Frugal innovation

Last updated

Frugal innovation or frugal engineering is the process of reducing the complexity and cost of a good and its production. Usually this refers to removing nonessential features from a durable good, such as a car or telephone, in order to sell it in developing countries. Designing products for such countries may also call for an increase in durability [1] and, when selling the products, reliance on unconventional distribution channels. [2] When trying to sell to so-called "overlooked consumers", firms hope volume will offset razor-thin profit margins. [2] Globalization [3] and rising incomes in developing countries may also drive frugal innovation. [4] Such services and products need not be of inferior quality but must be provided cheaply. [5] While frugal innovation has been associated with good-enough performance, in some sectors such as in healthcare, frugal innovation must offer maximum performance without compromising on quality. [6]

Contents

In May 2012 The Financial Times newspaper called the concept "increasingly fashionable". [7]

Several US universities have programs that develop frugal solutions. Such efforts include the Frugal Innovation Lab at Santa Clara University and a two quarter project course at Stanford University, the Entrepreneurial Design for Extreme Affordability program. [8]

Variety of terms

Many terms are used to refer to the concept. "Frugal engineering" was coined by Carlos Ghosn, then joint chief of Renault and Nissan, who stated, "frugal engineering is achieving more with fewer resources." [9]

In India, the words "Gandhian" [10] or " jugaad ", Hindi for a stop-gap solution, [11] are sometimes used instead of "frugal". Other terms with allied meanings include "inclusive innovation", "catalytic innovation", "reverse innovation", and "bottom of the pyramid (BOP) innovation", etc. [12]

At times this no frills approach can be a kind of disruptive innovation. [13]

History

Spotlighted in a 2010 article in The Economist , [14] the roots of this concept may lie in the appropriate technology movement of the 1950s, [12] although profits may have been first wrung from underserved consumers in the 1980s when multinational companies like Unilever began selling single-use-sized toiletries in developing countries. [2] Frugal innovation today is not solely the domain of large, multinational corporations: small, local firms have themselves chalked up a number of homegrown solutions. [15] While General Electric may win plaudits for its US$800 EKG machines, cheap cell phones made by local, no-name companies, [11] [15] and prosthetic legs fashioned from irrigation piping, [16] are also examples of frugal innovation.

The concept has gained popularity in the South Asian region, [3] particularly in India. [1] [17] The US Department of Commerce has singled out this nation for its innovative achievements, saying in 2012, "there are many Indian firms that have learned to conduct R&D in highly resource-constrained environments and who have found ways to use locally appropriate technology..." [18]

In the process of the COVID-19 crisis, frugal strategies have been adopted by Western companies for the handling of increased uncertainty. Specific customer needs can be met with frugal solutions that perfectly fit an exceptional (temporal) situation. [19]

Notable innovations

An Indian woman using her Nokia 1100 Using Mobile Phone 0251.JPG
An Indian woman using her Nokia 1100

Frugal innovation is not limited to durable goods such as the GE US$800 EKG machine, Reliance Jio's JioPhone or the US$100 One Laptop Per Child but also includes services such as 1-cent-per-minute phone calls, mobile banking, off-grid electricity, and microfinance. [3]

