As an entrepreneur and having spent over 10 years studying various entrepreneurship models, I’m convinced that our answer lies in innovation, especially innovation for social change.

You see there are two types of innovations:

Sustaining Innovation vs. Disruptive Innovation.

Sustaining Innovation:

A sustaining innovation improves existing products. It does not create new markets. It produces better quality products augmenting existing ones, meet existing customer needs.

Example of sustaining innovation would be when Apple introduces upgraded version of iPhones 6, 7, 8.

Disruptive Innovation:

A disruptive innovation helps creates new markets. It offers simpler, more convenient, less expensive products and in the process creating new customer base.

A classic example of disruptive innovation is Henry Ford’s Model T.

Through mass production, Henry Ford democratized the ownership of cars by making them simpler and affordable to own to millions of people who could not afford them.

Before that cars were expensive and only owned by the elites, rich people and kings.

By democratize I mean to making social services accessible to thousands of people at affordable rates in a sustainable manner.

Modern examples of disruptive innovation is:

• Low-cost airline carriers that provides no frills flights, making flying accessible to a lot people who could not afford it;

I would like to introduce another type of innovation, called: Catalytic Innovation.

But what is catalytic innovation you asked? 

Based on Clayton Christensen’s disruptive-innovation model, catalytic innovations challenge organizations by offering simpler, good-enough solutions aimed at un-served groups.

Catalytic innovation shares the same traits as disruptive innovative but focuses more on social change.

Disruptive innovation – seeks to increase competitiveness, whiles Catalytic innovation – seeks to solve social problems

Here are the 5 qualities of Catalytic Innovation: [Slide]

1 Create systematic social change through scaling and replication

2 Meet un-served needs of the market.

3 Offers products that are simpler, affordable but good enough for customers

4 They generate: resources, donations, grants, volunteer manpower, and intellectual property

5 Often ignored, disparaged by existing players

The idea of catalytic innovation is to democratize social services and make them easier and accessible to many people who could not access them.

To solve poverty we need to stop obsessing about building elitist institutions, but focus on building institutions that will offer simple, accessible, good enough and affordable products to poor communities.

How do we solve the poverty crisis? through innovation, innovation for social change.