Credit: Business Line
A flat production model that brings the consumer and producer closer leads to remarkable outcomes
Navi Radjou and Jaideep Prabhu are on a multi-city tour to promote their second book, Frugal Innovation, How to do better with less, a sequel to their earlier book, Jugaad Innovation.
Radjou, who hails from Puducherry, is an innovation and leadership
advisor based in Silicon Valley and a fellow at the Judge Business
School, University of Cambridge, where he teamed up with Prabhu, who is
the Jawaharlal Nehru Professor of Business and Director of the Centre
for India & Global Business at Judge. Their new book focuses on
cases of frugal innovation from the West, and develop insights about a
Western model of frugality. It’s not just about products and processes
but also about a mindset, say the authors in an interview to Business Line. Excerpts:
Frugal
innovation has many connotations: to some it’s cheap, low quality, or
could be something delivering great value. How do you define it?
Navi:
In the first book, we referred to jugaad to capture frugal, flexible
innovation in resource-constrained countries such as India. It’s
actually a continuum; essentially people are using tools, to be able to
do more with less, better with less, to deliver more value, to the end
customer, shareholder and society, using less resources which could be
financial, natural or even time.
How would frugal in India and the Western model be different?
Navi:
Frugal in the Indian context is not necessarily a product; it is often
talked about as the Nano or affordable healthcare (of the kind delivered
by Aravind Eye Care). These are frugal solutions; this is one
dimension. Frugality can extend to the entire supply chain and business
model; it can apply to the value you can bring to customers. Two
criteria are affordability and quality. In the West we are seeing two
other attributes being added. One is simplification; customers have had
to put up with complex solutions so far, but now people, especially the
young, want to simplify their busy lives. The fourth attribute is
sustainability, because while you can do something cheap it shouldn’t be
polluting. A product and service can also be frugal, like car
sharing/pooling, which can have a lower environmental impact.
So, frugal is essentially a state of mind?
Navi:
We call it mental models; we have three levels: one is at the product
level, the second is a frugal business model where you can
systematically create a solution, and the third level is a frugal mental
model, which is a mindset. If your staff are not trained and
incentivised, you can have it (a frugal mindset) for a while and people
can go back to doing things the way they were before.
So, in your book, you refer to frugality in processes as well?
Navi:
We refer to the Logan example, a car made by Renault. They set a target
cost of €6,000 but what they didn’t do is take an existing car and
reduce its features, value-engineering as it’s called, trim it down to
the point where a car without these features can hit their cost target.
But it’s not the right value to customers.
In this
case, both R&D and designers were in cross functional teams and were
involved in leveraging customer insights. Reducing costs is not about
reducing comfort and safety; R&D started doing work from scratch on
the entire value chain.
So, it meant more
collaboration between R&D, design and manufacturing. Things are done
in a linear way in car manufacturing and that adds to the cost. In the
case of Renault, they put these guys together to reduce lead time in
making it and reducing cost as well.
How much does consumer insight and feedback work in frugal innovation?
Jaideep:
That’s our first principle of engage and iterate. It started with
digital startups and has now extended to other startups as well. You
start with a customer insight and develop a minimal viable product,
something that addresses the main part of the need.
You develop that quickly and test that with consumers, follow the consumer home as they say; this is part of the process.
Rather
than develop a finely engineered product from scratch, which takes a
lot of time, and then find that it hasn’t met the market needs, here you
have a better chance of hitting a sweet spot and doing it faster,
better and cheaper.
What was the most exciting innovation you came across while writing the book?
Jaideep:
There are many, but an example I really love, encapsulates what we’ve
been talking about. It’s not found in the book. In Barcelona,
politicians wanted to turn it into a smart city, but a different kind of
smart city, more a 21st century kind of one.
We
cite the example of prosumers --- consumers who are not passive
recipients of products but also participate in making those products.
They have access to resources that only big companies could do in labs
10 years ago. Consumers have access to 3D printers and spaces where they
can go and work on prototypes and bounce their ideas off others and
also market it through social media.
In Barcelona,
the city has set up several fab labs, where the community is involved
--- ordinary citizens and students of engineering and architecture. One
of these is on pollution, which we can appreciate in India.
Instead
of installing sophisticated equipment around the city, they said it
would be much smarter if individual consumers can test pollution levels
out of their homes using simple equipment.
They
created these remote sensing devices in these fab labs which that can
sense light, nitrogen, carbon levels, noise, and which can send data to
another device. They use cheap computers and micro processors. Data is
sent through the internet to a central server.
These
devices are sold through Amazon and anyone in Barcelona can buy them.
Consumers get back processed data, which shows pollution levels relative
to other parts of the city. We can do it in India; we have the need.
You refer to conversations with consumers…is that where the strongest ideas come from?
Jaideep:
What you are seeing in the West is a democratisation of capitalism.
Things like innovation, which was the preserve of big companies because
you needed capital and sophisticated labs and special people to work
there. That’s going away, ordinary people now have the tools and with
training and space, they are able to do stuff. Maybe it’s not the most
sophisticated, but they are innovations nevertheless.
One
of my other favourites is something called the Square, which fits into
the audio jack of a smart phone. And it enables you to take credit card
payments. It was developed in a tech shop by Jack Dorsey, who came up
with Twitter. A friend of his wanted to sell spare stuff in his garage
and he couldn’t sell it because he couldn’t take card payments.
They developed a prototype of the Square in a tech shop and it’s a huge
business; in four years, they have transacted something like $30
billion. It’s a flattening of the structure; innovation is now easier to
do as small teams with focus can do it.
You can sell online, outsource manufacturing, you don’t have to own a distribution and market through social media.
The
whole process of doing business is more democratic. Even though
‘prosumers’ may not come up with the most earth-shattering idea, they
come up with ideas that have social application and that ingenuity is
what you want to tap into.
