? It’s truly, truly amazing. And so in writing this book, that was sort of the vibe he brought in every day. He didn’t see it as his book that we were helping him co-author, he was like this is our book. This is our stuff. And so let’s go out and write the best book we can, because our names are going to be on it. And then when you work with that kind of person, there’s no way it doesn’t affect how you begin to see life and treat other people. I mean, he has changed my life.
BM: Yeah, and so rarely anymore do we hear leaders described as kind and compassionate. And yet, I think you nailed it. I think that is at the center of the center of Clayton Christensen. So I appreciate you sharing that. Karen, what about you?
KD: I would second all of those things. This is third book I’ve had the pleasure to work on with him. And I think I wrote in the first acknowledgments that I ever wrote with him that Clay is, of course, brilliant, but he’s a good man, not just some of the time, not much of the time, but all of the time. He is really a man who wants to do good in the world. And he shares that all the time. It’s his every part of him and all of his work is for that reason. And the other thing I think that is really powerful about Clay is because he’s a teacher, he has a really rare gift. I was the editor of Harvard Business Review, worked with many brilliant academics, sometimes brilliant academics have a hard time explaining how they got from point A to point D, or the complexity of the idea is not easy for the average smart person to understand. Clay is a natural teacher. And so I just absolutely loved working with him because he helps you to understand complicated things in ways that become really meaningful. And he won’t leave it until you get it and understand it. So working with someone who’s both a good man, and brilliant, and a teacher is a really powerful combination. And the other thing is, he’s really humble. He genuinely believes he can learn something from everybody. So when you’re in a room with him talking or he meets you in the hallway, he is as interested in what you have to say as whatever he might have to say. And it’s really fun to be around him because it’s very rare and very special.
BM: Yeah, that’s fantastic. Well, as we come down the homestretch here, Karen, I want to ask you one question. I did a podcast a few weeks ago with Anne Snyder, who has done a book for the Philanthropy Roundtable talking about where philanthropists are investing their money, what kind of projects and things they’re doing. And she really made the case that it’s in organizations that are building character and societal fabric that it should be going. And what you’ve laid out in this book is really in that same alignment. But what do you think that philanthropists and businesses and organizations who are looking to solve the poverty problem, what should they be doing, based on what you’ve come up with in the book?
KD: So that obviously is a very worthy thing to do. And it’s important and powerful to do that. But I guess I just can’t emphasize enough how that usually follows the success of an innovation taking root. So in the sequence of things, it’s usually most successful when it follows there already being something taking root that’s going to take off. So in our push-pull language, those things are pulled into the society very successfully when there’s a reason that they need to be pulled in. When they are just offered, you know, often by outsiders, they less likely take hold and become part of the culture. The culture has to be built from within, and innovation can be, we think, the catalyst to ignite that.
BM: Well we always close the program, it’s called Therefore, What? for a reason. So I’m gonna let each of you take a whack at the “Therefore, What?” question and that is people have been listening to us for about 25 minutes now, what’s your “Therefore, What?” What do you hope people think different? What do you hope people do different as a result of listening today and reading your book? Karen, let’s go to you first.
KD: I guess I would say therefore, have hope and see opportunity in places that you might have in despair after watching years and years and years of the needle not moving. Therefore have hope that it is possible but you need to see the world through a different set of lenses. You need to see this as strangely fertile opportunity in places that you might not have imagined. And you can have hope if you know that what is possible, that we’ve chronicled in the book, is possible anywhere.
EO: I’m going to second Karen’s “Therefore, What?” Just so I could ram it down their throats. Because there’s a concept in the book called nonconsumption that we explain, therefore when you see a place that’s not consuming something, be it health care, education, electricity, whatever it is, just see it differently through a different lens, that that’s an opportunity for you to create a market there. That can help a lot of people begin to consume this thing so they can lead better lives. So I’m going to second Karen’s “Therefore, What?”
BM: You guys are good tag-team partnership there. That’s great. Well, we appreciate you being with us here on “Therefore, What?” The book is “The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty.” It is a must-read if you want to do good, if you want to be good, and if you want to find out how to really amplify that and leverage and parlay good things out there in the world. It’s just a beautiful roadmap. So thanks for being with us today. Remember after the story is told, after the principle is presented, after the discussion and debate have been had the question for all of us is “Therefore, What?” Don’t miss an episode, subscribe to this podcast on Apple podcast or wherever you’re listening today and be sure to rate this episode and leave us a review. Follow us on Deseretnews.com/Tw and subscribe to our newsletter. This is Boyd Matheson, the opinion editor at the Deseret News. Thanks for joining us on “Therefore, What.”
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