ChotuKool fridge
A tiny refrigerator sold by Indian company Godrej, the ChotuKool may have more in common with computer cooling systems than other refrigerators; it eschews the traditional compressor for a computer fan. [2] (It may exploit the thermoelectric effect.)
Foldscope
Designed to cost no more than a dollar, the Foldscope is a tough origami microscope assembled from a sheet of paper and a lens. [20] The Stanford engineer responsible more recently developed a string-and-cardboard contraption that can function similarly to $1,000 centrifuges. [21]
Jaipur foot
A low-cost prosthetic developed in India, the Jaipur foot costs about $150 to manufacture and includes improvisations such as incorporating irrigation piping into the design to lower costs. [16]
Mobile banking
Mobile banking solutions in Africa, like Safaricom's M-Pesa, allow people access to basic banking services from their mobile phones. [22] Money transfers done through mobiles are also much cheaper than using a traditional method. [23] While basic banking can be done on a mobile alone, deposits and withdrawals of cash necessitate a trip to a local agent. [24]
Nokia 1100
Designed for developing countries, the Nokia 1100 was basic, durable, and–besides a flashlight–had few features other than voice and text. [25] Selling more than 200 million units only four years after its 2003 introduction [25] made it one of the best selling phones of all time. [26]
Sorghum beer
In Africa, several companies including SABMiller and Diageo, following in the footsteps of local home brewers, [27] have made beer more affordable by using sorghum or cassava in place of malting barley and reducing packaging costs by using kegs instead of bottles. [28]
Solar light bulb
In some Philippine slums, solar skylights made from one-liter soda bottles filled with water and bleach can provide light equivalent to that produced by a 55 watt bulb and may reduce electricity bills by US$10 per month. [29]
Tata Nano
Designed to appeal to the many Indians who drive motorcycles, the Tata Nano was developed by Indian conglomerate Tata Group and is the cheapest car in the world. [30]
Fold-Illuminator
A paper-based device designed to support biochemistry and biotechnology applications. The Fold-Illuminator incorporates a USB powered heating element to incubate chemical reactions. It also incorporates LED lights and an acrylic filter to support fluorescence visualization. The device is modular such that only the fluorescent illuminator can be utilized for a cost of ~US$5, with an additional ~US$4 heating element add-on. This low-cost device provides the utility equivalent to laboratory equipment that cost >$10,000, with the added benefits of portability. Portions of the device can be recycled or composted while the electronic components can be reused. [31]
Lung ventilator
Swiss coffee machine manufacturer Thermoplan developed in spring 2020 a functional ventilator within four weeks on request of Starbucks. The simplified machine used 80% coffee machine components and could be mass-produced in up to 800 units per week in the company’s production facility at a quarter of the cost of an original ventilator. Unlike conventional devices, these are battery-powered, easy to use, and compact, hence, be used as a mobile unit in an ambulance. [32]

In the media

In 2014, Navi Radjou delivered a talk at TED Global on frugal innovation. [33]

In 2015, Navi Radjou and Jaideep Prabhu coauthored the book Frugal Innovation: How to Do More With Less , published worldwide by The Economist . The book explains the principles, perspectives and techniques behind frugal innovation, aiming to help managers to profit from the great changes ahead.

See also

Related Research Articles

<span class="mw-page-title-main">Nokia</span> Finnish multinational telecommunications, technology and electronics corporation

Sony Mobile Communications Inc. was a multinational telecommunications company founded on October 1, 2001, as a joint venture between Sony Corporation and Ericsson. It was originally incorporated as Sony Ericsson Mobile Communications, and headquartered in London, England, until Sony acquired Ericsson's share in the venture on February 16, 2012. On April 1, 2021, Sony integrated its electronics businesses including Sony Mobile into one company called Sony Corporation.

<span class="mw-page-title-main">Corning Inc.</span> American manufacturer of glass & ceramics

Corning Incorporated is an American multinational technology company that specializes in specialty glass, ceramics, and related materials and technologies including advanced optics, primarily for industrial and scientific applications. The company was named Corning Glass Works until 1989. Corning divested its consumer product lines in 1998 by selling the Corning Consumer Products Company subsidiary to Borden.

A collect call in Canada and the United States, known as a reverse charge call in other parts of the English-speaking world, is a telephone call in which the calling party wants to place a call at the called party's expense. In the past, collect calls were only possible as an operator-assisted call, but with the introduction of computer-based telephone dialing equipment, it is now possible to place a collect call without using an operator, which is called automated operator services (AOS) as opposed to Home Country Direct (HCD).

In economics and industrial design, planned obsolescence is a policy of planning or designing a product with an artificially limited useful life or a purposely frail design, so that it becomes obsolete after a certain pre-determined period of time upon which it decrementally functions or suddenly ceases to function, or might be perceived as unfashionable. The rationale behind this strategy is to generate long-term sales volume by reducing the time between repeat purchases. It is the deliberate shortening of a lifespan of a product to force people to purchase functional replacements.

<span class="mw-page-title-main">TCL Technology</span> Chinese multinational electronics company

TCL Technology is a Chinese electronics company headquartered in Huizhou, Guangdong Province. It designs, develops, manufactures, and sells consumer products including television sets, mobile phones, air conditioners, washing machines, refrigerators, and small electrical appliances. In 2010, it was the world's 25th-largest consumer electronics producer. It became the second-largest television manufacturer by market share by 2019.

