I had a (good-natured) disagreement with a friend last week. We were talking about innovation and our point of contention was around the value of incremental versus disruptive innovation. I believe both are equally important. He believes that only disruption will stimulate needle-shifting change.
A few days later a fleeting reference to Roger Bannister in a book I am reading further fuelled my belief that disruptive and incremental innovation are not only of equal importance, but are in fact inextricably linked.
Much has been written about Bannister’s four-minute mile. For an amateur runner his focus and self-belief were remarkable and eventually enabled him to break a barrier once deemed impossible. He worked hard and chipped away slowly but surely to achieve his disruptive goal. His progress came in increments. But this was incremental progress guided by a disruptive ambition. Once Bannister had run sub-four minutes it catalysed a whole cohort of runners who believed that they could do the same, and better.
Consider the estimated 4.5 billion people who live on less than $5 a day. They account for around a third of the $40 trillion global economy. This economy is growing at roughly ten percent, whereas the top of the pyramid is growing at just two to three percent. So by 2050 the 4.5 billion people will constitute for around two thirds of the global economy. Cracking this market will be an essential driver of growth.
But as recently as 2004 the notion of doing business with low-income consumers was rather radical. C.K. Prahalad’s “Fortune at the Bottom of the Pyramid” was a manifesto that made the case to see the poor not as victims but as consumers. He was not the first to introduce this concept to the market but his thesis accelerated the search for new kinds of inclusive business models. Since 2004 a whole host of multinationals, social enterprises and NGOs have invested in base of the pyramid initiatives. At the same time has come recognition that better insight is needed about low-income consumer habits and about smart segmentation at the base of the pyramid. And a realisation that while incomes may be low, aspirations and the desire for quality and value are high.
The idea of transforming perception of the poor, from victim to informed consumer, was disruptive. But since then incremental progress, with the occasional disruption has characterized the development of this sector. Case studies on JITA, Vision Spring and BRAC provide good narratives on the perpetual iteration and experimentation conducted by promising base of the pyramid business models.
Roger Bannister chipped away at his mile time, disruptive goal always in mind. Likewise companies, social enterprises and NGOs are incrementally improving how they do business at the base of the pyramid. These mini-innovations, quick experiments and smart failures are important because our disruptive goal makes Bannister’s seem like a jog in the park.
My friend admitted yesterday that he agreed with me after all. I am not clear whether this was achieved via incremental progress (me chipping away at him, like a woodpecker, until he broke) or a disruption of his previous mind-set. I prefer to assume the latter.