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
In economics, a durable good or a hard good or consumer durable is a good that does not quickly wear out or, more specifically, one that yields utility over time rather than being completely consumed in one use. Items like bricks could be consid ...
, such as a car or telephone, in order to sell it in
developing countries
A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreem ...
. Designing products for such countries may also call for an increase in durability
and, when selling the products, reliance on unconventional
distribution Distribution may refer to:
Mathematics
*Distribution (mathematics), generalized functions used to formulate solutions of partial differential equations
* Probability distribution, the probability of a particular value or value range of a vari ...
channels.
[ When trying to sell to so-called " overlooked consumers", firms hope volume will offset razor-thin ]profit margin
Profit margin is a measure of profitability. It is calculated by finding the profit as a percentage of the revenue.
\text = =
There are 3 types of profit margins: gross profit margin, operating profit margin and net profit margin.
* Gross Prof ...
s. Globalization[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]
/ref> and rising incomes in developing countries may also drive frugal innovation. Such services and products need not be of inferior quality but must be provided cheaply. 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.
In May 2012 ''The Financial Times
The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Nikk ...
'' newspaper called the concept "increasingly fashionable".
Several US universities have programs that develop frugal solutions. Such efforts include the Frugal Innovation Lab at Santa Clara University
Santa Clara University is a private Jesuit university in Santa Clara, California. Established in 1851, Santa Clara University is the oldest operating institution of higher learning in California. The university's campus surrounds the historic Mis ...
and a two quarter project course at Stanford University
Stanford University, officially Leland Stanford Junior University, is a private research university in Stanford, California. The campus occupies , among the largest in the United States, and enrolls over 17,000 students. Stanford is consider ...
, the Entrepreneurial Design for Extreme Affordability program.
Variety of terms
Many terms are used to refer to the concept. "Frugal engineering" was coined by Carlos Ghosn
Carlos Ghosn (; ; ar, كارلوس غصن; , born 9 March 1954) is a businessman who holds Brazilian and French nationality. Ghosn was the CEO of Michelin North America, chairman and CEO of Renault, chairman of AvtoVAZ, chairman and CEO of Nis ...
, then joint chief of Renault
Groupe Renault ( , , , also known as the Renault Group in English; legally Renault S.A.) is a French multinational automobile manufacturer established in 1899. The company produces a range of cars and vans, and in the past has manufactured ...
and Nissan
, trade name, trading as Nissan Motor Corporation and often shortened to Nissan, is a Japanese multinational corporation, multinational Automotive industry, automobile manufacturer headquartered in Nishi-ku, Yokohama, Japan. The company sells ...
, who stated, "frugal engineering is achieving more with fewer resources."
In India, the words "Gandhian" or "''jugaad
''Jugaaḍ'' (or "Jugaaṛ") is a colloquial Indo-Aryan word, which refers to a non-conventional, frugal innovation, often termed a "hack". It could also refer to an innovative fix or a simple work-around, a solution that bends the rules, or a ...
''", Hindi
Hindi (Devanāgarī: or , ), or more precisely Modern Standard Hindi (Devanagari: ), is an Indo-Aryan language spoken chiefly in the Hindi Belt region encompassing parts of northern, central, eastern, and western India. Hindi has been de ...
for a stop-gap solution, are sometimes used instead of "frugal". Other terms with allied meanings include "inclusive innovation", "catalytic innovation", " reverse innovation", and "bottom of the pyramid
The bottom of the pyramid, bottom of the wealth pyramid or the bottom of the income pyramid is the largest, but poorest socio-economic group. In global terms, this is the 2.7 billion people who live on less than $2.50 a day.
Management schol ...
(BOP) innovation", etc.[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]
At times this no frills approach can be a kind of disruptive innovation
In business theory, disruptive innovation is innovation that creates a new market and value network or enters at the bottom of an existing market and eventually displaces established market-leading firms, products, and alliances. The concept was ...
.
History
Spotlighted in a 2010 article in ''The Economist
''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Econo ...
