The six principles of Frugal Innovation – and why India can be a trendsetting practitioner and thought-leader in this space
In an era of resource shortages and empowered consumers, companies must grow in a responsive and sustainable manner. These best-selling authors provide frameworks, principles, and case studies of frugal innovation, with a specific call to action in India.Madanmohan Rao
India is in a unique position to harness trends like the sharing economy, maker movement, and circular economy, according to the new book Do Better With Less: Frugal Innovation for Sustainable Growth. The authors, Navi Radjou and Jaideep Prabhu, argue that with its limited natural resources and growing population, India should innovate in an environmentally sustainable manner without repeating the mistakes of the West.
The new book is an updated version of the 2015 title, Frugal Innovation: How to do More with Less (see my book review here), and includes in-depth interviews with six Indian innovators. The material is spread across 400 pages, and makes for an informative and practical read.
Navi Radjou is an author and innovation consultant based in Silicon Valley, while Jaideep Prabhu is a marketing professor at the University of Cambridge. Navi and Jaideep are also co-authors of the 2012 title, Jugaad Innovation (see my book review here).
Frugal innovation can help create an “age of opportunity” even in the “age of austerity,” former Unilever CEO Paul Pulman writes in the foreword. Customers today demand quality, value, and a sense of purpose from companies, and this can be achieved by the kind of frugal ingenuity found in many emerging economies.
Here are my key takeaways from the book, summarised in Table 1 (below) as well. See also my reviews of related books Lean Impact, A Beautiful Constraint, The Lean Startup Way, A World of Three Zeroes, Do Good, Scaling Up, Grassroots Innovation, and The Prosperity Paradox.
Need for frugal innovation
“As the world’s largest and most diverse democracy, with huge needs and mind-boggling complexity, India can truly present itself as the world’s largest living lab,” the authors urge. India can position itself as a “fertile breeding ground” for frugal solutions to “problems without borders.”
Tapping India’s strengths in frugal engineering helped Renault develop the Kwid, a compact car using modular design. Frugal engineering calls for a frugal business model as well as mindset, which is more readily found in emerging economies than resource-rich and stable Western economies where product complexity is seen as a sign of progress. Renault’s Logan car was designed in Romania, where engineers had grown up in a harsh economic environment.
Consumers today are value conscious and values conscious. Millennials increasingly want to buy products from or work in companies that are socially and environmentally responsible. Companies need to move from “do more with more” to not just “do more with less” but “do better with less.”
This goes beyond efficiency to enlightened purpose. The authors define frugal innovation as “the art and science of creating value from values.” They challenge companies to use 10X fewer resources and still deliver 10X more value – and even improve on this ratio.
Frugal innovation can help meet customer needs for quality, simplicity, affordability, and sustainability. Green products need to be sustainably sourced and easily recycled. Governments are also tightening regulations on carbon emissions for vehicles and factories.
The rise of the GAFA companies (Google, Apple, Facebook, Amazon), new players from China (Haier, Lenovo, Huawei, Alibaba, Tenent), and startups across the board are forcing traditional companies to adopt new frameworks of innovation. Consumers are becoming increasingly empowered and becoming makers and innovators in their own right. For new entrepreneurs and incumbents alike, the authors propose six principles of frugal innovation.
Principle 1: Engage and Iterate
Old models of top-down R&D can be time-consuming, inflexible, and often miss the mark; end products tend to be complex to buy, use, and maintain, and environmentally unfriendly as well. Continuous customer engagement and iteration are called for, as shown by “follow-me-home” visits by Intuit to better understand customer needs.
Toronto-based crowdsourcing site SoapBox has helped Cisco and GSK Canada systematically get ideas and ratings; SmartScan uses social media mining for customer insights. Affinova provides algorithmic tools for iterative design along with customer feedback and validation. Companies like Caterpillar have customer immersion labs for quick feedback on prototypes.
GSK is relying not just on blockbuster drugs but on more insights from healthcare institutions and pharmacies (“a nimble fleet of destroyers, rather than two or three battleships”). Cambridge University’s Inclusive Design Group has tools to better understand needs of customers with disabilities.
