As a process frugal innovation discovers new business models, reconfigures value chains, and redesigns products to serve users who face extreme affordability constraints, in a scalable and sustainable manner. It involves either overcoming or tapping institutional voids and resource constraints to create more inclusive markets (Bhatti, 2011). (1)
An enormous definition of frugal innovation. To long for a column actually, although to worthy to not mention. I belief in frugal innovation. This definition explains why. In this column I will address three important parts of the definition given by Bhatti. Scalable, sustainable and inclusive.
Scalable- Frugal innovation provides affordable solutions. Solutions which are scalable. In this modern world, based on the World Wide Web, people need access to modern solutions. Standard innovation gave us a lot of great easy solutions. Mobile banking, telecommunication, cars, ergonomic prosthetics and more. In the Western world, we love this innovations and enjoy the access to it. Too bad for all those who can’t afford. All those 3 billion people living from less than $2.50 dollar a day. Don’t you feel the dilemma here? We all enjoy the best innovations but 5000 kilometers south they don’t even have access to it! This is where frugal innovation comes in. Wouldn’t you like to make a lot of people happy? Frugal innovation gives you that opportunity. Affordable solutions are provided, to provide this world more equality.
Sustainable- Frugal innovation are not only products, it is a different mindset as well. Resource are scare. Oil, and metals like copper and lithium, we are all losing them. Every product we produce with endless features and possibilities, contributes to this loss. Most of the innovations we nowadays have, are not sustainable at all. They only move the problem a couple of years forward. Frugal innovation offers a whole new way of looking to supply chains and sources. Products need to be affordable, so not too much expensive materials or features need to be implemented. When overlooking all the options, the most sustainable one will be chosen. Of course not all frugal innovations work like this. Some are not sustainable as well. However frugal innovation thinks about easy products, not usi
ng too much materials.
Inclusive- Most important Western multinationals see the possibilities of the bottom of the pyramid. Although they see them, still a lot of products are produced outside the countries. Cheap industries in Asia produce most products, and after that, are shipped to countries in Africa. Take beer for example. Big multinationals like SABMiller don’t have production facilities on local level. Local brewers can’t compete against this big cooperation’s. Fortunately there are positive examples as well. Heineken recently built a production facility in Ethiopia. Working together with local farmers, Heineken cares about inclusiveness of the products they make.
To conclude; we need frugal innovation. Frugal innovations provide sustainability, scalability and are inclusive. In this way a lot of people are helped. A huge advantage of frugal innovation is the push to change our mindset. We need to think about new sustainable ways to deal with resources. After all most of the local communities benefit from frugal innovation. Because a lot of innovation is done local and people got access to it.
Corné Smaal / Business Administration / Erasmus University