Four lessons from M-Pesa on innovation adoption

Warwick Business School
6 min readMay 5, 2020


By Eivor Oborn

When you visit Kenya it is hard to avoid the distinctive dark green and white of the M-Pesa logo on shopfronts in Nairobi’s famous Kenyatta Avenue, as well as painted across the front of stores in Kibera, the largest slum in Africa.

M-Pesa is a mobile phone-based money transfer, financing and microfinancing service, launched in Kenya in 2007. M stands for mobile, pesa is Swahili for money. By 2012 there were 17 million accounts in Kenya. Today, it is considered to be the most successful mobile phone-based financial service in the developing world.

What made M-Pesa the focus for our research was that the innovation trajectory it followed was very different from the one that had been intended. The original programme was developed by a unit of a UK telecommunications firm Vodafone for a corporate social responsibility (CSR) project. The product was going to be niche — a low-cost, small-scale app to help ordinary Kenyans take out microloans to set up new businesses. Small and medium-sized businesses (SMBs) like this are the lifeblood of Kenya’s economy, making up an astonishing 98 per cent of all the businesses in the country.

However — luckily for the millions of people who now depend on M-Pesa — the planned trajectory of the product didn’t last long when it came into contact with reality on the streets of Nairobi.

The success of M-Pesa is an inspiring story, but we learned from our research that innovators need to take four vital steps to have their products adopted.

1 Understand local practices and people

The classic studies of innovation all look at the trajectory of an innovation like M-Pesa — how the company did or did not develop the product, the market take-up, and what hindered — or helped — them in achieving their stated goals. However, it is too easy to think linearly like this.

Instead, it’s time that we understood the world in which the technology sits, and how the ongoing process of innovation is shaped by the local practices, people, leaders, and infrastructures, in a positive or negative way, whether the innovators like it or not.

For example, what M-Pesa’s UK developers discovered was a wider, more important set of local trajectories and needs to align the app with than the management of microloans. A large unbanked section of the population is common in many countries, but in Kenya 90 per cent of the people didn’t have access to bank accounts and loans because the banking system was really set up for literate, wealthy men.

It wasn’t illegal for women to step through the doors of a bank, but they certainly felt uninvited. Women regularly reported being stopped by security guards from entering a bank even with their husbands.

The only ‘upside’ of these factors was that the banks saw the app as a telecommunications tool rather than a banking application — and didn’t stand in its way. In other countries the banks saw the app as a threat to their market dominance, which resulted in the enterprise being classified as a banking institution, and, as a result, the same technology performed very differently.

If developers want their innovations adopted, they need to spend more time understanding each place’s unique features and phenomena. Too often the language of the diffusion process sounds passive, but the process is not. These features actively shape and repurpose innovations.

2 Be led by your users

Developers need to expect that users will engage with their innovation in ways that were never intended, yet the successful scaling of their product will depend on their willingness to support and accommodate these user-generated changes. The users who generate the most value from the innovation may not even be the ones the innovators intended.

While out in Kenya, the developers discovered that the app was undermining the trust relationships vital to the success of microloan schemes by reducing the amount of face-to-face communication — an insight that would have been hard to glean from a business park in the UK and which threatened the app’s future. The realignment of the app was fortunate for the project.

The developers of M-Pesa were able to identify that migration from the countryside to Nairobi had created a real need for an easy and fast way for men and women working in the capital to send remittances home to their families. Kenya also has a very high crime rate — carjacking is commonplace — and Kenyans understandably didn’t to want to have to carry cash around the city or on the long journey home to their village.

Redesigned and simplified, the app went viral, disrupting the traditional flows of money within the country and dramatically increasing levels of financial inclusion.

3 Freedom is key

What is clear from our research is that innovators need the freedom to be able to redirect their focus and support to where the use of and need for their product are emerging rather than where they initially planned. This can be tricky — but it is the difference between success and failure.

For example, CSR projects are the kind of businesses that are free from the shackles of quarterly reviews. This — and the lack of interest from the C-suite in such a niche project — gave the app’s developers the freedom to operate under the corporate radar, and they used this opportunity well, to spend a vital 18 months understanding the local practices, leaders and infrastructure in Kenya.

The developers didn’t have the same freedom to align the app with the practices and needs of the neighbouring country of Tanzania. The success of the app in Kenya had caught the eye of the corporation’s leadership team, and executives now took control of the project. In their eyes Tanzania, with its shared colonial history, Swahili language and even a shared mobile operator, looked like the ideal market in which to reproduce the app’s success.

What the executives had overlooked was that the post-colonial history of Tanzania was the mirror image of Kenya’s and there was simply less need to send money electronically. After independence in 1964, the African socialist Government of President Julius Nyerere meant that Tanzanians had been encouraged to stay in their villages rather than migrate to Dar-es-Salaam, the largest city and port. Furthermore, Nyerere’s programme of nationalisation left a legacy of a few large businesses rather than many SMBs. And a lower crime rate simply made Tanzanians feel safer carrying money then their Kenyan neighbours.

Kenya and Tanzania have a similar-sized population, and in many ways a similar history, but in 2016 there were only seven million M-Pesa accounts in the country.

If the senior leadership of the company had given the developers the freedom to adapt M-Pesa to the local practices, people, leaders and infrastructures of Tanzania then its adoption might have been greater.

4 Think strategically

Developers also need to think strategically about which local trajectories to align their product with — and which not.

For example, the decision to align the app with the Kenyan financial regulators, who also had a mission to increase access to the finance system and were happy to support the app’s development, accelerated its adoption.

What’s more, the local firm the developers were working through was Kenyan through-and-through and highly trusted, which again made scaling the app easier. In fact, its CEO was held in such high esteem by Kenyans that he was seen as “being next to God”. What better recommendation is there than that?

In the end, the time spent by the developers in understanding local practices and people in Kenya and being led by their users, as well as the freedom that a CSR gave them, meant they could align the app with the local trajectories that sped the adoption of the product, and avoid those that would slow it down.

The lack of these insights and freedom led to a much lower rate of adoption in the app’s second market, the former socialist state of Tanzania.

Ultimately, our privilege makes us assume that the world lives like we think it does. The problem is that it doesn’t.

Further reading:

Oborn, E., Barrett, M., Orlikowski, W. and Kim, A. (2019) “ Trajectory dynamics in innovation : developing and transforming a mobile money service across time and place “, Organization Science, 30, 5, 1097–1123.

Eivor Oborn is Professor of Healthcare Management and teaches Strategic Leadership for the Healthcare Industry on the Executive MBA (London).

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Originally published at on May 5, 2020.



Warwick Business School

Warwick Business School, located in central England, is part of the University of Warwick and one of the world’s leading business schools