 Let's see, the answer is roughly $120 per citizen. All right, so we're getting the same question, but now America is the country in question. So if Nigeria was roughly 120, America, yeah, the answer is roughly 12,000. And this is at the federal level. The reason I started with that is because when you look at that and you say, well, why don't they have the roads fixed, all the schools, all the hospitals, the good governance, and so on, this really puts their circumstance into perspective, right? I do this just to highlight how important the role of entrepreneurs and innovation is because on the one hand, I do want many governments in the world to be better, and especially poor countries, on them to build the roads, schools, and so on. But at the same time, when we look at the reality of their circumstance, they find themselves, that's a really tough call for them. And that's so easy to get how we wrote this work. Nigeria is not even doing as bad as, say, a Somalia where it's $25, $30 per citizen. So hopefully that gives you some perspective into where many of these countries are coming from. So this is Clay. And I love talking about him because he changed the way I think and the way I see the world. And my job today is to do my best to just introduce you to a couple of ideas in our book, I can't do the whole book justice, to maybe reframe the way you think, the way you see innovation's role in creating prosperity. But one of the big things that Clay harps on is the importance of theory. And the focus of today is really sort of combining ideas he had in his first book with some new ideas we have in the prosperity paradox. And he applied innovation to competition and industry and in the innovators dilemma, which is sort of the book that was his type of thing. And we've now taken that concept and we've applied it to economies and how it can impact economies. And at the root of all his books and ideas is the notion of management theory. We don't wake up every day with questions in our minds, right? What classes do I take, whether I go to school, if you're an investor or a manager, you're asking different questions, right? Should I buy this company? Should I sell? Should we invest in this resource? Should we not? Should we hire this person? Should we fight? So all of these questions. And we can answer the questions sort of based on God like, well, look at these guys doing that, let them do what they're doing. Or we can use the management theories. And so Clay has sort of built his career based on coming up with these theories and they act as tools, right? And so depending on the situation you find yourself, you say, hey, do I need an innovation theory to help me with that? Do I need jobs to be done theory? Do I need to set back the business model and look at that theory? And so these theories really helped a lot of the research we do and how we answer some of these questions. And often they would, the idea is they'll lead you to the right outcome more often than not. So the three ideas I just want to quickly share with you today are the economy, non-consumption and consumption. I want to introduce you to that. Talk about how not all innovations are created equal and really illustrate the power of market-creating innovations. And the third is something we're working on in the market-creating innovation lab. So what you see here are three essential circles. This is sort of how we think about the economy. A lot of times when you hear the economy, it's a hodgepodge of, you've got schools, hospitals, infrastructure, governments, private sector. There's a lot going on. But from an innovation perspective, we simplify it and say, like if you look at these three circles and just take the population of any region, it could be a country, it could be a global economy. There are usually people in a smaller circle who have a ton of money, ton of wealth, a ton of access on a scale. And as the circle gets bigger, you've got people with progressively less money, less access, less skill. And what we say is, there is a ton of non-consumption, especially in the two optimal circles. It's a simplistic representation and it's not as clean as the circles, but you get the idea. And non-consumption is really just a simple phenomenon that says, there are many people who would benefit from access to a product or a service, but because of the cost of existing products and services on the market, they can't access it at all. It doesn't mean they don't have use for it or need for it. It's just the cost of what's available prevents them from getting access. And so they typically would go without. Now, to give you a quick example, if we look at how innovations in computing have evolved, what you find is that 60, 70 years ago, computers were as big as this room, not even bigger. And you need to be highly skilled technical people to operate them. In addition, they were extremely expensive and so many big organizations and universities to afford them. But over time, they got less and less expensive and they were democratized. And so more and more people in society were able to afford computers. And my guess is almost everybody has a computer in their pockets right now, because they've been democratized and they're being further democratized in lower income countries. And so as we think about innovation and the impact, it's in its ability to democratize access. It doesn't mean people didn't have use for computers at all. It's that the mainframe computers were still the dominant way we did computation. There's no way I would have access to computers and many of us in this room. And so we think about how you democratize innovation and how it begins to impact people in these outer circles. The more access you can democratize, the computing, healthcare, education, food, you begin to see economic development. So these are just simple characteristics of the two economies. I'd like to show this just so you see that a lot of times when you're in the consumption economy, the market already exists and makes sense if you want to invest in a particular product