Frugal Design Thinking for Emerging Economies

The notion behind Frugal Design Thinking is to make the products and services resulting from Frugal Innovation more meaningful for promoting a reliable long-term success of products in the global market. With the current innovation revolution, the demand of consumers is shifting towards 80% benefit from 20% of the cost. Companies are increasingly embracing unconventional ways of innovating and adopting a “more with less, for more” strategy, otherwise known as ‘Frugal Innovation’ (P. Mahmood, 2014).


Frugal Economy and Design thinking for Circular Economy

Frugal Innovation which often related to other terms like "inclusive innovation", "catalytic innovation", "reverse innovation", and "bottom of pyramid innovation" (Bhatti et al., 2012), is categorized in two types:

- Corporate Frugal Innovation: High-quality solution developed by the companies for budget-restricted customers (Wagner et al., 2010)

- Grass-root Frugal Innovation: Improvised solutions that are developed with limited resources (Radjou et al., 2012: Jugaad Innovation)


As the demand for frugal products and services are increasing (Radjou et at., 2012), companies are using different ways to adapt to this form of innovation. Though corporate frugal solutions have complex, structured, resource-intensive development process (Wohlfart et al., 2016), still Frugal Innovation often creates social awkwardness among the users which cause lower acknowledgement of these solutions in the society. These poor responses from the market make companies very prone to cannibalization of the existing offering and brand damage. Failure of Tata Nano by Tata group in India is a well-known example of such situations. (S. Mundy, 2018)


On the other hand, Grass-root solutions are driven by individual inventors or social organizations, who are part of or close to the target group. However, due to resource constraint, they mostly face upscaling challenge (Wohlfart et al. 2016). Failure of the PlayPumps – a merry-go-round water pump technology for providing water to the people of Sub-Saharan Africa, is described as a perfect example for the failure of Frugal Innovation due to unforeseen implementation challenges in social innovation (PlayPump International – Gaining User Buy-In, 2012). These examples, therefore, illustrates that even though Frugal Innovation have high potentials (P. Mahmood, 2014) but it often creates a difference between Actual and Perceived values by business, social innovations, and customers.


Designing for the circular economy involves completely rethinking our traditional, linear, “take­-make-- waste” model and replacing it with a new, circular, restorative one. Incorporating both frugal thinking and design thinking would assist in better aligned Circular strategies

Frugal Innovation has different meanings in a different context. In business, it is a way to remove non- essential features from a product for selling it to the ‘over-looked customers’ in developing countries (Bellman, Eric, 2009). However, according to academia, Frugal Innovation seeks to create an attractive value proposition for their targeted customer groups by focusing on core functionalities and thus minimizing the use of the material and financial resources in the complete value chain. They substantially reduce the cost of usage and/or ownership while fulfilling or even exceeding prescribed quality standards (Tiwari et al., 2016).


Some examples of Frugal Innovation across different growing markets:

- Nokia 1100, a low-cost mobile phone (Virki, Tarmo, 2007)

- Tata Nano for providing lower-priced car (Meredith, Robyn, 2007)

- Siemens Multix Select DR (X-Ray Machine), one-third of the price of the comparable products within Siemens portfolio (Agarwal, N., Brem, A., 2012)

- M-Pesa providing Mobile Banking services in African Countries (The power of Mobile Money: The Economist, 24 September 2009, Retrieved 12 August 2020)

Even though these products address the economic conditions but most of the time they are not accepted by the users itself. Frugal Innovation concept caught the attention of the world when Tata Motors’ micro-car Nano was launched in 2009 (P. Wells, 2010), but its failure also shocked the world. Some claimed that the Nano car failed because of its bad marketing and some called it a bad design. The evidence gathered during pre-study for this literature says that the car has a good design and the company also spent enough money on marketing (ET Bureau, 2017). Though the car failed because it challenged the consumers' psychology and developed the feeling of social awkwardness among the users. The low acceptance of the car with time is shown in figure 1. This failure of Tata Nano questions the communication strategies of the company to its users.