'', the roots of this concept may lie in the appropriate technology
Appropriate technology is a movement (and its manifestations) encompassing technological choice and application that is small-scale, affordable by locals, decentralized, labor-intensive, energy-efficient, environmentally sustainable, and locally ...
movement of the 1950s,[ although profits may have been first wrung from underserved consumers in the 1980s when multinational companies like ]Unilever
Unilever plc is a British multinational consumer goods company with headquarters in London, England. Unilever products include food, condiments, bottled water, baby food, soft drink, ice cream, instant coffee, cleaning agents, energy drink, t ...
began selling single-use-sized toiletries in developing countries.[ Frugal innovation today is not solely the domain of large, multinational corporations: small, local firms have themselves chalked up a number of homegrown solutions.] While General Electric
General Electric Company (GE) is an American multinational conglomerate founded in 1892, and incorporated in New York state and headquartered in Boston. The company operated in sectors including healthcare, aviation, power, renewable energ ...
may win plaudits for its US$800 EKG
Electrocardiography is the process of producing an electrocardiogram (ECG or EKG), a recording of the heart's electrical activity. It is an electrogram of the heart which is a graph of voltage versus time of the electrical activity of the hear ...
machines, cheap cell phones made by local, no-name companies,[ and prosthetic legs fashioned from irrigation piping,][ are also examples of frugal innovation.
The concept has gained popularity in the South Asian region,][ particularly in ]India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
.[ 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..."]
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.
Notable innovations
Frugal innovation is not limited to durable goods such as the GE US$800 EKG
Electrocardiography is the process of producing an electrocardiogram (ECG or EKG), a recording of the heart's electrical activity. It is an electrogram of the heart which is a graph of voltage versus time of the electrical activity of the hear ...
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.[
;ChotuKool fridge: A tiny refrigerator sold by Indian company ]Godrej Godrej may refer to:
* Godrej family, a wealthy business family in India
**Ardeshir Godrej (1868–1936)
** Pirojsha Burjorji Godrej (1882–1972)
**Adi Godrej (born 1942)
**Nadir Godrej
** Jamshyd Godrej
**Pirojsha Adi Godrej
* Godrej Group, a grou ...
, the ChotuKool may have more in common with computer cooling
Computer cooling is required to remove the waste heat produced by computer components, to keep components within permissible operating temperature limits. Components that are susceptible to temporary malfunction or permanent failure if overhea ...
systems than other refrigerators; it eschews the traditional compressor for a computer fan
A computer fan is any fan inside, or attached to, a computer case used for active cooling. Fans are used to draw cooler air into the case from the outside, expel warm air from inside and move air across a heat sink to cool a particular componen ...
.[ (It may exploit the ]thermoelectric effect
The thermoelectric effect is the direct conversion of temperature differences to electric voltage and vice versa via a thermocouple. A thermoelectric device creates a voltage when there is a different temperature on each side. Conversely, when ...
.)
;Foldscope: Designed to cost no more than a dollar, the Foldscope
A Foldscope is an optical microscope that can be assembled from simple components, including a sheet of paper and a lens. It was created by Manu Prakash and designed to cost less than one USD to build. It is a part of the " frugal science" move ...
is a tough origami
) is the Japanese paper art, art of paper folding. In modern usage, the word "origami" is often used as an inclusive term for all folding practices, regardless of their culture of origin. The goal is to transform a flat square sheet of pape ...
microscope assembled from a sheet of paper and a lens. The Stanford
Stanford University, officially Leland Stanford Junior University, is a private research university in Stanford, California. The campus occupies , among the largest in the United States, and enrolls over 17,000 students. Stanford is considere ...
engineer responsible more recently developed a string-and-cardboard contraption that can function similarly to $1,000 centrifuges.
;Jaipur foot: A low-cost prosthetic developed in India, the Jaipur foot
The Jaipur foot, also known as the Jaipur leg, is a rubber-based prosthetic leg for people with below-knee amputations. Although inferior in many ways to the composite carbon fibre variants, its variable applicability and cost efficiency make ...
costs about $150 to manufacture and includes improvisations such as incorporating irrigation piping into the design to lower costs.
;Mobile banking: Mobile banking
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 ...
solutions in Africa, like Safaricom
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. T ...