<span class="mw-page-title-main">Nokia 1100</span> 2003 mobile phone produced by Nokia

The Nokia 1100 is a basic GSM mobile phone produced by Nokia. Over 250 million 1100s have been sold since its launch in late 2003, making it the world's best selling phone handset and the best selling consumer electronics device in the world at the time. The model was announced on 27 August 2003 and was discontinued in September 2009.

M-learning, or mobile learning, is a form of distance education where learners use portable devices such as mobile phones to learn anywhere and anytime. The portability that mobile devices provide allows for learning anywhere, hence the term "mobile" in "mobile learning." M-learning devices include computers, MP3 players, mobile phones, and tablets. M-learning can be an important part of informal learning.

Mobile banking is a service provided by a bank or other financial institution that allows its customers to conduct financial transactions remotely using a mobile device such as a smartphone or tablet. Unlike the related internet banking it uses software, usually called an app, provided by the financial institution for the purpose. Mobile banking is usually available on a 24-hour basis. Some financial institutions have restrictions on which accounts may be accessed through mobile banking, as well as a limit on the amount that can be transacted. Mobile banking is dependent on the availability of an internet or data connection to the mobile device.

The term mobile commerce was originally coined in 1997 by Kevin Duffey at the launch of the Global Mobile Commerce Forum, to mean "the delivery of electronic commerce capabilities directly into the consumer’s hand, anywhere, via wireless technology." Many choose to think of Mobile Commerce as meaning "a retail outlet in your customer’s pocket."

Safaricom PLC is a listed Kenyan mobile network operator headquartered at Safaricom House in Nairobi, Kenya. It is the largest telecommunications provider in Kenya, and one of the most profitable companies in the East and Central Africa region. The company offers mobile telephony, mobile money transfer, consumer electronics, ecommerce, cloud computing, data, music streaming, and fibre optic services. It is most renowned as the home of M-PESA, a mobile banking SMS-based service.

In economic literature, the term "aftermarket" refers to a secondary market for the goods and services that are 1) complementary or 2) related to its primary market goods. In many industries, the primary market consists of durable goods, whereas the aftermarket consists of consumable or non-durable products or services.

<span class="mw-page-title-main">Nokia 6300</span> Cell phone model

The Nokia 6300 is a mobile telephone handset produced by Nokia. It was announced on 28 November 2006 and released in January 2007. This model was assembled in several factories, including Jucu plant, near Cluj, in Romania.

<span class="mw-page-title-main">Mobile phone</span> Portable device to make telephone calls using a radio link

A mobile phone is a portable telephone that can make and receive calls over a radio frequency link while the user is moving within a telephone service area, as opposed to a fixed-location phone. The radio frequency link establishes a connection to the switching systems of a mobile phone operator, which provides access to the public switched telephone network (PSTN). Modern mobile telephone services use a cellular network architecture and therefore mobile telephones are called cellphones in North America. In addition to telephony, digital mobile phones support a variety of other services, such as text messaging, multimedia messagIng, email, Internet access, short-range wireless communications, satellite access, business applications, video games and digital photography. Mobile phones offering only basic capabilities are known as feature phones; mobile phones which offer greatly advanced computing capabilities are referred to as smartphones.

<span class="mw-page-title-main">M-Pesa</span> Mobile banking service

M-PESA is a mobile phone-based money transfer service, payments and micro-financing service, launched in 2007 by Vodafone and Safaricom, the largest mobile network operator in Kenya. It has since expanded to Tanzania, Mozambique, DRC, Lesotho, Ghana, Egypt, Afghanistan, and South Africa. The rollouts in India, Romania, and Albania were terminated amid low market uptake. M-PESA allows users to deposit, withdraw, transfer money, pay for goods and services, access credit and savings, all with a mobile device.

<span class="mw-page-title-main">Feature phone</span> Mobile phone that is not a smartphone

A feature phone is a type or class of mobile phone that retains the form factor of earlier generations of mobile telephones, typically with press-button based inputs and a small non-touch display. They tend to use an embedded operating system with a small and simple graphical user interface, unlike large and complex mobile operating systems such as Android from Google or iOS from Apple. Their functions are limited compared to smartphones, which integrate the phone with an internet communications device.