Health insurer Aetna and coaching provider Newtopia offer personalised advice based on genetic profiles. Arla Foods restructured its R&D unit into smaller networked teams. Lego has a cross-functional innovation governance group. “No business model is set in stone. Every model needs to be fine-tuned continuously, depending on ever-changing customer requirements and market conditions,” the authors caution.
People should be hired based on willingness and ability to collaborate; scouts can play a valuable role in getting market insights, the authors advise. GE and Renault have tapped insights from markets like India.
“Seek inspiration from startups,” the authors add; they lack legacy issues of incumbents and are “hungry to make their mark.” Startups can be actively engaged in partnerships, and companies can inculcate an internal startup mentality, eg. GE FastWorks principles and tools.
Signify uses LED sensors to extract patterns of light exposure in homes. “India is poised to become the world’s largest ‘clean lighting’ market, already producing domestically over one billion LED lamps,” the authors explain.
Vishal Rao created a voice prosthesis that costs less than $1; it helps throat cancer patients regain the ability to speak. The inserter was designed by a toymaker from Channapatna; the team included material science experts and mould makers. “If innovation is the passion, compassion is the purpose,” according to Vishal.
Principle 2: Flex your assets
Frugal approaches can be applied across the asset chain: manufacturing, distribution, services, and even people. Volkswagen uses modular design for smaller plants with versatile production capabilities. Tata Steel’s ‘H1sarna’ steel production approach significantly reduces some energy-intensive processes. BMW is using ‘light-weighting’ approaches for electric cars with aluminum and carbon fibre instead of steel.
BAE systems uses 3D printing for jet components. GE Additive has nine centres around the world, including Bengaluru, for additive technology services. Low-cost industrial robots are being used in Japanese factories, with greater productivity, safety, quality and agility.
Quirky’s machine shops help rapid prototyping of consumer products based on crowdsourced ideas. Shapeways’ 3D printing factories offer a ‘personal manufacturing service.’ GE, along with Local Motors, has created its micro-factory called FirstFuild to co-create next-gen consumer appliances. Levi Strauss has a technique called future-led execution (FLX) to create designs in jeans with no chemicals and less labour.
Overcoming the challenges of multi-tiered supply chains, Cemex has integrated its supply chain and customer relationship systems. This resulted in lower freight costs and fewer calls to customer care centres. Target uses RFID to improve supply chain visibility.
EasyJet and RyanAir have brought frugal services models to the airline industry. Amazon flexed its platforms and experiences from books to music, and onward to cloud services and Alexa.
WL Gore and Associates keeps factory sizes down to 150 workers to cut down on bureaucracy and foster a sense of community. It also has a lattice organisation where teams are self-forming. “Smart simplicity” is the way to go, according to Yves Morieux of BCG.
Near-shoring and re-shoring of manufacturing are picking up, as seen by Zara (clothing), NCR (ATMs), and Caterpillar (excavators). Corner shops play an important distributor role in Kenya (for M-Pesa) and India (Unilever Project Shakti, Essilor Eye Mitra).
Digitisation of assets can lead to ‘exponential agility,’ according to Lopez Research. Harley Davidson’s motorcycle factories are ‘self-aware’ and ‘self-regulating.’ Bayer has adopted flexible manufacturing via a ‘plug-and-produce’ philosophy. Ford partnered with TechShop to convert a warehouse into an innovation playground for solutions on smart mobility.
Haier operates as a collaborative network of 3,000 cross-functional teams known as ‘micro-enterprises.’ They spot and capitalise on unusual uses of their products, eg. a washing machine that can clean potatoes for farmers.
“Decentralised energy production can be a boon for India, where 300 million people lack electricity and over 650 million citizens lack access to reliable electricity,” the authors observe. This can help overcome the challenges of centralised grid systems, and involve consumers as energy producers and distributors.
India’s Triton Foodworks is promoting hydroponics for food sustainability and independence. Its smart plant factories use precision farming with sensors and AI, and supply quality produce to quick-service restaurants. The founders also recommend other practices like use of water-sustainable crops such as millets, and even plant-based meats.
Principle 3: Create sustainable solutions
In the face of climate change, environmental sustainability includes less use of energy and natural resources, ethical sourcing, switching to renewable energy, sending zero waste to landfills, and active recycling and upcycling.