's M-Pesa, allow people access to basic banking services from their mobile phones. Money transfers done through mobiles are also much cheaper than using a traditional method. While basic banking can be done on a mobile alone, deposits and withdrawals of cash necessitate a trip to a local agent.
;Nokia 1100: Designed for developing countries, the Nokia 1100
The Nokia 1100 (and closely related variants, the Nokia 1101 and the Nokia 1108) 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 handse ...
was basic, durable, and–besides a flashlight–had few features other than voice and text.[ Selling more than 200 million units only four years after its 2003 introduction] made it one of the best selling phones of all time.
;Sorghum beer: In Africa, several companies including SABMiller
SABMiller plc was a South African multinational brewing and beverage company headquartered in Woking, England on the outskirts of London until 10 October 2016 when it was acquired by Anheuser-Busch InBev. Prior to that date, it was the world's ...
and Diageo
Diageo plc () is a Multinational corporation, multinational alcoholic beverage company, with its headquarters in London, England. It operates from 132 sites around the world. It was the world's largest distiller before being overtaken by Kweich ...
, following in the footsteps of local home brewers, have made beer more affordable by using sorghum
''Sorghum'' () is a genus of about 25 species of flowering plants in the grass family (Poaceae). Some of these species are grown as cereals for human consumption and some in pastures for animals. One species is grown for grain, while many othe ...
or cassava
''Manihot esculenta'', common name, commonly called cassava (), manioc, or yuca (among numerous regional names), is a woody shrub of the spurge family, Euphorbiaceae, native to South America. Although a perennial plant, cassava is extensively ...
in place of malting barley and reducing packaging costs by using kegs instead of bottles.
;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.
;Tata Nano: Designed to appeal to the many Indians who drive motorcycles, the Tata Nano
The Tata Nano is a compact city car that was manufactured and marketed by Indian automaker Tata Motors over a single generation, primarily in India, as an inexpensive rear-engined hatchback intended to appeal to current riders of motorcycles a ...
was developed by Indian conglomerate Tata Group
The Tata Group () is an Indian multinational conglomerate headquartered in Mumbai. Established in 1868, it is India's largest conglomerate, with products and services in over 150 countries, and operations in 100 countries across six continent ...
and is the cheapest car in the world.
;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.
;Lung ventilator: Swiss coffee machine manufacturer Thermoplan
The Thermoplan is a given name of the prototype of Russian lenticular-shaped hybrid airship.
Design features
The key feature of Thermoplan is its combined structure with primary section having a torus of revolution shape (one variant was to ...
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.
In the media
In 2014, Navi Radjou
Navi Radjou (born 14 August 1970) 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 ...
delivered a talk at TED Global
TED Conferences, LLC (Technology, Entertainment, Design) is an American-Canadian non-profit media organization that posts international talks online for free distribution under the slogan "ideas worth spreading". TED was founded by Richard Sau ...
on frugal innovation.
In 2015, Navi Radjou
Navi Radjou (born 14 August 1970) 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 ...
and Jaideep Prabhu coauthored the book '' Frugal Innovation: How to Do More With Less'', published worldwide by ''The Economist
''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Econo ...
''. The book explains the principles, perspectives and techniques behind frugal innovation, aiming to help managers to profit from the great changes ahead.
In 2016, Jaideep Prabhu collaborated with Ignitho Technologies to brin
frugal innovation methodology
to enterprises adopting digital solutions.
See also
* C. K. Prahalad
*Market segmentation
In marketing, market segmentation is the process of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers (known as ''segments'') based on some type of shared characte ...
*Open innovation
Open innovation is a term used to promote an information age mindset toward innovation that runs counter to the secrecy and silo mentality of traditional corporate research labs. The benefits and driving forces behind increased openness have bee ...
*Price discrimination
Price discrimination is a microeconomic pricing strategy where identical or largely similar goods or services are sold at different prices by the same provider in different markets. Price discrimination is distinguished from product different ...
* Reverse innovation
*Small is beautiful
''Small Is Beautiful: A Study of Economics As If People Mattered'' is a collection of essays published in 1973 by German-born British economist E. F. Schumacher. The title "Small Is Beautiful" came from a principle espoused by Schumach ...
References
{{Engineering approaches
Engineering disciplines
Poverty
Innovation