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‘Jugaad’ innovation: the businesses getting creative in the face of scarcity

 
Frugal Innovation

Children play on improvised swings in Mumbai. The concept of frugal innovation is being taken up by businesses around the world. Photograph: Danish Siddiqui/REUTERS

 

Powered by Guardian.co.ukThis article titled “‘Jugaad’ innovation: the businesses getting creative in the face of scarcity” was written by Beth Gardiner, for theguardian.com on Tuesday 3rd December 2013 07.00 UTC

What do a $1 pair of glasses, a rough-terrain wheelchair built with bicycle parts and a fish farm in a shipping container have in common?

All embody a developing-world idea called frugal innovation, a notion that is beginning to catch on in wealthy countries too, influencing big companies as they look toward a future constrained by growing economic, environmental and social pressures.

Silicon Valley consultant Navi Radjou and his two co-authors borrowed the Hindi word for a clever, improvised solution for the title of their book, Jugaad Innovation, about how the West can learn from entrepreneurs in India and elsewhere who get creative in the face of scarcity.

Western corporations once led the world in new ideas, but many now churn out expensive, overly-complicated products weighed down by unnecessary features, the writers argue. In contrast, they say, innovators in poor countries keep things simple by necessity, and focus on solving real problems instead of creating demand.

“The moment you change your attitude about value, you realise you are not anymore in love with the technology or this notion of always coming up with new stuff,” Radjou said. “You try to say, ‘OK, if the customer is very frugal, how can I bring them more value in ways that makes it affordable to them?'”

He added: “Rather than reinventing the wheel and building everything from scratch again and again, you try to leverage what you already have.”

The idea called jugaad in India is known as “zizhu chuangxin” in China, “gambiarra” in Brazil and “jua kali” in Kenya, the writers say. The English translation might be DIY or “make do and mend.”

Everywhere, it is about entrepreneurs making the most of what they have, adapting existing technologies in new ways, cutting costs dramatically and focusing on the problems consumers need solved, say Radjou, a fellow at Cambridge University’s Judge Business School, and his co-authors, Judge School professor of Indian business Jaideep Prabhu and Minneapolis-based consultant Simone Ahuja, of the firm Blood Orange.

Crucially, they say, jugaad innovators also see poor consumers as a huge market to be tapped, not as an object of charity.

The publishing giant Pearson shares that view, said Katelyn Donnelly, head of the company’s Affordable Learning Fund, which is investing in startup, for-profit education companies that offer inexpensive schooling or materials to poor children in countries like India, Ghana and Kenya.

“For a company like Pearson to ignore the bottom of the pyramid is to ignore half the market,” she said. “It’s a volume game. We see that these economies are growing rapidly, they have lots of young people, a huge need to upskill their talent and a large demand.”

Frugal innovation is widespread in poor villages and cities around the world, where inventors responding to local needs have come up with easy-to-implement ideas like the clay refrigerator in India that uses evaporation instead of electricity to cool food, and eventually biodegrades.

Big, developing-world companies like India’s Tata Motors have run with the idea, slashing costs dramatically to make no-frills cars and other products that are affordable to customers who until recently would never have dreamed of owning them.

Now, say those in the field, major multi-nationals based in the west are also starting to innovate frugally. Many offer cheaper, pared-down products in emerging markets like India, China and Brazil, but they quickly realised there was also a demand for simplicity and affordability back home, where recession and worries about a natural resource crunch mean those in richer countries are feeling squeezed too.

“As we’re coming up against some hard constraints in the West, it’s becoming increasingly relevant to us,” said Kirsten Bound, head of international innovation at the innovation charity Nesta.

Some big companies are focusing on “radical affordability,” completely re-thinking designs to offer goods that sell for a small fraction of what traditional models cost.

The most frequently cited example, Bound noted, is the portable MAC line of electrocardiogram machines that GE Healthcare developed for India. Its premium ECGs were unaffordable in rural areas, which also lacked skilled technicians to operate and maintain them. The light-weight version, using a simple printer of the kind that prints bus or film tickets, costs $500 (£305), compared to as much as $10,000 for top-end, hospital-based units.

 

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