“The second-best time to act against climate change is now; the best has already passed,” according to Jose Domecq, CEO of Acciona. “If necessity is the mother of invention, then scarcity is its grandmother,” the authors evocatively add.
Flooring and carpet solutions company Tarkett uses oyster and walnut shells, closed-loop water systems, and re-purposes industrial waste. It also recycles some products of other manufacturers. The Ellen MacArthur Foundation has initiated the Circular Economy 100 programme to drive conservation via reuse of materials.
Levi’s Waste<Less jeans are made of 20 percent recycled consumer waste, including eight plastic bottles each. Its Wellthread collection is meant to be especially durable, the opposite of disposable fast fashion.
Apple’s 2018 MacBook Air laptops are manufactured with 100 percent recycled aluminium. French postal company La Poste has launched RecyGo to collect and recycle office waste. Japanese architect Shigeru Ban has repurposed existing materials to build cheap houses for communities struck by natural disasters.
Companies like Timberland are pursuing “value spirals” by creating an environmental index called the Higg Index. Such benchmarking can improve sustainable design and supply chain practices in the apparel industry, which is the second largest polluter in the world.
Unilever has launched vending machines to dispense dishwashing liquid into empty bottles that consumers bring along themselves. The company also has an ambitious Sustainable Living Plan. Marks & Spencer plans to source 100 percent of its energy from renewable sources by 2020.
Companies can go a step further and not just have zero impact but positive impact on the environment. Tata Tetley’s tea factory in the UK recycles all its waste; tea dust is given to farmers for use as animal feed. Tata Coffee turns coffee waste into bio-fuel. Tata Chemicals GeoGreen manure is made from sugar mills’ waste. Tata Power upcycles fly ash into cement, bricks and highway materials.
The sharing economy includes companies like Project Box, which lets users rent tools like power drills. BMW’s DriveNow and Daimler’s Car2Go are corporate entrants into the sharing economy; their merger has been approved by the European Commission.
FIAM Italia has a team of designers to convert glass waste into beautiful works of art. “Artists don’t have limits, they know how to turn constraints into creative opportunities and integrate sustainability and beauty,” explains CEO Daniele Livi.
“India could gain much if it were to adopt the circular economy. Each day, India generates over 100,000 tonnes of solid waste. Only 30 percent of India’s waste water is recycled,” the authors observe. The ‘lab to landfill’ approach must be replaced by ‘cradle to cradle.’
Rimagined, founded by Shailaja Rangarajan, aims to make upcyling ‘cool’ by converting waste into beautiful consumer products. India is growing too fast, and having more is seen as a measure of success, Shailaja cautions. Though the circular economy has always been a part of traditional Indian lifestyle, the rise in spending power is challenging this, but needs to be creatively tapped.
The company promotes inclusive and sustainable growth by employing underprivileged women; it collects waste from manufacturers, retailers, apartment complexes, and waste aggregators. “The worst thing to waste is talent,” Shailaja explains. “The USP of India is the traditional craft and the extremely gifted artisans. It has become essential to contemporarise this traditional craftsmanship to ensure the sustenance of artisans,” she urges. “Repackaging the old and presenting it to a new audience will open a whole new market for the culture and tradition of India,” she sums up.
Principle 4: Shape customer behaviour
While many customers already embrace frugal principles, more need to be nudged along the way to increase awareness and motivation. Full-cycle carbon reduction needs to include consumption patterns, not just production. People need to not just consume less, but consumer better, the authors urge.
Nest gives consumers monthly energy reports, app-based controls, and incentives to reduce energy usage during peak hours. Opower even uses social pressure tactics in addition to persuasion to get consumers to use energy better than their neighbours. IKEA uses gamification to promote car-sharing among its customers.
The Care4Today app helps patients stay on schedule with their medication. GlowCap bottles have caps that glow, play music, and even alert designated friends when patients forget to take their pills.
GetSmarter and UpGrad improve learning outcomes via social learning in tight cohorts rather than large MOOCs. Progressive Insurance does not just punish drivers for bad behaviour but rewards good drivers, thanks to monitoring devices on vehicle dashboards. Simple Bank (bought by BBVA) helps customers set financial goals and milestones and track them, thus helping them manage money better.
Carrefour is keeping up with trends like consumers bringing their own shopping bags; it has redesigned its trolleys to have hangers. Interface offers carpets as a service; Signify offers lightning as a service.
