The leapfrog economies

In much of Africa and South Asia, a generation made its first telephone call on a mobile. They did not wait for copper wire. They skipped a stage richer countries spent a century building, and in some ways ended up ahead.

The landline that never came

Then came money. Safaricom launched M-Pesa in Kenya in 2007 to send small sums between phones. It became a way for people without bank accounts to save, pay and be paid, years before contactless cards were ordinary in much of Europe. The missing banking network, which looked like a weakness, left room for a better design.

Leapfrogging happens when a latecomer adopts a new technology without first sinking capital into the old one, and so faces no cost of switching.

Why leaps happen

Three conditions made those leaps possible. The old technology was expensive to extend. The new one was cheaper at the margin: one mast serves a district. And there was no installed base to protect. Where those conditions held, leaps happened. Leapfrogging is not a law of nature; it happens only when someone builds for it.

Business software's expensive middle stage

We believe business software now meets all three conditions for the mid-market of Africa, the Middle East, South and Southeast Asia.

The old technology is expensive to extend. Enterprise suites were priced per seat for high-wage economies and sold with long implementation projects. For a distributor in Lagos, that is a far larger share of revenue, so many firms buy a fraction of what they need and run the rest on spreadsheets and messaging groups.

The new technology is cheaper. Software whose agents do the routine work needs less consultant configuration and less feeding by staff, and small, efficient AI models bring the cost of that work within reach.

And there is little installed base. A company that never bought the heavyweight CRM does not have to migrate from it. It can start from software that acts.

A lack of heavyweight systems looks like a gap. It may be a freedom.

The case against

Not everything leapfrogs. Countries did not skip roads, ports or power grids. Mobile money flourished in Kenya partly because the regulator gave it room; elsewhere, similar ideas stalled. And consumer leaps worked because one product served millions who wanted the same thing, while business software must fit thousands of companies, each with its own exceptions.

We accept this. The conclusion is not that the leap is inevitable, but that its conditions are present and whether it happens depends on choices. Software priced for these markets, built to do work and supported by people who understand local practice makes it possible. Software designed for somewhere else and discounted does not.

What leapfrogging requires

Builders must price so the whole team can use the software, not a chosen few. They must build for companies that run on messaging, send routine work to small AI models, and be honest about what is finished. A firm making its first serious software decision cannot afford to buy promises.

Leaders must not quietly rebuild the old stage. A company that configures new software to mirror the spreadsheet it replaced has jumped nowhere. And regulators matter, as mobile money showed: rules that let new models grow make a leap easier.

What this means for a mid-market leader

Is your lack of heavyweight systems a gap or a freedom? Most leaders set out to buy what larger competitors have. It may be the chance to skip a stage those competitors are stuck in.

Which processes would you design differently if software did the routine work? Start there, not with a list of modules.

What does it cost to run, not only to buy? Count the time your people spend feeding it.

Who decides? Without decades of legacy process, clear approval rules can be written well from the start.

The countries that skipped the landline did not end up with a cheaper copy of someone else's network. They ended up with something better suited to how they lived. The growing mid-market has the same opportunity now.