or service. But with non-consumption, oftentimes it doesn't make sense. People look at you like you're crazy. If you look back at the history of Apple, for instance, it was safely computing. It was founded by Steve Jobs and Steve Wozniak. Wozniak at the time, he came up with the idea that it was actually working at HP. And he pitched the idea of the personal computer five times to people at HP and he just kept shutting it down because they didn't see the value. The market didn't exist and they just didn't see what the point was. And so you begin to see the characteristics of these different markets and how when you pitch an innovation to a circle where there's no product or service yet, oftentimes you're met with, I don't know if they can afford it or if they need it, I don't know what the point is. But there are ways that you can figure out how to democratize access to people in those markets. And so how do we do that? I think that's sort of where the next point is, right? How do we begin to democratize access? And that's where for us at the Institute and Clay, he, you know, so Clay is sort of the Silicon Valley, especially he's sort of the godfather of innovation and destructive innovation, especially one of the words he hates the most is innovation. Because it's like, what is innovation, right? It means so many different things to different people. And so he actually, when he's having a conversation with you, he loves to make sure that the language being shared is we're using a common language and so for him, he does not like the word innovation much. So for us, the value of innovation is in its ability to democratize access from one circle to another. But here's the thing, transitioning from one circle to another fundamentally requires you to create what we call a new value network. That's just a fancy business word for how you get your product from point A to point B, right? And so if you think about it, virtually every product, there's a group of people who sit down and research and design it, and then they figure out it's very simplistic of value chain or value network, right? We need new manufacturer, you distribute, you market, you sell, and if necessary, you do some after sale service, right? With each component in the value chain, right, you're adding costs to the product. For you to go from a mainframe computer to a personal computer to a smartphone, you have to change the value network. And this is where you can create an enormous value for people in society. As you change the value network from mainframe computers to personal computers to smartphones, right, you begin to, what ultimately happens is because you're serving so many more people in progressively larger circles, you need many more people to make the product, market the product, sell the product, service the product, and many more people are now using the product, and so they ultimately become more productive. They now have more access to things that can make their lives productive. And so as we think about our work, it's really a very simple model is how do we democratize innovations, right, that can make life better for people? How do we increase the number of people that have access to the things that many of us in this room take for granted? In doing that, in finding sort of a business model that can help us do that, what ultimately happens is you create a new value network that then hires a lot more people. And as that happens, you see society begin to become more prosperous. And it's an evolutionary process, I get it, but that's how the things play out. To give another quick example, cars are about the same thing. You know, 100 years ago, cars were like private jets today, and then a guy by the name of Hengwa, first of all, many people have a private jet in their car, but they're extremely expensive and difficult to drive. Those cars 100, 120 years ago, and then Andy Ford comes around and says, I'm going to make a car for the average American. Many people who he told said it's never going to happen. Some of his investors walked out of him and said, how do you make cars through the society where we don't even have roads, we don't have transportation laws, that's not going to work. But he figured out a business model, created an entirely new value network that was able to democratize access to cars, and that led to so much development in the U.S. And how many folks know how we actually pay for our roads today, building new roads and maintaining new roads, tolls and taxes. That's true, tolls and taxes, taxes from gasoline and rubber and the tires. And so think about paying for roads. So when we leave up poor countries, they don't have good roads and they can't maintain their roads. When you begin to think about how many cars they have on the roads versus how many cars wealthy countries have on the roads, you can begin to draw these connections and see, oh, there is a link between the construction amendments of infrastructure to the democratization of innovation. You can begin to even estimate when you read a report in the Wall Street Journal, this country built this new road and you can actually assess and see, man, in a few years that road is probably not going to do well. Why? Because the mechanism that makes it sustainable is not yet there. And that is where democratizing access comes from. And that's the important, that's why we really take that very seriously is how we see innovation. And so the three main types just to round that out. The first are market creating innovations. These are innovations that transform complicated and expensive products into products that are simple and affordable so many more people in society could get access to them. At the core, they create growth, development, they create jobs, but they need capital. And so imagine going to a manager requesting capital for a market that does not yet exist. And so this is where Steve Wozniak was having issues, right? Because they needed capital to democratize computing for a market that didn't exist yet. And so you begin to see this economy here. The second type