Sonia Manchanda, founder of Spread Design (and earlier IDIOM and DREAM:IN), advocates the use of “designpreneurship” for better business and social impact. The company has set up the Design Barn as an independent design centre and incubator.
It designed the Khanavali food court at the Organics and Millets International Trade Fair in Bengaluru, as well as the social media campaign for the fair to promote sustainable and nutritious foods.
Principle 6: Co-create with other prosumers
Consumers increasingly want personalised solutions and conversations with brands. Some hack into existing products and improve them, while many want to go even further and design, build and sell products themselves, the authors observe. It is therefore important for companies to engage with “MEcosystems” that are consumer centric.
Customers are more than “wallets on feet,” and want to contribute to the entire lifecycle of the products they consume. They value products much more when they are involved in their creation or assembly (the ‘IKEA effect’), and have more emotional investment and creative attachment to them.
French retailer Auchan worked with crowdsourcing platform Quirky to get product ideas from customers, and convert winning ideas into products. The co-creation platform Decathlon Creation allows users to suggest improvements to existing products and propose new products.
Home improvement chain ADEO makes house calls to see how products are used, and has launched open makerspaces in Paris and Lille. These makerspaces are becoming an “incubator of hardware startups,” as “do it yourself” becomes “do it with others,” according to corporate training head Stephane Calmes.
India’s 3D printing services company Imaginarium adds a high-tech touch to traditional craftsmanship in fields like jewellery. The Maker Faire is promoting a movement of social “tinkerers, not just thinkers.”
TechShops, an advanced version of FabLabs, has helped create the Embrace infant warmer and credit-card reader Square. La Ruche qui dit Oui (The Hive that says Yes) helps collective buying of fresh produce from farmers in over 1,500 hives in nine European countries.
Starbucks has crowdsourced customer ideas from its site MyStarbucksIdea.com, such as providing a pump for bicyclists. Crowdfunding platforms are spawning the “middle-class Medici.”
It is important not just to identify customer needs but sense their dreams, the authors urge. Customers play an important role as dreamers (Volkswagen getting futuristic ideas from China), validators (Hasbro and customer voting on rules for board games), ideators (Lego opening up toy robot code), makers (Kimberly-Clark grants for mompreneurs), evangelists (Intuit brand advocates), sales agents (Avon door-to-door sales staff), and fixers (giffgaff telecom expert users).
Frontier Markets, founded by Ajita Shah, offers solar energy solutions to over 500,000 low-income households in India, and has built a grassroots network of over 5,000 entrepreneurs. They help design, sell, and maintain the clean-tech solutions. The company measures its impact in social, economic, and environmental terms, eg. number of households with clean energy, number of entrepreneurs, productivity gains, kerosene lanterns replaced.
Specially-designed products with local insights include solar street lights, solar-powered MP3 players, high-power systems for poultry farmers, and high-beam torches to help farmers detect animals that eat crops. Local women entrepreneurs, known for their empathy and emotional connect, also upsell other products such as finance and home appliances.
Principle 6: Make innovative friends
Hyper-collaboration with partners, suppliers, startups, government and even competitors is another pillar of frugal innovation. For example, tech giants from around the world are setting up innovation centres in Silicon Valley.
GE has partnered with crowdsourcing platform Quirky to conceive of and develop products like the Aros air-conditioner. It hosts innovation challenges through crowdsourcing platform NineSigma, such as Healthymagination for tackling breast cancer. It teamed up with TechShop to launch GE Garages in countries like Nigeria.
GE Ventures’ portfolio includes startups like Veniti (gene analytics), Stem (energy storage), and Mocana (IoT security). “Startups’ enthusiasm is contagious,” according to former chief marketing officer Beth Comstock. “We are learning to scale down first in order to scale up faster,” she adds, referring to its FastWorks principles and tools.
Adversity fuels the creativity of entrepreneurs. “Unlike scientists, they create breakthrough solutions out of sheer personal necessity,” explains French consultant Jacques Birol. Frustration can lead to motivation and even inspiration.
Entrepreneurs have “sponge-like minds,” according to Liz Wiseman, author of Rookie Smarts. Imbibing entrepreneurial culture from startups makes large firms more open, agile and risk tolerant, and increases their internal “clock speed,” the authors add.
