Frugal Innovation
The term frugal owe its origin from the Hindi term “Jugaad”, which means to work-around constrained or lack resources. Frugal can be though as be thought as being economical in the consumption of resources in development, production and delivery of service of products. Innovation according to Chesbrough, Wim and Joel (2008) is the action or practice of presenting new concepts, product, or approaches. Combining the two terms, “frugal innovation” can be defined as the economical use of the available resources in an economical manner to develop new ideas, product and approaches that are affordable and useful. It can further be described as an innovation achieved with limited resources.
Some of the features of frugal innovations that distinguish it from the technology innovation include the new business model that frugal innovation adapts which targets the low income customers who are sensitive to prices changes. While the technology innovation target the high income customers in the top of the pyramid who are willing to pay more to acquire a new product. The second distinguishing feature of frugal innovations is the role the target customer play in this innovation. In frugal innovation the customers play a key role in defining what they want supplied to them. They actively participate in defining the product specification as this technology is mostly oriented towards solving social issues in the society. Unlike technology innovations where users are not actively involved in defining the product specification, in frugal innovation the bottom-up technology diffusion in used.
Furthermore frugal innovations aim at producing low priced products and service that the lowly income earners in society can afford the tend to generate enough profit with thin margins through mass production. Frugal innovations thrive well in a populace countries like India with large population of low income earners.
Frugal technology is characterized by the cooperation between the local innovators (Local Partners) and external expatriates who provide important technical support and market knowledge to ensure that the innovation minimizes the risks involved in the market.
Some of the high impact projects implemented using frugal perspective innovation include
The Solar-powered Automatic Teller Machines (ATMs)
In the urban areas people have access to ATMs located at all strategic place, but those people living in the rural area in India had to travel for a long distance in search of banks or ATMs to be able to withdraw money. The banks knew of their plight but the circumstances in the rural areas made the installation of the ATMs detrimental. Among the detrimental factors that hindered the installation of ATMs in the rural India included the cost of operating the ATMs in the rural areas was high and the lack of power supply.
Vortex Engineering thought of an economical solution to problem by developing a solar powered ATMs that facilitated the installation of these ATMs to the remotes parts of India. The unbanked population from the rural also got a chance to enjoy the banking services without having to travel for a long distance.
Since the ATMs consumed less power generated by the use of the solar panel which is a renewable source, the cost of operating the ATMs significantly decreased. The ATMs also do not need air conditioning system which made it bulk and consumed additional power. According to Vortex the initial installation cost decrease by 30-50% and the operation cost was significantly small.
The ATM had the capability to operate at a varying temperatures ranging from 0 degrees upto 50 degrees without a problem, thus making them suitable for deployment in diverse environments from the deserts with high temperatures to areas of low temperatures.
The Vortex ATMs also used in-built finger prints authorization systems and did not require users to enter their identification numbers to get access to the system. The finger print identification system became popular in the rural area since the user did not need to memorize the identification number.
Vortex ATMs have an in-built fingerprint identification system so that the user does not need to key in a personal identification number, a feature that has apparently proved very popular in rural areas.
The ATMs revolutionized banking service in India and Vortex became popular with the innovation that many countries also contracted Vortex to supply solar powered ATMs.
Figure 1: Solar powered ATM
ChotuKool refrigerator
Another Frugal Innovation in India is the introduction of ChotuKool refrigerator. Having observed how people in the rural area stored their food and the facts that tonnes of food go to waste in India daily by spoilage. The engineers came up with a small battery powered refrigerator that can be used to store the left-overs, and other perishable food stuff in the house (Zeschky, Bastian and Oliver).
They designed ChotuKool refrigerators which specifically targeted the population living in the rural areas. The refrigerator is intact, portable and do not use a compressor in its cooling system. The ChotuKool refrigerator weighs approximately 7.8 kilograms and operates on a cooling chip with a small cooling fan similar to computer cooling fans. The system uses 55 watt of power and operate on a dual power comprising of the AC or DC 12V. these refrigerator can run on battery and is further designed with very high-end insulation to remain cool for a long period when there is no power supply. Because the refrigerator consumes less than half the power consumed by regular refrigerators, the running cost of ChotuKool Refrigerator is lower.
The frugal innovation product results in saving of food wastage at homes and small business dealing with perishable goods were able to store their products in good condition for a long time thus gaining more profits. On the part of the company, the company was able to supply over one hundred thousand in their second year of its commercialization of the product.
Figure 2: ChotuKool refrigerator
Why frugal innovation would be phenomenal
The frugal innovation is going to be a significant phenomenon because of the slowing economic growth in the developed countries and huge emerging markets in the developing world that will boost demands for frugal products and services. With increasing number of environmental conscious customers and the constraining environmental conditions concerning the climate, energy and other natural resources may increase the demands for frugal products and frugal processes (Birtchnell). The vast emerging markets in developing countries who demand for low cost quality products and service would further boost the demand for frugal innovated products. Birtchnell (2011) also note that the rapidly growing number of ageing population in may require redesigning of the business models to accommodates, which the solutions lies in frugal innovations
Global impact of Frugal Innovation
In the emerging markets there is not technological innovation being observed. The products thriving in the emerging markets are frugal products for example the tata nano car, the solar powered phones by Nokia, the MPESA service in Kenya which enable users to transfer and receive money without having an account. These are just but a few frugal innovations that have greatly changed the way society live and how business is carried out (Singh, Gambhir and Dasgupta).
With the integration of the frugal innovations the enabled the development of low cost yet high quality products that serve the low income earners in various countries that have had embraced frugal products and services. The frugal innovation have the potential of saving the wanton destruction of the natural resources since most of the frugal products utilizes green energy. India and China for instance are countries where the frugal innovation have helped to boost the economy and the general living standards of its citizens through the adoption of low cost solutions (Tiwari, R., & Herstatt)
According to Radjou, Prabhu and Ahuja, (2012) the organizations that have a Frugal mindset see an opportunity in scarcity by becoming innovative and producing a low cost solution to the many customers who are in the bottom of the earning pyramid.
References
Birtchnell, Thomas. "Jugaad as systemic risk and disruptive innovation in India." Contemporary South Asia 19.4 (2011): 357-372.
Chesbrough, Henry, Wim Vanhaverbeke, and Joel West, eds. Open Innovation: Researching a New Paradigm: Researching a New Paradigm. Oxford university press, 2008.
Radjou, Navi, Jaideep Prabhu, and Simone Ahuja. Jugaad innovation: think frugal, be flexible, generate breakthrough growth. Wiley. com, 2012.
Singh, MANISHA G., A. N. U. R. A. J. Gambhir, and J. I. B. A. K. Dasgupta. "Innovation in India: affordable innovations." The Global Innovation Index (2011): 77-86.
Tiwari, Rajnish, and Cornelius Herstatt. "India-a lead market for frugal innovations? Extending the lead market theory to emerging economies." TIM/TUHH Working Paper 67 (2012).
Zeschky, Marco, Bastian Widenmayer, and Oliver Gassmann. "Frugal Innovation in Emerging Markets." Research-Technology Management 54.4 (2011): 38-45.
