In the early 2000s, a group of young Estonians who were fed up with the high cost of long-distance phone calls developed software that enabled them to talk to each other on video through their computers. Their makeshift solution, which they called, “Sky peer-to-peer” (later shortened to “Skype”), proved wildly popular, attracting a million users in its first month. Less than two decades later, video calls have become a ubiquitous part of people’s working and personal lives.
Skype is just one of many examples of breakthrough technologies that have enabled the creation of new markets by making previously expensive or inconvenient solutions affordable and accessible to average people. In fact, when people think about innovation, they often associate it with products like Skype that harness impressive new technologies and set new standards for what is possible. From the invention of the internal combustion engine to the latest applications of artificial intelligence, breakthrough technologies routinely allow for the creation of products and services which were unrealizable only a few years earlier.
However, as important as technology can be for democratizing access to products and services for previously overlooked populations, the association between innovation and new technologies shouldn’t distract from the fact that innovation doesn’t need to be flashy in order to make a big impact. Oftentimes, simple, low-tech solutions provide a powerful means for progress.
We recently studied 100 market-creating organizations (39 of which are African) across time, and industry to understand which strategies they employed to increase their odds of success. It turns out that just 55% of these organizations harnessed technology considered novel in their industry at the time. That’s a far cry from the often synonymous way many people think about innovation and breakthrough technology.
The real barriers to progress
If breakthrough technology isn’t the common enabler of impactful market-creating innovation, what is?
Interestingly, 100% of the organizations we studied shared something else in common: they found success by reducing barriers that had previously prevented consumers from buying and using beneficial products, such as cost, time, complexity, and accessibility. Every organization removed at least one of these four barriers, and 95% removed at least two.
Breakthrough technology can prove useful for doing this at times, such as in the way companies like Safaricom or Flutterwave have made financial tools simpler and more accessible in Africa through the use of mobile devices. But almost as often, innovators accomplished this task through low-tech means. It isn’t breakthrough tech that enables innovation, but the breaking down of barriers that prevent people from consuming products and services they want and need.
Low-tech, high impact
To illustrate the impact of simple, low-tech innovation, consider Havaianas, the popular Brazilian sandal company. Havaianas innovated to create a new market for footwear in Brazil in the 1960s by developing a remarkably uncomplicated flip-flop that rapidly became the go-to footwear for the majority of Brazil’s lower-income citizens, many of whom often went barefoot before.
Recognizing that many of the company’s prospective customers lived far from conventional retailers, Havaianas elected to distribute its sandals via a fleet of simple vans that traveled to the rural locations where its customers lived and worked. To overcome the barrier of cost, the sandals were developed with a flat rubber footbed attached to a one-piece strap, making them cheap and quick to manufacture. Rather than harnessing flashy technology to solve a problem, it was precisely the lack of bells and whistles that made Havaianas sandals affordable and accessible enough for average Brazilians to buy and use them. Today, Brazilians buy more than 200 million pairs of Havaianas sandals each year.
Similarly, at a time when ox-drawn carts dominated South Korea’s roads following WWII, Kia Motors recognized the opportunity to break down the barriers that prevented average people from accessing modern transportation solutions. Rather than harnessing the latest technology of the day, Kia developed a simple, affordable three-wheeled vehicle suited for the practical and financial circumstances of typical working families in Korea. During the same period, French carmaker Citroën developed its massively successful 2CV car using a similar strategy to offer a simplified, low-cost solution for lower-income families in the French countryside.
It’s worth noting that the wealth these low-tech innovations have generated hasn’t just benefited their creators; in each case the new markets Havaianas, Kia, and Citroën created were a boon for prosperity in their respective countries. Each needed to hire thousands of people to make and sell their products. What’s more, the taxes they generated helped provide much needed income to governments. Low tech thay may have been, but in terms of impact they packed a serious punch.
Throughout time and in industries varying healthcare to household appliances, there are countless more such examples of organizations that have harnessed low-tech solutions to create high impact innovations. It’s not the technology innovations use that make them valuable, but the access they create to solutions that help customers make progress. This discovery has an encouraging implication: many impactful innovations don’t hinge on the pace of technological progress, but on the creativity with which innovators use the technology available to them.
Breakthrough technologies can unlock opportunities for new markets that didn’t exist before, but innovators shouldn’t wait around for new technologies to be developed. There are usually plenty of opportunities to create new markets using technology that’s already available, and oftentimes, taking a simple, low-tech approach is just as effective as a high-tech one.
To learn more, see:
Making your own luck in emerging economies: Six innovative strategies for creating new markets