American Express Ventures is investing in startups that help manage money better. Pearson’s Catalyst for Education selects 10 promising startups each year to work with domain experts; the company wants to become the “Netflix of education.” Hotel chain Accor is speeding up the way it engages with SMBs and startups, via speed-dating pitch events and simplified supplier contracts. SNCF, Orange, Total, Air Liquide and Michelin have teamed up to launch Ecomobility Ventures, Europe’s first multi-corporate investment fund, to invest in mobility startups.
Ford has set up makerspaces in Nanjing and Chennai. Bosch is a supplier which thinks globally; it developed the core engine for the Tata Nano and is being sought after by German carmakers as well for such frugal innovation insights.
Industrial symbiosis is practiced by companies like Statoil and Gyproc, to exchange material waste and byproducts. The UK has set up the National Industrial Symbiosis Programme to reduce landfill waste and carbon emissions.
The FLOOW2 B2B marketplace helps companies share under-utilised equipment, services and skills, eg. hospital equipment. Hybrid value chains bring together MNCs, CSR initiatives, philanthropists, NGOs and social enterprises.
Open sourcing technology is another way to grow entire markets, as seen in Google’s Android and Tesla Motors’ electric car technology. Fee-based licensing is not the only way to monetise IP. Mumbai-based Makers’ Asylum, founded by Vaibhav Chhabra, hosts the annual STEAM School maker meet. Its diverse members foster a collaborative and non-judgmental culture. “Judgment and cynicism kill innovation,” Vaibhav observes.
The makerspace has expanded to Delhi and Jaipur (textile artisans) as well. Its partners include Airbus Foundation, Dussault Systems, Godrej, and Deloitte. The maker movement is at an inflexion point in India, according to Vaibhav. The central government is supporting tinker labs, and the Kerala government is promoting FabLabs.
Interesting projects created at Makers’ Asylum include BAT (wristwear for the blind), GreenLine (waste management system), Bullseye (workshop to help children overcome bullying), and Ma-kudo (teaching maths through dance). Entrepreneurs leveraging the makerspace include Studio Emergence (parametric installations), Black Canvas (leather goods), and Plastic Maker Hubs (upcycled products from plastic waste).
Other projects address the needs of the disabled, such as prosthetics and electric wheelchairs. Trends to drive are the use of advanced design tools to preserve traditional handicrafts, according to Vaibhav.
The road ahead
The authors call for a global innovation partnership for frugal growth. This must include organisational culture transformation, along with strategic initiatives. Such transformation includes the ‘what’ (bold goals, organisational leadership, measurable KPIs), ‘how’ (business models, mindset), and ‘why’ (purpose, incentives).
For example, Marks & Spencer pushed its sustainability strategy by arguing that there is no Plan B. Danone wants to be the largest company in the world committed to ‘doing well while doing good;’ it uses the Danprint tool to track the carbon footprint of entire product lifecycles.
Siemens has formulated its frugal innovation strategy as SMART (simple, maintenance-friendly, affordable, reliable, timely). Autodesk has developed tools for lifecycle assessment of building materials to assess full environmental impact. Air Liquide has set up the i-Lab to connect intrapreneurs, engineers, artists, and sociologists for inter-disciplinary insights.
Aetna’s Innovation Labs act as the “innovation command unit” for med-tech solutions. It promotes wellness tracking for its own employees so they can better understand it and pitch it to its customers. Healthcare should be based on “pay if it works” and not “pay first and pray it works,” according to the authors.
The Collaborating Centre on Sustainable Consumption and Production in Germany conducts visioning exercises for senior managers. A number of academic and industry alliances are taking on the cause of sustainable innovation and growth, such as Stanford-India BioDesign Programme and University of Cambridge’s Institute for Sustainability Leadership.
The authors trace variations of frugal innovation around the world, such as jugaad (India), jiejian chuangxin (resource-saving innovation, in China), and kanju (make do, in Africa). In sum, frugal innovation helps creativity emerge from the bottom upwards.
Companies must be willing to overhaul every function, rethink HR policies, and shift their entire business model and mindset from doing more for more or less with less, to doing better with less, the authors sign off.