Inclusive Innovation: A Source of New Ideas to Deliver Business Growth

Abstract

As emerging markets continue to grow in both size and economic influence, innovation managers at companies around the globe increasingly turn to those markets for new ideas that could catalyze their business and deliver the next generation of growth. At the same time, governments in these regions are seeking new ways to generate economic growth and ensure that their entire populations--not just business elites--benefit from that growth. One outcome at the intersection of those two needs is the proliferation of inclusive innovation programs. These government-supported initiatives offer companies potentially important sources of new ideas and governments and the people they serve a way to power economic growth. Business should pay attention to the rise of inclusive innovation programs. They offer a direct channel to ideas developed by local innovators, which may represent new business opportunities. For example, through one country's inclusive innovation program, a multinational fruit processor identified a small enterprise that had developed a novel method for drying and processing mango pits into a nutrient-rich flour. The business is considering either partnering with the local firm to scale the process or licensing the know-how from the local enterprise to introduce the innovation into its processing plants globally. Whatever form the final deal takes, the company will benefit from a new business line that turns a waste stream into a value-adding product, the grassroots innovator will benefit from licensing fees or other resources made available through a partnership, and the community will benefit from the wealth created through the company's engagement with the local business and the community. Although the specifics vary by country, inclusive innovation programs broadly seek to drive innovation from nontraditional sources and enable grassroots innovators by propagating best practices and developing clear paths to commercialization. From the government perspective, inclusive innovation programs offer a means of supporting economic development objectives by connecting innovation with growth. Growing support for inclusive innovation among emerging-market governments is driven by a belief that these programs will nurture new ideas that generate new products and services; those new offerings will then boost the economy, and the returns generated by innovators will create increased domestic spending power for both the individual innovators and their communities. The inclusive growth promised by inclusive innovation programs is essential for these countries to escape the middle-income country trap, an economic dilemma faced by countries whose growth has previously been fueled by access to resources--especially cheap labor. As labor costs rise, the competitiveness of these countries is threatened, particularly in export markets, leaving them without the resources to offer the higher-value products that drive advanced economies. Countries facing the middle-income trap today include Thailand, Malaysia, and India, as well as the more often-cited examples of Brazil and South Africa. These countries must find a way to transition from growth based on cheap labor and commodity resources to growth based on higher productivity and innovation, which can expand export markets and increase domestic demand. Supporting inclusive innovation can help achieve these goals by nurturing locally developed, value-added innovations that capture greater value in the global marketplace and deliver economic growth to the originating community. For companies seeking to do business in these markets, inclusive innovation programs offer streamlined access to new ideas that might otherwise never reach their attention. Further, the programs frequently provide support for building partnerships with local innovators. Whether funded by the public sector or supported by social organizations, the programs actively seek to identify innovators--both through active search and through open calls designed to attract innovators' attention--and support them in developing their ideas to maturity. …