Kelly talks to Efosa Ojomo of the Christensen Institute and Karen Dillon, the former editor of the Harvard Business Review, about their new book "The Prosperity Paradox" that they co-authored with the legendary scholar Clayton Christensen.

You cite different kinds of innovation in this book. Talk to us about ‘Efficiency Innovation.”

“These are innovations that enable organizations to do more with less, essentially enable organizations create a good product, much cheaper. And so examples of efficiency innovations are operation such as outsourcing. So I might outsource my manufacturing so I could make my car phone whatever cheaper or leveraging automation and technology so that I can get rid of employees so that I could make my process a lot more efficient. Now the interesting thing about efficiency innovations is that it’s absolutely important to keep an organization vibrant and competitive. However, they have a different impact on the economy.  And so if I give you an example, you go to the rust belt of America or many cities and towns that historically had some kind of manufacturing or the steel industry, things like that. Now when you look at what has happened in those regions, they've lost a lot of jobs and they've moved to other places that could make those products less expensive and as a result, you now see the impact it's had. Efficiency innovations by themselves are not bad, but they really just have a different impact on the economy than the other types of innovation.”

Okay, now talk to us about ‘Market-Creating Innovations.”

“The other type of innovation, and if you read the book, you'll understand we're very biased towards market creating innovations, especially in a lower middle income countries. These are innovations that transform complicated and existing and expensive products into products that are simple and affordable so that many more people in society could get access to them. A very simple example is the automobile. About 120 years ago, the car was a toy for the rich is sorta like the private jet of today, if you could believe it. And Henry Ford decided that he wanted to make a car for the average American. Now investors laughed at him, other car manufacturers laughed at him because at the time it was inconceivable that the average American would be able to afford a car. It would be like me saying I want to go buy a private jet.”

Sam Wells wrote a book about improvisation and Christian ethics which I think ties into something you talk about in the book about getting culture right. Here’s the quote: "Christian ethics and theatrical improvisation are both about years of steeping in a tradition so that the body is so soaked in practices and perceptions that it trusts, trusts itself in community to do the obvious thing."

“I think you've got it exactly right. To me, I liken it to parenting: it's that your culture has been so well solidified, articulated, it becomes inherently part of how people make choices when they're out of range of the parent. You trusted because it becomes so ingrained in the person. This is what we value, this is how we make decisions, this is what we do. I think you nailed it. I think that's exactly where it was. The  culture comes from solving problems together and it becomes part of how we always do it.”

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