of innovations which are also important are what we call sustaining innovations. These are innovations that make good products better. And so if you think about your phones or your cards or the university, if the University of Michigan had resources from 25 years ago, they hadn't updated the classrooms and updated the student center. Yeah, it could still take in a lot of students but it wouldn't be as vibrant a place, it wouldn't be as exciting a place to go to school. And so sustaining innovations are important, right? They need good products better. But when you really step back and think about it from an access standpoint, especially, they don't create entirely new access for people who historically could not afford existing products in the market. If you could not afford an iPhone 10, chances are you can't afford an iPhone 11. But, you know, you've got more features on the iPhone 11. The engineers at Apple are more excited. They get to work in cutting-edge stuff. And so there's a lot of value. But when you step back and think about the impact, it's a replacement in character. And you don't need an entirely new manufacturing plan or distribution to get the products out to people. And the third type are what we call efficiency innovations. How efficiency innovations are, they're probably the most interesting types of innovations. Because they're also important, but they especially sort of have a detrimental impact on economy. And so think about when an organization decides to outsource a job to a region where they can do production, for instance, at a lower cost. Both think about when they get automation into their operations and people lose jobs. Now, why they're interesting is, you know, if you as a company don't invest in efficiency innovations, your competitors will invest in efficiency innovations and they'll blow you out of the water. However, when you invest in them, it's important to know that they will probably have a particular type of impact on one industry in particular that is notorious for investments in efficiency innovations are the resource extraction industries. So you would see the country like Nigeria or Angola, they have a ton of oil, oil and gas, but these are efficiency innovations because the typical manager in that industry is thinking, how do I reduce costs so that I can extract this resource as cheaply as possible. So they're not particularly thinking about democratizing access because the prices are set on sort of global markets. So they're just thinking about reducing costs. And so if you go to many countries that have a ton of efficiency innovations, what you'll find is in those industries that's not really a ton of jobs, they release cash flows that are important for the viability of organizations. But if those cash flows are not reinvested back into market-creating innovations that can then create jobs and democratize access, what you find is that the cash typically goes to a select few and this then increases inequality. So these are the three types of innovations and what we try to do in the book in chapter two is explain these in detail and then really focus on how market-creating innovations impact development. I've talked about some of these ideas in that with market-creating innovations typically the payback is a bit longer and the market doesn't exist and there's internal process misalignment because every company is designed to do what it does better. So if you're a company that makes cars you are designed to figure out how to make and sell better cars, how to be more efficient, but how to add features that keep your customers excited. Many companies are designed to focus on creating new markets, especially markets that may ultimately undercut their existing products. And so there is this sort of internal process misalignment in organizations to go after market-creating innovations. So I thought a quick maybe show of hands or a quick or even blurt out an answer. I'm going to read out some demographics for you and if you can tell me what country you think this is. So this is a country where roughly some percent of people live in rural areas. The average household spends more than half their income on food. One in five kids dies before the fifth birthday. Ten percent of people go to secondary school electrification is sub-twenty percent, like ten percent. Life expectancy is 45 years. I wish I would be in my twilight years now, if I had been here and some of you chuckled in who wouldn't go be here, so I am kidding. So if you were reading a report in the newspaper and you saw these demographics what countries would come to mind if you were reading this? DRC, that's an excellent one. Just two more guesses. Nigeria? India? That's another good one. I'm sorry? Okay, so that one just covers it. Pretty much I like that. That's your poker play, your hedging. So these are demographics of these United States of America. This is probably my favorite slide whenever I go and speak. Now I saw America today, so don't freak out. Oh my gosh, why did this happen? But this is the U.S. anywhere from 100 to 150 years ago. And the reason I like this is not to say you can sort of throw a one-to-one map of America there and many more countries today, but the reason I love this is it just shows where America has come from and how development is possible for many poor countries. It's an evolutionary thing that can happen, but I think we have to get the mechanism right because when America had these demographics and you looked at how much the government spent per citizen, it was on par with many poor countries today. If you looked at corruption in government, which we've explained in chapter nine in our book, you will see widespread corruption and mismanagement of pensamento funds. If you looked at the level of the state of America's institutions, maybe they didn't even exist, but the ones that did, I mean, judges were extremely corrupt and were in the pockets of big corporations. If you looked at infrastructural projects, there's a book called The Big Rows that says, you know, for municipalities, they