Clayton M. Christensen is one of Utah’s remarkable success stories. Recognized as one of the world’s most influential business authorities, he is in high demand as a popular college professor, acclaimed speaker, successful consultant and investor and, most of all, extraordinary author.
His 10th and most recent book, “The Prosperity Paradox,” tackles reducing poverty in developing countries. His proposals, based on solid research and case studies, are receiving widespread praise.
Christensen grew up in the Rose Park neighborhood of Salt Lake City, the second of eight children. He was student body president at West High School, graduated from Brigham Young University, was a Rhodes Scholar at Oxford University and earned an MBA from Harvard Business School.
He has never forgotten his roots, even naming his venture capital firm Rose Park Advisors. He and his wife, Christine, are the parents of five children and live in Belmont, Massachusetts. He is the Kim B. Clark Professor of Business Administration at Harvard Business School.
As a young man in the early 1970s, Christensen served a mission in South Korea for The Church of Jesus Christ of Latter-day Saints. At that time, South Korea was one of the poorest nations in Asia. He said he “witnessed firsthand the devastating effects of poverty.” Today, South Korea has become one of the world’s richest countries. “South Korea’s transformation in just a few decades is nothing short of miraculous.”
Christensen set out to determine, along with his two co-authors, Efosa Ojomo and Karen Dillon, “why some countries find their way to prosperity, while others languish in profound poverty.”
He notes that while poverty has been reduced across the world, especially in China, many countries are still very poor. Some 750 million people still live in extreme poverty in the world, surviving on less than $1.90 per day. And at least 20 countries are poorer today than they were in the 1960s. This despite the fact that trillions of dollars in aid have been invested in providing resources in developing countries. In 2016 alone, $143 billion was spent on official development assistance.
The big idea of Christensen’s new book, which he documents with research and case studies, is that while “pushing” resources like new schools, water wells, sanitation facilities, roads and other infrastructure can be helpful, much better long-term results occur when innovative entrepreneurs create new business markets that naturally “pull” needed resources into communities and nations. Pulling in those resources because a market needs them creates incentives that produce long-term wealth and resource sustainability.
Christensen cites several cases where simply pushing resources has not produced sustained progress, such as digging new water wells in remote villages, but leaving them without the expertise and funding to maintain them. The result is 50,000 broken water wells in Africa.
By contrast, an entrepreneurial company named Tolaram saw an opportunity to provide inexpensive noodle meals in Nigeria, despite the fact that Nigerians weren’t used to eating noodles.
Tolaram created a new market and has been spectacularly successful — but not just in selling noodles. To serve its big new market, Tolaram has built water, electricity and waste-management resources. It developed a deep-water port and invested millions of dollars in transportation infrastructure. It trains employees in electrical and mechanical engineering, finance, manufacturing and other disciplines. The company “pulled” in resources because it needed them to be profitable, and millions of people have benefited.
Providing jobs, education and infrastructure could be the development objectives of government aid or a nonprofit. But, thanks to Tolaram, they were the natural result of creating a market and operating a growing business. Tolaram sells 4.5 billion packs of noodles every year (20 cents each), employs 8,500 people and creates 43,000 indirect jobs.
Christensen outlines how market-creating innovation has helped elevate many countries from poverty to prosperity, and how these principles and strategies can be applied in developing nations around the world.
Utah is a globally focused state with many international connections. I recommend this book to policymakers, nonprofit leaders and business executives seeking to improve the lives of people everywhere.