Navi Radjou is an Indian born scholar and an innovation and leadership advisor based in Silicon Valley. He is a Fellow of Judge Business School at the University of Cambridge and has spoken and written widely on the theme of frugal innovation.

FreedomPop is a wireless Internet and mobile virtual network operator based in Los Angeles, California. The company provides "free" IP mobile services including free data, text and VoIP and sells mobile phones, tablets and broadband devices for use with their service. It was founded by CEO Stephen Stokols and Steven Sesar, and owned and operated by STS Media Inc until June 2019 when it was successfully sold. FreedomPop uses networks of T-Mobile and AT&T in the United States, Three in the UK, Yoigo in Spain, and Telcel in Mexico.

M-Kopa is an African connected asset financing platform that provides underbanked customers in Africa to essential products including solar lighting, televisions, fridges, smartphones & financial services. M-Kopa was launched commercially in 2012 and is headquartered in Nairobi. The company is currently operating in Kenya, Nigeria and Uganda.

<span class="mw-page-title-main">Manu Prakash</span> Biophysicist

Manu Prakash is an Indian scientist who is a professor of bioengineering at Stanford University. Manu was born in Meerut, India. He is best known for his contributions to the Foldscope and Paperfuge. Prakash received the MacArthur Fellowship in September 2016. He and his team are also working on a water droplet based computer in Stanford University. His work focuses on frugal innovation that makes medicine, computing and microscopy accessible to more people across the world.