got a dime worth of rows for every dollar they spent. And so you begin to just sort of look at this state of things back then and where it is today. America is not a perfect country, but it's very different from where it has come from. And what we found as we were doing the research is that one day, everyone in government had this sort of come-to-Jesus moment and they said, we got to stop stealing money, we got to build the roads right, we got to take care of the poor, we got to, you know, that's the way it all happened was market creating innovators, created new markets, employed a ton of people. Those people became more prosperous over time and began to fight the government saying, well, you can't keep doing this, you can't keep behaving this way. And that's a very quick summary of American history of how it became prosperous. But when you look at that mechanism, right, you can't divorce the power of market creating innovations from America's story. And so I think it's important for us to step back and look at where governments are today, tell them how much they have to spend and where the countries like the U.S. came from and how they've been able to achieve its prosperity. And so what does this market creating innovation look like? I go pack of noodles, actually. So I grew up in Nigeria, this is a very famous food in Nigeria, I'll tell you the story and why I think democratizing access is absolutely critical. So about 30 years ago, 1988, these two brothers look at Nigeria and they say there's a lot of poverty in the country. The country is ruled by military regime agents and people live on best and two dollars a day. I mean, you made it, it just did not screen the investment destination, I mean, a golden investment. But instead of looking at the country and saying, I'm going to build a lot of schools, a lot of hospitals and so on, they said, let me see how I can get a pack of noodles to as many Nigerians as possible. I had the time to appreciate this, most Nigerians didn't eat noodles. So they actually, we, I guess, thought they were worms at first. And they're laughing, but if you've never seen noodles, they knew them weren't me. But these guys figured out a business model, they figured out how to get the foods into every corner of the country. And just to give you an idea of the impact, trying to get a pack of noodles to the average person in Nigeria has had, you get an idea, right? So from a country where nobody ate noodles, you now have like 16 other companies that are making noodles, you've got over half a billion dollars in investment to build factories. You got tens of thousands of jobs that are created. The company now has as part of their division the biggest corporate logistics company in the country. And so the point of showing this is a product that's sort of flimsy as a pack of noodles has this much economic weight and activity behind it. Now, as we say in the book, right, one pack of noodles is not going to create prosperity in Nigeria. One model T is not going to create entire prosperity in America. But the mechanism and the process by which they went about creating this new market is what I think is exciting for us. And if we can share this message far and wide to begin to change how we think about development and innovation, I think we can have a lot of progress. The same thing happened with cell phones. This is a story that's been told one too many times. But I think it's a good story because we forget how incredible it was 20 years ago to go into Africa, as some of us thought was a country, to say I'm going to invest billions of dollars in telco infrastructure in an industry that has to interplay with governments, right, with a ton of corruption and poverty and so on, to democratize access to phones. I think it was highly improbable. Moibra him, Shri Matajiwa, that many of these guys said, I'll give this a shot. And now you sort of see the impact it's having. And many other innovations are built on top of this. Again, this is not going to create prosperity for the entire continent. But I think this, it gives us an idea of how prosperity can begin to emerge after you create so many jobs. You create an entirely new industry that inspires new generations of innovators. You can begin to see how this is going to have significant development. Not to mention the people who invested in this and others is the School of Social Work. And so we don't maybe talk about money a lot, but they became extremely wealthy. So I'm going to throw that in there. That's sort of a thing. All right. I will do one last question. I've been talking for too long. Oh, sorry. This is annually. I realized after I sent the slides, I didn't put annually. It's like monthly or daily. You'd be surprised. So how many people globally earn more than $7,500? All right. So we're about 31. That's about right. Yeah. So you guys are, you're sort of getting the hang of it. So it's about, okay, good. So you're right. It's about 16-ish percent. Pew Research did a study about the global window classes, not as big as we thought. Now, let me put this in perspective. We begin to look at this number, $7,500 a year. That means a majority of people in the world are non-consumers. A majority of people can't stomach a major catastrophe that happens to them. They live in societies where they can't even be fall sick. I mean, I know we have issues with our healthcare system, but they live in countries where they can't even take sick days. And so for me, for us, it really underscores the importance of how we think about immigration's role in creating these products and services for people. Because if you remember how I started this, as much as, you know, let's even assume for one second governments want to help, right, because they wake up every day thinking, how can I help these folks in my country? At $150 a year per citizen, I would argue it's impossible for them, right. And so it's incumbent on us to figure out how we can democratize innovations that can have access. So I think it's an important lesson. Here are just a few companies doing