Michael D. Moberly December 4, 2014 ‘A blog where attention span really matters’!
Has frugal innovation been oversold? If so, should the west’s conventional entrepreneurial community and its stakeholders, often portrayed as consisting of university research, biotech, incubators, venture capitalists, SBIR’s, and quick witted management teams now relax? These two, much paraphrased, questions were posed to readers in an article in The Economist (March 24, 2012) aptly titled ‘Asian Innovation: Frugal Ideas Are Spreading From East to West’.
Oh contraire! Those inclined to characterize frugal innovation as merely representing a new ‘flash-in-the-pan’ simplistic business model that will likely never gain sufficient traction in western economies to become viable, are encouraged to re-think that position. Frankly, I do not sense frugal innovation, conceptually or practically, will become subordinate to business start-up convention and fade from western business lexicon. Those who convey it will may not have taken the time to understand it or perhaps are themselves stakeholders in retaining existing conventions.
It’s short-sighted to characterize frugal innovation as merely a business start-up model which befits (a.) simplified products or services, (b.) work force demographics frequently associated with developing countries, (c.) limited availability of or access to start-up capital, (d.) investor returns in single vs. double or triple digits, and (e.) subordinate to western conventions.
Interestingly, in The Economist’s Schumpeter column (March 24, 2012) titled ‘Asian Innovation’ it’s noted that numerous universities are in somewhat of a ‘scramble mode’ to design and integrate in academia, courses focusing on frugal innovation. This suggests the fundamental principles and concepts of frugal innovation are variously resonating in the west insofar as accommodating the dual visions and/or requisites of (a.) do-ability and work ability, and (b.) attracting – reaching a broader range of prospective entrepreneurs whose innovation does not require substantial and immediate infusions of investment.
To be sure, frugal innovation represents a principled, but less structured path for developing and hopefully commercializing practical innovations that initially target consumers at the so-called ‘bottom of the pyramid’. Not infrequently, initial frugal innovations can be ratcheted up to attract consumers in successively higher brackets of the global pyramid.
Numerous advocates and practitioners of frugal innovation in the East, as The Economist’ article points out, imagine a time when particular Western products, upon removal of gratuitous frills, will lead to such substantial cost savings that frugal ideas will (eventually) come to dominate the innovation process. While car seat warming western consumers have clearly not arrived at that point, the interest embedded in prospective entrepreneurs to pursue alternative paths to innovation commercialization, absent many of the conventional hurdles and/or constraints, particularly those having to do with securing substantial investment are attracting some well deserved interest.
“Reverse Innovation” a book written by Vijay Govindarajan and Chris Trimble, and “Jugaad Innovation” by Navi Radjou, Jaideep Prabhu and Simone Ahuja are seminal guides to frugal innovation. And, as a demonstration that the concept of frugal innovation is not wholly dismissed by the multi-nationals, Mr Govindarajan (Dartmouth’s Tuck Business School) is known to have advised General Electric on frugal innovation and co-authored a very worthy article with its CEO, Jeffrey Immelt.