Nevertheless, there are also very successful examples of frugal innovations like Nokia 1100 (Virki, Tarmo, 2007) which was widely by all type of users in many emerging markets. Companies such as Siemens and General Electric are using frugal innovation concept to serving emerging markets with their low-cost products especially in the Healthcare sector especially with their low-cost X-Ray machines and ECG machines. It is because of their robust functionalities these products attract B2B customers.


Design Thinking is a systematic, human-centred approach which combines user’s perspective, technological feasibility, and business perspectives to work out innovative solutions beyond the typical expectations (H Plattner, C Meinel, L Leifer – 2014). Although frugal innovation and design thinking have many things in common, for example, empathy towards users, user-centricity, design-intensive solutions etc. but unlike frugal innovation, design thinking is not driven exclusively by lowering cost and resource constraints. Nevertheless, many of the Social Enterprises in emerging economies already intuitively use some aspects of design thinking, but most stop short of embracing the approach to move beyond today’s conventional problem-solving. (T. Brown and J. Wyatt, 2010).

In the case of Tata Nano, the company determined a need for a low-cost car, and they developed and released the product in the market. The car was focused to tackle the problem of unsafe biking culture in India by providing a low-cost car, but users started relating the product to poverty, misery, and incapability (M. Erying, 2011). This characterizes the major problem of most of the frugal innovators as they often miss the unforeseen challenges associated with their products. Even though the product is brilliant and robust, it failed to reach the consumers' expectations. Design thinking process, on the other hand, seeks to uncover unforeseen implementation challenges and unintended consequences of having more reliable long-term success (T. Brown and J. Wyatt, 2010).


An article published by World Bank together with IDEO on ‘Design Thinking for Social Innovation’ illustrates the impact of bringing design thinking and frugal innovation together in emerging markets. IDEO’s expert design thinkers worked with VisionSpring, a low-cost eye care provider in India for providing comprehensive eye care to children (T. Brown and J. Wyatt, 2010).

By prototyping and creating an implementation plan to pilot and scale the project, IDEO was able to design a system for the eye screenings that worked for VisionSpring’s practitioners, teachers, and children. As of September 2009, VisionSpring had conducted in India 10 eye camps for children, screened 3,000 children, transported 202 children to the local eye hospital, and provided glasses for the 69 children who needed them.”


Design Thinking methods can be very helpful in making frugal innovations more intelligent, meaningful, and satisfying for the customers. Together with Design thinking, Frugal Innovation can help businesses and social innovation in improving the acceptance of Frugal solutions while reducing cost, improve performances and enhancing the Brand image. At the same time, such integration will help in achieving a good lifestyle while providing access to modern technologies at an affordable price.

Designing for the circular economy involves completely rethinking our traditional, linear, “take­-make-- waste” model and replacing it with a new, circular, restorative one. The European Commission estimates 80% of the costs and impacts of a product or service are defined at the design stage. What is means is that if we want to create as many positive impacts as possible and do better with less, we must anticipate and decide the soonest in the process. Incorporating both frugal thinking and design thinking could help us make tools and methods that would enable design for the user and the entire ecosystem.


References

Agarwal, N., and Brem, A. (2012). “Frugal and reverse innovation - Literature overview and case study insights from a German MNC in India and China,” in Eighteenth International Conference on Engineering, Technology and Innovation, B. Katzy, T. Holzmann, K. Sailer, K. D. Thoben (Eds.), pp. 1– 11.