this. I met these at my last trip to Nigeria. You can look them up. COVID 360 is democratizing distribution of logistics. AXA, NG, similar with urban transportation, microinsure with insurance. They now have over 60 million people in their insurance platform. These are people who earn less than three to five dollars a day and they're able to get some form of insurance or self insurance, life insurance or accident insurance. The policies are not going to pay out. I'm glad our policies pay out. But again, they don't have to at this level. And over time, I think things like that will grow. And that shaft is investing in making pharmaceuticals more affordable. And so what I want to end with is what we're trying to do at the Institute. We really want to create a lab where we can make it a lot easier for people to democratize access. If you're an entrepreneur and you want to go figure out how to democratize an innovation, we want to create the resources and tools to help. Similarly, if you're an investor thinking, you know, now you've got to make returns. But how do you democratize access to certain innovations? We want to create a space where there are entrepreneurs that you can look at so you invest in. So I'll just end with this quote from Henry Ford that says the highest use of capital is not to make more money but to make money even more for the betterment of life. So thank you guys for your attention and for participating. So I have another microphone that I can use to take around to take some questions. Who has a question? It's a good question. I'm a first year student at the Ross Business School here at the University of Michigan. So you mentioned that in order to create these market innovative solutions that you need access to capital, so I'm curious as to how you view foreign direct investment and if you view that as a way to create the market solutions, do you feel it's more an efficiency? Yeah, so FDI. So I'm assuming foreign direct investment is capital that comes into your country for long term. So there's foreign portfolio investment, which is shorter term. So companies that would invest into a stock market for instance, they can pull out a lot quicker than if I build a plant. So plant FDI stocks FDI. So that's the decision. So to answer your question, I think very sorry, I think it depends. Now why does it depend? If you look at our numbers, many African countries have attracted FDI over the last 20, 30, 40 years and China is investing a lot now in Africa as an example. But the reason it depends is what is that FDI funding? So I don't necessarily get excited when I see FDI going to a country. I have to ask, is the FDI being channeled at market creative innovations or sustaining or efficiency innovations? And to sort of bring that to light, sorry for all my assumptions, I would assume many of us are familiar with NAFTA. And if you were not, I'm sure President Trump has thought about it enough that you and I are familiar at least with NAFTA. Now NAFTA was signed 1994 President Bill Clinton. So it's a trade deal between US, Canada and Mexico. Yeah. Now at the time, many experts saw it as an opportunity for Mexico to become sort of wealthy like the US and Canada are all here. But when that happened, a lot of manufacturing jobs went to Mexico. And we would categorize those as efficiency innovations. And so Mexico saw a huge boost in FDI. I think they were averaging three, four billion. Now it's probably around 40, 50. But the last couple years might be a little rough. But if you look at Mexico's sort of ascendancy in terms of economic growth and poverty, more than half or about half the people in Mexico are still below the policy line. And so it's not to say the FDI was bad, but efficiency innovations simply don't have the distributed effect that market-created innovations would have. And so people who built those plants, they were able to do their operations at lower costs. They made more money for their shareholders. But that didn't quite diffuse in the Mexican economy, as we would expect. In the same way, many investments in the resource extraction industry, which is where many African countries have invited FDI, have not really diffused to affect the whole economy. And so in no one sense, FDI can be really good. But if you look at the way FDI impacted Singapore, South Korea, even China, and the U.S., in the U.S., you have to go back much farther. But if you look at how we've taken, like countries taking FDI, you sort of have to look at what is the FDI doing. And so it's a nuanced answer. But I would say that I were a policy maker. I would try to attract the kind of FDI that creates markets in my country. I wouldn't shun the others, but I would just know, so I'm going to have as much of a name as I want. Hi, thanks very much for the talk. It goes a nice lay out of innovation. I guess I have a similar question to that, which is I'm also curious. I'm trying to grab what this means for policy makers. So in terms of R&D, the support or the three types of innovation, is there an area you think policy makers should focus on if we provide cars then the roads will follow, or is this not just a focus on one issue? Yeah, so that's a good one. And I'll be the first to tell you, I cringe whenever I get questions about what should policy makers do. Because the sort of short answer is I'm not 100% sure. I really don't know. The way I would respond, which I hope doesn't sound like a cop out, is the first thing is just understanding any event that you care enough to understand this largely. And I say that because many policy makers in most countries now that are at least democratic, they have this sort of four, well, two to six year cycle. They raise a lot of money to get elected. When they get elected, they sort of have favors, they have to go loud. And so those are real pressures that they are under. So any event that they can overcome those and say, okay, I want to actually make change and policy for the better. The first is understanding, just understanding the three types of innovations and how they might impact