A new approach to frugal innovation

In today’s difficult economy, organizations cannot rely on the expensive R&D projects they have used for the last few decades. The most successful approaches to innovation are more flexible and more frugal, and embrace the idea of “doing more with less.” One such strategy is “Jugaad” innovation.

Navi Radjou is the co-author of “Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth,” and as just completed his second book, “From Smart to Wise.” The Economist calls “Jugaad Innovation” the “most comprehensive book yet to appear on the subject” of frugal innovation. An independent thought leader and strategy consultant based in Silicon Valley, Navi is also a World Economic Forum faculty member and a Fellow at Judge Business School, University of Cambridge. Featured regularly in Bloomberg Business Week, CNN, The Wall Street Journal, The Economist, and The Financial Times, Navi speaks regularly at the Council on Foreign Relations, World Economic Forum, and Asia Society.

Recently, Imaginatik had the opportunity to talk to Navi about what “Jugaad” innovation is all about and how it has impacted different economies around the world.

Navi Radjou

Imaginatik: Can you define more precisely what “Jugaad Innovation” is?

Radjou: In some ways, Jugaad innovation is closely related to the concept of “frugal innovation;” it’s doing more with less, delivering more value to customers at a lower cost. But Jugaad is more than just frugality. Jugaad is about being resourceful when faced with constraints. Jugaad is the flexible mindset that is embodied by MacGyver, the resourceful TV action hero who can extricate himself from all predicaments using merely duct tape and his Swiss Army knife. Jugaad is all about leveraging ingenuity. Everyone is born with ingenuity. It is something more profound than either creativity or innovation. It’s our birthright. We all have ingenuity, but unfortunately, we don’t connect with it, let alone harness it and bring it to life. In Western corporations, ingenuity of employees gets stifled because we put so many structures in place that people don’t get the chance to look inside themselves. Employees get stuck inside the guidelines that they are given; they come to believe they are paid to do things the “right way” (by following specific guidelines), rather than doing the “right thing” (by heeding their intuition). In emerging markets, however, the constraints and complexities of the environment force entrepreneurs to tap into their ingenuity and intuitively create affordable solutions to combat the extreme adversity that they face there.

Jugaad is the flexible mindset that is embodied by MacGyver, the resourceful TV action hero who can extricate himself from all predicaments using merely duct tape and his Swiss Army knife.

Imaginatik: You talked about how constraints help lead to the Jugaad mindset; how can Western leaders actually “impose” or “manufacture” these constraints?

Radjou: There are two answers to this. First, in the West, we used to believe that we didn’t have extreme constraints, but increasingly we do have constraints, such as the dwindling purchasing power of the American middle class, the aging workforce in Europe, or the growing scarcity of natural resources. Yet, our biggest constraint in the west is not money, but something else. The scarcity we face is time. Time is the most valued resource we have here, and it’s in short supply. Think about what Facebook is doing with their Hackathon. They create constraints around time by imposing a 72-hour deadline to find solutions to complex issues that they’re facing and to come up with their next advances. This artificial constraint around time is what creates the right conditions for the improvisational Jugaad innovation to thrive. We’ve found that R&D people love constraints; setting time limits, price points, and limiting money and resources creates an exciting intellectual challenge for them. This is when the best innovations take place.

Imaginatik: What is the best example of a company using Jugaad innovation?

Radjou: It’s hard to pick just one because there are so many dimensions to it. I will mention Google for their flexibility primarily. They operate heavily on short-term plans and innovate in rapid-fire mode. On the frugal dimension, I like GE Healthcare. They’re producing a lot of interesting products at very low cost.

R&D people love constraints; setting time limits, price points, and limiting money and resources creates an exciting intellectual challenge for them. This is when the best innovations take place.

Another great example is Embrace, a company co-founded by Jane Chen. While studying for an MBA at Stanford, Chen attended a course called “Entrepreneurial Design for Extreme Affordability,” which teaches students how to design products at 1 percent of existing products in the marketplace. Chen took what she learned there and applied it to the design and production of a portable infant warmer incubator for premature babies. In the West, an average incubator costs around $20,000. Chen made an equivalent with a $200 price tag. After its successful debut in India, it has spread to China and elsewhere. It is being piloted now at Standford-affiliated Lucile Packard Children’s Hospital in the US.

Embrace’s product delivers much more value for a lot less. It is not only extremely affordable, but it also allows mothers to hold their premature babies close to their bodies, which traditional, more expensive incubators can’t do due to their fixed nature. The key takeaway: this is not just a product for poor countries.

NEXT: How a "Jugaad" mindset can help you build a career

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