Frugal innovation: the lessons of India's 'jugaad'

Corporations may be able to learn from developing-world entrepreneurs, who emphasize frugality, flexibility, and simplicity in designing products.

A new book titled Jugaad Innovation looks at lessons from emerging markets in frugal innovation for multinational corporations. Here's our chat with co-author Simone Ahuja, one of the three authors on this project (along with Navi Radjou and Jaideep Prabhu).

For readers who aren't familiar with jugaad, could you please briefly describe it?

Jugaad is a Hindi word meaning an innovative fix. It's an improvised solution using ingenuity and resourcefulness, often due to very limited resources.

When we talk about jugaad innovation, we are referring to the mindset and principles that are used to make this happen. Jugaad innovation is frugal, flexible, and inclusive. It's also called gambiarra in Brazil, zizhu chuangxin in China, and is most like DIY in the US.

RELATED: Thirty ideas from people under 30: The Entrepreneurs

I think the biggest question for a lot of readers is – this looks great on paper.  But how do we make this happen in the US where there's an onslaught of regulations?  

I think we have to shift our mindset around this issue.  Absolutely regulations can add a challenging dimension to innovation, but the jugaad mindset can actually help address these.

Embrace, a low cost, portable infant warmer is one example. The creators of Embrace used all of these principles to find a solution that would address the needs of emerging markets. The device is now being tested at the Lucille Packard [Children's] Hospital at Stanford right here in the US, where medical devices are highly regulated.

Another example is the Nano, the $2,000 car created by Tata Group in India.  The car was made first for Indian markets, but with some limited additional cost is being adapted for Europe and even the US – markets with strict regulations, and setting new industry benchmarks.

Another example is GE Health's Mac 800 – a portable, low-cost ECG unit first developed for emerging markets that has received FDA approval and will make a big impact on our highly strained health-care system right here in the US.  All of these products utilized several principles of jugaad innovation – and all of them are finding a place in highly regulated markets like the US and Europe.

Reducing the bells and whistles on many of these products is in a way about going backward – going back to a simpler existence?  Mitticool, for example, is about using basics and natural products.

Jugaad innovation goes far beyond simple de-featuring, but having a deep understanding of consumer needs and recognizing that certain features just don't provide value for money is a part of jugaad innovation.

It's interesting to think about whether removing bells and whistles is going backward, or is actually an advancement from the complexity we face today ... too many software programs on your laptop, too many buttons on your remote control – it's overwhelming and counterproductive.

That's the beauty of many Apple products – in a way Steve Jobs created value by reducing bells and whistles – he took away the keyboard, the mouse, and gave us greater value.

MittiCool, the low-cost, biodegradable refrigerator made out of clay, is a great example of jugaad innovation – creating a product and a new industrial process with very limited education and capital, flexible thinking that allowed the innovator to use a millennia-old material like clay to create a fridge out of it, and yes, simplicity that allowed his community to have refrigerated produce and dairy for the first time ever – and in an environmentally friendly fashion  Interestingly, many users of the MittiCool say that food actually tastes better when stored in it as compared to a regular fridge, because it provides moisture to the food rather than drying it out.

There's been some debate about how successful are some of these low-cost products. Tata Nano is a low-cost product but had trouble with quality control and didn't really reach as many consumers as they had hoped. Can you address the "success" element here?

I think the Tata Nano is a huge success. While they've had some challenges with safety and sales have been disappointing, the Nano has created a whole new benchmark in the global auto industry. Every car company today wants to create their own version of the Nano. The car isn't just stripped down, there were many new innovations that were developed resulting in tens of technology and design patents. It also provides an alternative to families who previously could only travel on a motorcycle – sometimes with 4-5 passengers. The Nano provides a much better option. They've also demonstrated tremendous flexibility in their sales models and even the location of their factories quickly – no easy feat for a large corporation.

You refer to a Booz & Company report that has a CEO wearing a shirt, "Spent $2 billion on R&D, and all we got was this lousy T-shirt." For companies in the West to get smarter about innovation, what do they need to do?

Companies in the West would benefit from using jugaad innovation to augment their current innovation practices, which tend to be more expensive, structured, and insular.

Typically innovation occurs in big R&D labs, with planned approaches to innovation done by those whose job it is to innovate. What we're suggesting is that rigid processes like Six Sigma can be highly effective where sameness is desired, such as manufacturing. But innovation takes place in a less linear fashion.

As George Buckley, former CEO of 3M said, "Invention by its very nature is a disorderly process. You can't put a Six Sigma process into that area and say, 'Well, I'm getting behind on invention, so I'm going to schedule myself for three good ideas on Wednesday and two on Friday.' That's not how creativity works."  And that's exactly why he rolled back Six Sigma initiatives at 3M.

Companies will need to imbue frugality, flexibility, and inclusiveness into their culture to drive sustainable growth in a global economy that is more diverse, interconnected, volatile, global, and resource scarce.

Western companies traditionally have large overhead costs – complex corporate structures, large staff, etc. Are they ready to get rid of some of this? What do you find in your conversations with these companies?

There is a huge trend emerging around frugal innovation – and companies are now understanding the urgency of why they must be more frugal, flexible, and inclusive in order to succeed in today's volatile economy. This is a big shift from 3 to 4 years ago when we first started writing about jugaad innovation, when there was a lot of pushback around making these kinds of changes.

Having said that, the changes will come slowly. Typically, we see this style of innovation occurring on the edges, and through partnerships and even acquisitions. It will take some time before we see radical changes across large organizations, but it's starting to happen.

One of the ways we're helping corporations deeply understand how to do this is through workshops and interactive, hands-on innovation labs that dig deep into the principles of jugaad innovation. In our book, my co-authors and I share several examples of [how] large companies like 3M, Google, Facebook, Renault-Nissan, and GE are already using the principles of jugaad innovation to create sustainable growth in a very challenging economic climate.

There's a saying, "Keep it simple, stupid." Is that fundamentally at the core of frugal innovation – keep it simple?

Yes, simplicity is a key principle of jugaad innovation, and one of my favorites. Simplicity requires a deep understanding of consumers, their needs and their habits. Simplicity and "good enough" products deliver higher value because they are designed to do one thing exceptionally well (functional specialization), rather than doing multiple things in a mediocre fashion.

The MittiCool mentioned above is an outstanding example of simple, focused design, as is the Mac 800.  John Maeda, president of the Rhode Island School of Design, points out "It's not necessarily beneficial to add more technology features just because we can. R&D engineers must make frugal simplicity the core tenet of their design philosophy." I couldn't agree more.

• This interview originally appeared at Dowser.org.

• Sign up to receive a weekly selection of practical and inspiring Change Agent articles by clicking here.