your region. And then the second is focusing on creating policies that prioritize productivity, not just profitability. So what does that mean? If, say, there is a pharmacy in the biggest pharmacy in Canada or Nigeria or some other country where access to drugs is not as readily available, my policy would essentially be, okay, for you to keep getting whatever benefits you're getting, you have to make sure over the next five years, this many more people have access to drugs. So that forces the companies to develop or create new markets. Now, what that looks like on the ground, how it plays out, I don't know. But when you look at policies and regulations in really, even rich countries, what ultimately happens is because politicians and the wealthiest in society typically talk, they're in constant communication. And so remember those three circles I drew, you know, the richest are in the smallest circle and they have access to politicians and everybody, typically policies promote sort of rent seeking and which increases profitability, not necessarily productivity. And so in so far as you as a policymaker can create policies that will prioritize productivity, I would do that in terms of how that connects to FDI. I love what China did, for instance, where you come into the country, you got to partner with a local Chinese firm in some way. And if you don't share the technology, then you're going to share the technology whether you like it or not. And what happens is today, today China is not just making cheap t-shirts and shoe races or cups, they're making the most technology products. And so if you as a policymaker kind of track the FDI, make the conditions good for investors, but also say, look, you know, you got to make sure you partner with a local firm so that we can grow our local base, that's the route I would take. So I really appreciate your opening with the way you wrote your book, especially the Zinnism talks about channeling article at the reference. But I also noticed throughout your talk that when it comes to innovation, you still also encounter resistance to a change. So then how do you best balance kind of wanting to be pro-collective, pro-team, while also having the perseverance and resistance to continue to push for an innovative idea? If I understood your question correctly, it's what I sort of want. It's kumbaya, everybody come together, let's try to fix this thing by the same time the message. It's going to be met with some kind of resistance. So how do I manage that? Yeah, it's like with Apple or with Henry Ford with all of these different people's journeys. There's always this moment where they're in a room and there's a lot of naysayers or people are resistant to the ideas that they have, but it kind of does work. Yeah, I mean, so education is a big part of it. That's why the slide about where America's come from is really important. That's why we wrote the book the way we did. There's a third section of the book we call the value section and it really focuses on institutions, corruption and infrastructure and we try to talk about these things in a way that help people see the more it's a process. This country wasn't built overnight, but in order to be successful, we have to get the mechanism right and we've been trying to sort of get the conditions in place for decades, especially in poorer countries. So we've been trying to build institutions, build judiciary's courts and legislatures and those are good things to do, but if we don't have the complementary innovation piece, it's going to be incredibly difficult. So I think part of it is evangelizing the message and then finding key people who are very well resourced and connected, who can then further act as an evangelist. But you're right, it's sort of hard. It's being met with a lot of resistance, but we have to keep pushing. I have a question. It's for colleagues. I just have a question in terms of what your advice would be or what you see as an investment way to connect to investors, to maybe there's people at the local level who have these ideas, who could be local entrepreneurs, who know some other communities and can work these ideas from the bottom up almost. So how do you get people like that who have these great ideas in poorer communities or what's not connected, people who have the resources and what is kind of view on that? So it's partly why we are really trying to figure out how to structure this lab. The focus is going to be on a particular region. In trying to identify these really highly talented individuals and then even then the language to be able to explain what they're trying to do in a way that can resonate with investors of people with capital. And then we're also very well placed to get access to these investors, to at least listen and be connected to Harvard Business School. We are all in being here at University of Michigan. We're all heavily resourced in that way. We don't have capital in our pockets, but we have access in that way. And so figuring out the infrastructure to connect that is what we're really thinking about now. I don't know what the answer to that is, but we're actively trying to figure it out. Hi, I'm Martha. Thank you. I'm from, I'm a PhD student in the School of Education. And so one of my questions is where does the, where and how would collaboration with educators in these kinds of economies fit and match and will support the kind of market information that we're talking about? So I get questions of education a lot. And let me first say education is very important. It's very important. However, if you think about education as a way for people to improve their knowledge and experiences so they can be more productive in an economy, right? They begin to see a lot of education in four countries are just useless. It's just no point. You've got kids who go to school for computer science, they never see a computer. You've got kids studying biology from the standpoint of how it impacts Western diseases and there's no relevance or little relevance in their economies. And so if by education we mean how