Giving Compass' Take:

• Lincoln Wilcox lists four barriers to building a new market that any entrepreneur should keep in mind for success. 

• How have entrepreneurs overcome this barrier to create successful new markets? How can other entities learn from or augment this work? 

• Learn about wealth building policies. 

Here at the Christensen Institute, we recently began a research project to better understand what makes successful market-creating innovations so that we may guide entrepreneurs and investors. The remarkable power of these innovations, which transform previously expensive, complicated products into ones that are simple and affordable, is the central theme of The Prosperity Paradox. Our research, drawing on ideas from The Innovator’s Guide to Growth, points to this type of innovation as a core driver of growth and prosperity in low- and middle-income countries and communities.

Market-creating innovations create new markets because they target nonconsumers—people who previously did not consume products they would otherwise want because some kind of barrier, such as cost, prevented them from doing so. When innovators find ways to successfully break down such barriers, thereby democratizing access to products and services to new segments of the population, they create a win-win scenario for themselves and for communities and countries as a whole. The new markets they create generate jobs, improve infrastructure, and bolster institutions, while often capturing vast profits for the innovators who create them.

There are a variety of reasons why a person might want or need to purchase a product but remain unable to do so. Generally speaking, these reasons can be sorted into four basic categories: cost, access, time, and skill. As we explore each one, we’ll see how innovators we’ve researched have found ways to break them down, thereby unlocking new markets.

  1. Cost. None of us can afford every product or service we might want, and many people can’t afford even the ones they need.
  2. Access. Many people, particularly those living in rural communities, can’t consume needed products or services simply because they are not physically available.
  3. Time. Time is yet another major barrier that prevents potential consumers from using products or services they want or need.
  4. Skill. Today, many of us take so many pictures with our phones that we don’t have the time to go back and look at them.

Read the full article about building a new market by Lincoln Wilcox at Christensen Institute.