Frugal Innovations – Creating More for Less

Last week I had the opportunity to attend apparently the world’s first dedicated seminar on frugal innovations, right here in Helsinki Finland. The seminar was held in April 16-17, 2015 by the Nordic Frugal Innovation Society, at the General Electric Health Innovation Village.

 

Among the speakers at InnoFrugal 2015 was Navi Radjou, who has written two books on frugal innovations and is also known for his 2014 TED-talk about the same subject.

Before coming into contact with the idea of frugal innovations, Radjou was working as an innovation expert in Silicon Valley, where he helped large companies develop innovations. During his work at the Valley he made an important observation: western companies often use huge amounts of money on research and development without achieving major product or service innovations. A good example of this “more for more” approach is the seemingly never-ending line of new versions of the iPhone.

Navi Radjou

Navi Radjou delivering a TED talk in 2014.

Radjou’s observation about bloated R&D budgets drove him to seek ways to create more for less. He eventually went back to his home in India and started researching how Indian entrepreneurs are creating innovations with limited resources.

His research lead him to dive into the concept of jugaad – Hindi for innovative fix – innovation. Jugaad, or frugal innovation, was a very different approach to product and service development than what we’ve used to in the west. Furthermore, it is something that Indian entrepreneurs are very good at.

So, what the heck is a frugal innovation?

According to Radjou, frugal innovations are about doing more with less. Frugal innovations are products, services, business models or production processes that use significantly fewer resources, but achieve the same level of quality and usability compared to their non-frugal counterparts.

Here is a richer definition by Nesta, the British think tank:

Frugal innovation responds to limitations in resources, whether financial, material or institutional, and turns these constraints into an advantage. Through minimising the use of resources in development, production and delivery, or by leveraging them in new ways, frugal innovation results in dramatically lower–cost products and services. Successful frugal innovations are not only lower in cost, but outperform the alternative, and can be made available at large scale. Often, but not always, frugal innovations have an explicitly social mission.

Based on this definition, frugal innovations are products and services that are lower in cost, outperform the alternative and can be made available at large-scale. Therefore, frugal doesn’t imply cheap, but smarter and more resource-efficient.

Book Jugaad

“Jugaad: Hindi word meaning an innovative fix; an improved solution born from ingenuity and cleverness; resourceful. Also known as zizhu chuangxin in China, gambiarra in Brazil, D-I-Y in the United States, jua kali in Africa, and système D in France.”

 

One great example Radjou talked about during the seminar was MittiCool refridgerator. MittiCool is a refrigerator that was developed by an Indian entrepreneur, named Manshuk Lal Prajapati. The refrigerator is entirely made out of clay and doesn’t use any electricity, with the temperature inside the fridge 8 Celsius degrees cooler than the room temperature. It can hold vegetables fresh for four days and milk for two. The MittiCool sells for 3000 rupees in India, making refrigeration accessible for poor people (and allows tapping into a huge market).

Another example of frugal innovation Radjou mentioned and which might bring a smile to Finns’ faces is the Nokia 1100. Nokia 1100 was released in 2003 and it is remembered by being seemingly indestructible. While Nokia 1100 had no extra features, the phone was durable, reliable and came with a low-cost, which made it perfect for people in developing countries. Having sold over 200 million units, the Nokia 1100 is one of the best-selling phones of all time.

Using what is abundant to overcome scarcity

What’s important to understand about both MittiCool and Nokia 1100 is the fact that both serve the most important needs of the customer while cutting back on other, often unnecessary features. This is a more user-centered approach to product and service development, as it focuses on the core needs and expectations of the customer.

In the west, companies are used to having access to huge amounts of resources, which often causes companies to use brute force when developing new solutions. However, sometimes limitations can be an important source of innovation. Trying to overcome limitations, most importantly resource scarcity, is the starting point of frugal innovations.

According to Navi Radjou the defining quality of frugal innovation is using what’s abundant to overcome what is scarce.

This requires thinking creatively about what we do have now, instead of fixating on what we lack, and finding ways to use existing assets in a way that creates new value. It also requires understanding what’s really important and trying to find a design that can include the most necessary features.

For example, there is a service called M-Pesa in Africa, which helps people transfer money where there is no internet access. This is possible, because M-Pesa uses good old SMS technology to send payments. While internet access is scarce in Africa, mobile phones are abundant.

M-Pesa

The M-Pesa service being sold in a kiosk in Africa.

 

Another service used in Africa, called M-Kopa, is an example of how frugal innovations often allow people in developing countries to leap-frog into advanced technologies. The M-Kopa III service Solar Home System comes with a solar panel, several led lights, a solar-charged radio and a phone charging station. The M-Kopa is also priced in such a way that even the poor can afford it and gain access to electricity where there is no grid available. Thanks to this service, people have been able to leap-frog from candle light into solar light.

Some final thoughts

 

Frugal Innovation = Disruptive Innovation?

Frugal innovation sounds a lot like disruptive innovation, a term coined by Clayton Christensen. According to Christensen, a disruptive innovation “allows a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill.”

As frugal innovations enable a lower price point while maintaining the most important product features, the connection between disruptive and frugal is very clear. Both terms involve tapping into new markets by enabling consumers with fewer resources to access a product or a service previously inaccessible to them.

Is more with less enough?

Okay, so frugal innovations can be a really good thing for both consumers and businesses, but what about the big picture? Can frugal innovations help us transform our current, unsustainable economic system to a sustainable one?

Based on initial observations, I think the answer in the short-term is yes, but in the long-term no.

In the short-term we need radical improvements in efficiency in order to reduce our overall resource use and emissions. Frugal innovations can help us obtain higher efficiencies effectively as they can potentially change how whole industries work.

However, in the long-term creating more value for fewer resources spent – or being less bad – is not enough. No degree of efficiency will help us become sustainable if our economies and industrial processes continue to produce harmful toxins, emissions and waste. This is especially true because our economies can grow at such a rate that gains in eco-efficiency can be overcome by the sheer speed of the growth.

Frugal innovations are a good start and certainly necessary. But what we truly need, is a circular economy.

 

 

Creative Commons Wakala providing M Pesa service by Development Planning Unit University College London is licensed under CC BY 2.0.

Creative Commons Now you can fly with M-PESA ! by cesar harada is licensed under CC BY-NC-SA 2.0.

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