do we communicate knowledge in a way that can help this individual be more productive in their societies, then I think education is absolutely critical. And in a way, you could argue this lab is about education. But if education is what, you know, sort of a school, a building, teachers, and you've got to go through these things, then I think, again, we have to look at the relationship between education and the economy. And so is University of Michigan a land-run university? No? Okay. So if you go from, I'm not going to say, I was going to say Ohio State. I hope you have a land-run university. They just saw it. But if you look at the proliferation of higher education institutions in America, you will see this beautiful relationship to what was going on in America at the time, the agriculture industrial revolution, right? And so in so far as we can create education institutions that help people in economies become more productive in that context, you cannot develop without education. And so I think practically speaking, not only us continuing to evangelize this message, but figuring out how we can partner with education institutions to say, hey, what are you teaching people? Do they understand the power of innovation? I mean, what would you mean in schools that teach policy work or public administration talking about the impact of entrepreneurship and innovation and how they think about policy? I think those kinds of things can ultimately make education more relevant Could you say something about, I wasn't sure I was understanding correctly what you were saying about the different kinds of innovation which one gives you, making a comment on which one is better or worse than the others? And let me give you a couple of things that you can. So for instance, on the disruptive innovation, one of the things that's always got me like that is we talk about the examples of those that succeed, but there are enormous resources spent by companies, by individuals, and we never even hear about them during the novel So from a company perspective, I couldn't tell them that your best investment is to go after something like that, because you don't even have data, you couldn't even say anything about it. And then some of the others you hang on to the efficiency, the lowering cost, it doesn't seem like that's necessarily a bad thing, that's actually a very useful thing. A lot of it happens when you're talking about it. And the other one you're talking about was the losing jobs, it moved jobs to another place, but not last year, jobs became there. So it seems like they each have their place, but I didn't know if you'll make a comment on which one was good in particular situations. So yeah, I'm glad you actually are struggling with that, because I didn't make a comment on which was good or bad. I think we are somewhat agnostic. I'm not going to moralize the impact of an innovation. I think we, as a researcher, we sort of call it what it is. And so efficiency innovations, we look at it from the standpoint of where the investment is happening. And so if I invest in efficiency innovations in State University of Michigan, and I invest in a technology that eliminates 20% of jobs here, I'm focused on how that efficiency innovation affects the University of Michigan. Now, the idea that 20% of jobs that are lost, they would go somewhere else and they would find other jobs, I think that's, it's a consideration. But I think from the University of Michigan standpoint, I think it's important to think about how the jobs that are lost would affect that economy. And so, and I say University of Michigan, but if you think of it as a local economy, if I'm a mayor or a governor, right, how will efficiency innovations impact my, even though the jobs lost here are getting somewhere else, I care about my economy. So it's important for you to sort of understand how that impacts your economy. It doesn't mean you stopped it, but you can take care for it. So the people who lose their jobs, what programs are in place to get them either retrained to get other jobs? How should you be making investments in your infrastructure to make sure that whenever efficiency innovation shocks happen, which they will, it doesn't lock your economy as much as it should, right? And I think just understanding that I think is important. What we try to do with the book is not really say market create, creating innovation good, all these others bad. We just try to illustrate the power of market creating innovations. And I think that's where we spend a lot of our time. The last thing I'll say on efficiency innovations is they reduce the cost of making a product, but they don't necessarily reduce the price of the product. And so when they make me more efficient, typically I take that money and I give it back to my shareholders or I figure out what I want to do with it. But when we talk about market creating innovations, I mean there is a seismic shift in the price of the product. We're talking mainframe computers to personal computers to smart phone type shift. But so in some of the examples, there are competitors there. So you don't have the luck here to return it to your shareholders. When you're competing with others, you're doing the same thing. We observe a competitive market that it does drive the price down. Yeah, it drives the price down. But from a development standpoint, if you couldn't afford a car in a matter, if you couldn't afford a Ford last year, no matter what kind of competition that's going on in the industry, you can't afford a Ford this year. And so until the fundamental value network on how you make boards changes, and so people who couldn't afford $2,000 computers, some of them can afford $100 smartphones. And I think that's the shift I'm talking about. So the fact that the computer goes from 2,000, there's always a window, 2,000 to 1900. I mean there's always that happening, economic activity. But we're really talking about, I'll give you an example. If you look at Mexico, there's a guy who in chapter seven we talked to, he's changing the way diabetes gets