Bhatti, Yasser Ahmad and Ventresca, Marc. (2012). The Emerging Market for Frugal Innovation: Fad, Fashion, or Fit? (January 15, 2012)

Bellman, Eric (2009) "Indian Firms Shift Focus to the Poor". The Wall Street Journal. pp. A.1. (October 20, 2009)

How Nano failed to create a mass market for small cars – The Economic Times, April 22, 2017, Retrieved June 30, 2018

H. Plattner, C Meinel, L Lifer, (2014). The Design Thinking Research – Building Innovators pp.1

‘If ever there were a symbol of India’s ambitions to become a modern nation, it would surely be the Nano – Financial Times (https://www.ft.com/content/e68ab572-8a3e-11dd-a76a-0000779fd18c)

L. Wohlfart, M. Bunger, C.L.Koetz, F. Wagner, (2016): Corporate and Grass-root Frugal Innovation: A comparison of Top-Down and Bottom-Up.

M. Erying, (2011). Learning from Tata’s Nano Mistakes – Harvard Business Review, January 11, 2011,

Retrieved June 30, 2020 (https://hbr.org/2011/01/learning-from-tatas-nano-mista)

Meredith, Robyn, (2007). "The Next People Car". Forbes. Yahoo! - ABC News Network. (Apr 19, 2007) Retrieved June 30, 2018.

N. Radjou, J Prabhu, S Ahuja, (2012) Jugaad innovation: Think frugal, be flexible, generate breakthrough growth

N. Radjou, J Prabhu, S Ahuja, (2012) The CEO’s Frugal Innovation Agenda – Harvard Business Review, October 5, 2012, Retrieved July 1, 2018

Nirmalya Kumar, Phanish Puranam (2011). India Inside. Harvard Business Press. p. 114. I

P. Mahmood, (2014). Frugal innovation: Creating and capturing value in emerging markets

Play pumps International – Gaining user Buy-In, 2012 – Stanford’s Innovation Insight Series (https://www.gsb.stanford.edu/sites/gsb/files/publication-pdf/playpumps-gaininguserbuy-in.pdf)

P. Wells, (2010). The Tata Nano, the global ‘value’ segment and the implications for the traditional automotive industry regions

R. Tiwari, K. Kalogerakis, C. Herstatt, (2016). Frugal innovation and analogies: some propositions for product development in emerging economies

S. Mundy, (2018) Tata Motors looks to move beyond expensive Nano Failure – Financial Times, March 2018, Retrieved 30 June 2018

(https://www.ft.com/content/c752d206-0ce4-11e8-8eb7-42f857ea9f09)

S. Schaltgger, M. Wagner, (2010). Sustainable entrepreneurship and sustainability innovation: categories and interactions (April 7, 2011)

Virki, Tarmo, (2007). "Nokia's cheap phone tops electronics chart". reuters.com. Thompson Reuters. May 3, 2007, Retrieved June 30, 2018.

The power of mobile money: The Economist, 24 September 2009, Retrieved 20 June 2018 (https://www.economist.com/leaders/2009/09/24/the-power-of-mobile-money)

T. Brown and J. Wyatt, (2010). Design Thinking for Social Innovation IDEO (https://elibrary.worldbank.org/doi/pdf/10.1596/1020-797X_12_1_29)


About the Authors

Prakarsh Mishra (LinkedIn) is currently leading Agriculture, Rural Livelihood and Animal Husbandry vertical of AGNIi Mission, which is a flagship initiative under the Office of the Principal Scientific Adviser, and one of nine technology Missions under the Prime Minister’s Science, Technology and Innovation Advisory Council (PM-STIAC). Prakarsh is trained design thinking practitioner and fully merit-based scholarship awardee from Bologna Business School, University of Bologna. Prakarsh’s portfolios advance his interests in a vital, under-researched area: how innovation can be reframed as an instrument to rural human development.


Piyush Dhawan (LinkedIn) is the Cofounder of the Circular Collective was awarded the prestigious German Chancellor Fellowship to work on the topic of Circular Economy. He has for the past decade been working with Bilaterals and Multilaterals on a range of topics including business and biodiversity, Vision 2030 for Haryana and Future of Indian Cities. 



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