References

  1. 1 2 Fontanella-Khan, James (May 19, 2011). "Supply chain: 'Frugal engineering' heads push into manufacturing". Financial Times. The Financial Times Ltd. Retrieved June 21, 2012.
  2. 1 2 3 4 Bellman, Eric (Oct 20, 2009). "Indian Firms Shift Focus to the Poor". The Wall Street Journal. pp. A.1.
  3. 1 2 3 Bhatti,Y. Khilji, S. & Basu, R. 2013. Frugal Innovation. In Globalization, Change and Learning in South Asia. Edited by Khilji, Shaista & Rowley, Chris. UK: Chandos Publishing.
  4. ↑ Shibulal, SD (May 13, 2011). "Emerging economies: outside-in and inside-out". livemint.com. HT Media. Retrieved June 24, 2012.
  5. ↑ Bhatti, Yasser (March 19, 2012). "About Frugal Innovation Research". Frugal Innovation Portal. Said Business School, University of Oxford. Retrieved Nov 19, 2012.
  6. ↑ Bhatti, Y., Basu, R. R., Barron, D., & Ventresca, M. J. (2018). Frugal Innovation: Models, Means, Methods. Cambridge University Press.
  7. ↑ Crabtree, James. "More with less." FT.com. May 19, 2012.
  8. ↑ For Santa Clara University's lab, see "About Frugal Innovation". Santa Clara University. Retrieved June 20, 2012. For Stanford University's course, see "Hasso Plattner Institute of Design at Stanford: Entrepreneurial Design for Extreme Affordability". Stanford University Institute of Design. Stanford University. 2010. Archived from the original on July 13, 2012. Retrieved June 20, 2012.
  9. ↑ Nirmalya Kumar, Phanish Puranam (2011). India Inside. Harvard Business Press. p. 114. ISBN   9781422142400.
  10. ↑ Platt, John (February 2010). "Introducing Gandhian Engineering". The Institute. IEEE. Retrieved June 20, 2012.
  11. 1 2 "Asian innovation". The Economist. The Economist Newspaper Limited. Mar 24, 2012. Retrieved June 20, 2012.
  12. 1 2 Bhatti, Yasser Ahmad and Ventresca, Marc. 2012. The Emerging Market for Frugal Innovation: Fad, Fashion, or Fit? (January 15, 2012) Available at SSRN: http://ssrn.com/abstract=2005983
  13. ↑ Kelland, Kate (Jun 20, 2012). "Analysis: Healthcare sees emerging future in frugal innovation". reuters.com. Thomson Reuters. Archived from the original on June 21, 2012. Retrieved June 20, 2012.
  14. ↑ "First break all the rules: The charms of frugal innovation". The Economist. The Economist Newspaper Ltd. Apr 15, 2010. Retrieved July 6, 2012.
  15. 1 2 Woodward, David. "Plain and simple". Director Magazine. Director Publications. Archived from the original on February 3, 2014. Retrieved July 6, 2012.
  16. 1 2 Magnier, Mark (February 8, 2012). "India group's prosthetic device a boon for thousands of amputees". Los Angeles Times. Retrieved June 24, 2012.
  17. ↑ Tiwari, Rajnish and Herstatt, Cornelius (2012): "Assessing India's lead market potential for cost-effective innovations", Journal of Indian Business Research, Vol. 4 Iss: 2, pp.97 - 115
  18. ↑ "U.S. Commerce Secretary John Bryson Visits Jaipur Foot". US Department of Commerce. March 28, 2012. Retrieved June 24, 2012.
  19. ↑ Fasnacht, Daniel (2022-01-01). "Agile and Frugal Strategies for the Handling of Increased Uncertainty". Rochester, NY. SSRN   3963271.{{cite journal}}: Cite journal requires |journal= (help)
  20. ↑ Roberts, Sandy (March 16, 2014). "Origami Microscope for Just 50 Cents". makezine.com. Maker Media, Inc. Retrieved 25 May 2014.
  21. ↑ Yi, Hannah (March 19, 2017). "A 20-cent lifesaving tool that's made with only paper, string, and PVC pipe". Quartz. Atlantic Media. Retrieved 30 March 2017.
  22. ↑ Lahiri, Tripti (June 6, 2012). "Q&A: Why the West Needs 'Jugaad' Creativity". WSJ's Indiarealtime blog. Dow Jones & Company Inc. Retrieved June 23, 2012.
  23. ↑ "The power of mobile money". The Economist. The Economist Newspaper Limited. Sep 24, 2009. Retrieved June 23, 2012.
  24. ↑ For transferring money with only a mobile, see "Send (Transfer) Money". Safaricom. Retrieved June 23, 2012.
    • For paying bills with only a mobile, see "Pay Bill". Safaricom. Retrieved June 23, 2012.
    • For necessity of visiting an agent when depositing money, see "Deposit Cash to Your Account". Safaricom. Retrieved June 23, 2012.
    • For necessity of visiting an agent when withdrawing money, see "Withdraw Cash". Safaricom. Retrieved June 23, 2012.
  25. 1 2 Virki, Tarmo (May 3, 2007). "Nokia's cheap phone tops electronics chart". reuters.com. Thomson Reuters. Retrieved June 20, 2012.
  26. ↑ Herrman, John (Oct 19, 2010). "The Most Popular Phone in the World". gizmodo.com. Gawker Media. Retrieved June 23, 2012.
  27. ↑ "Beer in Africa: From lumps to lager; The race to slake a continent's thirst". The Economist. Mar 24, 2012. Retrieved August 12, 2012.
  28. ↑ "SABMiller strives to make beer affordable in Africa". reuters.com. Thomson Reuters. Mar 13, 2012. Archived from the original on April 20, 2012. Retrieved August 12, 2012.
  29. ↑ Orendain, Simone (December 28, 2011). "In Philippine Slums, Capturing Light In A Bottle". NPR. Retrieved June 20, 2012.
  30. ↑ Meredith, Robyn (Apr 19, 2007). "The Next People Car". Forbes. Yahoo! - ABC News Network. Retrieved June 6, 2012.
  31. ↑ Logan R. Burrington, Emran Baryal, Katherine Hui, Emmett Lambert, Sarah T. Harding, Javin P. Oza (June 21, 2021). "The Fold-Illuminator: A low-cost, portable, and disposable incubator-illuminator device". Synthetic and Systems Biotechnology. 6 (2): 95–101. doi:10.1016/j.synbio.2021.04.003. PMC   8099501 . PMID   33997359.{{cite journal}}: CS1 maint: multiple names: authors list (link)
  32. ↑ Fasnacht, Daniel (2022-01-01). "Agile and Frugal Strategies for the Handling of Increased Uncertainty". Rochester, NY. SSRN   3963271.{{cite journal}}: Cite journal requires |journal= (help)
  33. ↑ "Navi Radjou: Creative problem solving in the face of extreme limits". TED.com. Retrieved 17 January 2015.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.