treated in Mexico. There are a lot of hospitals in clinics that treat diabetes, but it costs the average Mexican about $1,000 a year. He's figured out a model where he's reduced that to about $250. It was incredibly difficult for him to start, right? It was nothing like it. And many people said, impossible, this is not going to work. But now there are a ton of copycats, right? Who are now saying, oh, I could make money and do that. I think that's the kind of shift we're talking about. It doesn't mean there are no efficiencies in the $1,000 that may take you down to 900, which is huge. But it's not going to create an entirely new market that fundamentally changes the way people access a product or service. You don't seem convinced. That's all right. Hi. I had a question about what happens after markets are developed in four countries. So once prosperity kind of goes up in four countries, what do you think is the next step in addressing corruption that may still linger in the government? So I think the way we write about corruption is it happens on this spectrum, right? And so the first sort of most obvious like corrupt countries we call over and unpredictable. So you go to a country and you don't know what the state of corruption is. You just know it's very corrupt, very low and transparency, international corruption, recession index, it's a big proxy. Well, the second phase is what we call covert and predictable. That phase is where I would put say a China today or South Korea 15-ish, 10, 15 years ago. And the third phase is transparent, where there's still corruption happening and there's corruption in every way you have people. I think you have corruption. But have the systems being developed to help us reduce corruption or to catch it in a way that can build trust in society, right? So those three phases. The mechanism in which you move from phase one to phase two is really by creating these new markets, right? It's often looked at like the mechanism is to build institutions. But as we described in the institutions chapter, institutions are not just a legislative system or a judiciary system. They really are connected to the culture and the way people solve problems in society, right? And when people can make progress by means that are not corrupt, they would often choose that. But you have to give them that and that's where the new market sort of gives you that option. As people become more prosperous, they, with their resources, now begin to elect officials who can fight corruption. They now begin to create a vibrant civil society and keep government in check. And so if you look at the way the U.S. sort of evolved in terms of corruption, you'll see similar things happening. There was a, it was in, I think, if it was not in New York, I think it was in New York, early 1900s, where it was a very well-known politician. I think William Massey Tweed, it was known in Boston, Boston Tweed, it was part of sort of the Democratic machinery at the time. And the governor of New York at the time would not prosecute him, even though there was evidence that he was corrupt. And so these things in America coming up called good government clubs that were essentially concerned citizens who pulled resources together, raised minds. So think of it as civil society. And they raised the money to be able to prosecute him. I think that process is sort of what has to happen. But it's incredibly difficult for people who are poor to marshal resources together to fight a government that's oppressive and extremely wealthy. And I think that's why that first step is absolutely important. A quick plug for a TED Talk I just gave on this, actually, you can just google my name, TED Talk, I see it in Russian. I should have forgotten to say that. Yeah, so it's Massey, it's evolutionary, but I think as more people, it's being more wealth, they're able to get the government around for its money. So you don't pun intended? Yes, it does. Thank you so much for the talk. I'm curious your thoughts on, you know, for the goal of achieving Latian prosperity in the countries that we're talking about, how important it is that these market-creating innovations ultimately end up being homegrown innovations. So, you know, to take you three examples, I guess I'm a Nigerian and my noodles are made by Nestle, instructed by Nestle, and I'm using a Samsung phone on the Airtel network, and I'm driving on a Chinese-made road to my job at Shell Oil. You know, is there a cap then on how much prosperity my fellow countrymen can achieve when so many of those, you know, the benefits of those innovations are going to other countries? Yeah, the short answer is yes. I think there's no free lunch. We get paid for being able to do really difficult things well that many people want, right? And so if you think about that, if it's really hard to do something that many people wanted and your company does that, you can create a ton of value and you'll be extremely, extremely well. Part of why market-creating innovations are important is not only do they inspire copycats, most of whom are often local, there's this transfer of technical know-how or business know-how that happens as a result, right? And so if I import all my Samsung phones, I import all my telco infrastructure, import all my new rules, or I don't add value in country, absolutely it's going to be capped, right? In some ways, when you make a product from another country and you ship it to a different country, you're essentially importing the cost structure that made the product in that country. So if a German person in an manufacturing plant is making your car, you who's buying that car is paying the German pension and all those things. So there's going to be a cap. But I think when you transfer that technology and you make it locally, which is a process and it doesn't happen overnight, then you can begin to make a lot more gains in terms of prosperity. So it's absolutely important, but it does not have to start with a local person. Are there any last burning questions? If not, let's give our speaker a round of applause.