This morning, I read an Economist article on innovation in emerging economies that began by talking about the Tata Nano and frugal innovation. If you’re like me, you’re probably groaning at the thought of yet another piece that cites the same old tired example of the Nano to talk about either the failure or success of Indian innovation. But don’t worry, the article wasn’t just another for/against ‘Nano as innovation’ piece, and turned out to be about the fact that, despite the failure of the Nano (touted as the harbinger of Indian innovation to the global marketplace), frugal innovation is still here to stay.
The article, published in the ‘Schumpeter’ column of the Economist, talks about how “Multinationals are beginning to take ideas developed in (and for) the emerging world and deploy them in the West.” He takes several examples, including an infotainment system for cars called ‘Saras’, GE’s new portable ultrasound device, and Mahindra’s small tractors, to talk about how cost-effective, frugal solutions developed in places like India are being exported to and imbibed by large western corporations. All these examples, however, focus specifically on the Schumpeterian view of innovation, concentrated on business and technology innovation. However, as a comment from one of the readers stated, this definition of frugal innovation is too narrow. The reader, Yasser Bhatti, a doctorate student at the Said Business School at Oxford University, whose research is focused on innovation and entrepreneurship in emerging economies, proposes an alternate view:
Frugal innovation isn’t being practised solely within the Schumpeterian domain of technology innovation, but inevitably overlaps and extends into the boundaries of institutional innovation and social innovation. It is in those intersections that hold the sweet spot which characterizes the true nature of frugal innovation, one that transcends a new value proposition based on cost or a specific marketing strategy.
This definition of frugal innovation is substantially different and I’d argue, more evolved and comprehensive than previous definitions by the National Innovation Council, RA Mashelkar, and the host of business articles that sang its praises (for example, this, this and this). Those were focused, like the Schumpeter columnist, on cost optimization and price-pointing innovation. The new, more expanded definition of frugal innovation, is not only about frugality of cost, but also takes other factors – such as resources, reach, and sustainability into account. Most importantly, it applies the notion of frugality to public service design and delivery, so that frugal innovation is about bringing improved or previously non-existent services to more of the population.
To return to the point that the Schumpeter columnist was making – I’d say that his primary argument, that innovation in the West is being increasingly influenced by the emerging world, still holds true, not only in business and product innovation, but also in social innovation. For example, this recent article in the Guardian talks specifically about frugal innovation in social services that emerge from the bottom up. The article argues that this model of frugal social innovation, focused on providing citizens with a cost-effective access to various public services including healthcare and education, is becoming increasingly more important even in wealthier nations due to, at least in part, global fiscal crises in most western nations. The author writes:
Although the social and economic challenges of India are of a different order to the fiscal crises currently faced largely by Western developed countries, India could provide the UK with useful insight into how solutions developed from the bottom up in some of the most challenging public service environments can better meet the needs of citizens.
To conclude, I’d like to point out that there is still a need to agree upon a suitable definition of frugal innovation that can fully capture the full extent of what it includes and how we can approach. Perhaps Bhatti’s Ph.D. thesis is one starting point, but there needs to be further articulation of what frugal innovation really means, especially in the social sector. Your thoughts welcome.