Impact Innovation: Will Business Really Save the World?

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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 on capital.

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?

I then started thinking about Stuart Hart's sustainable value framework, his green leap, and "The Great Disruption"--when both Mother Nature and Father Greed hit the wall at the same time.

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.

Here's one group I hope will make it happen. And of course we already see some business entrepreneurs taking up the challenge, making money and doing good simultaneously.

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.

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This page contains a single entry by Christian Sarkar published on June 12, 2013 9:43 PM.

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