Professor Jaideep Prabhu from Judge Business School, the University of Cambridge (author of Jugaad Innovation: A Frugal and Flexible Approach to Innovation for the 21st Century and Do Better With Less: Frugal Innovation for Sustainable Growth) in conversation with Piyush Dhawan, Cofounder of the Circular Collective
The Circular Collective: Thank you for taking out time to talk to the Circular Collective! Jugaad – an ingenious form of indigenous frugal innovation needs no introduction in India. What we would like to understand is frugal innovation and jugaad synonymous? Have you seen similar examples in other countries?
Jaideep: There are definitely parallels between jugaad and frugal innovation. Both are about doing more and better with less. Both are about solving problems by conserving or making the most of limited available resources. In some ways, the differences are mostly semantic: frugal innovation is just what jugaad is called in the west. However, as an Indian who understands Hindi and some Urdu and Punjabi, I prefer the term jugaad. Frugal can sound stingy, and even mean, and somehow lacks the implication of ingenuity and lateral thinking that jugaad has. However, jugaad also has negative connotations for many Indians of cutting corners and doing something dodgy or shoddy, and frugal gets around that. On balance I think the idea of using human ingenuity to solve problems while conserving resources is universal. I have certainly come across examples from all parts of the world, both from developed and developing countries alike.
The Circular Collective: Policymakers and businesses around the world are increasingly looking towards the ‘circular economy model’, which aims to enable effective flow of materials, energy, labour and information. How do you think frugal innovation could contribute to the Circular Economy discourse?
Jaideep: I think there is an intimate relationship between frugal innovation and the “circular economy model”. Both are about doing more and better with less. Both are concerned about maximising value while minimising the waste of scarce resources. Frugal innovation, for me, is an important input to achieving a circular economy. Equally, circular thinking is fundamental to frugal innovation. When my co-author Navi Radjou and I were researching our 2015 book Frugal Innovation about how large Western corporations are learning to do better with less we discovered that adopting circular models was crucial to their own efforts to remain sustainable as businesses over the next 20 to 30 years. So much so, we devoted a whole chapter of that book to how companies such as Unilever, Marks and Spencer, B&Q, Tarkett etc. are committing themselves to grow their revenues while dramatically reducing their environmental footprint. A major way in which they are doing this is moving toward circular economy principles and business models. We also realised that for these companies to be able to achieve their targets they need to find various ways to reduce, reuse and recycle and thus innovate to do more and better with less.
The Circular Collective: With respect to frugal innovation and circular economy, there would be challenges if innovations are developed without taking the larger operating system into account. From your experience how could frugal innovations be scaled up?
Jaideep: This is a key question! The world is awash with clever frugal ideas or inventions that have been tried out at a small scale (i.e., as pilots) and work at that level but fail to become more widespread and have a global impact. For these ideas to have a real impact and solve bigger problems of climate change etc. they have to be scaled up. And in order to be scaled up, they need to fit into what you call the “larger operating system”. In other words, for these kinds of innovations to work they have to be designed from a systems perspective as opposed to being designed in a vacuum or a lab. We need to think about not only the individual company introducing the frugal innovation, but we also need to think about all companies potentially adopting it. We need to think about the regulations and government policies needed to sustain or encourage it. We need to think about consumers and consumption and the behaviour changes that will be involved. And we need to think about the role of civil society more generally in the process including the role of social media and the press.
The Circular Collective: Frugal innovation is important for further development of the circular economy in an emerging economy context as it helps to think about and define what circular economy can mean at a local level. We would love to explore what in your opinion are the possibilities and challenges in emerging markets?
Jaideep: There are several important issues that your question is bringing up. First, there is a general belief that to become more sustainable, to move to a circular economy, to do the necessary innovation, involves huge cost. There is a notion that doing this will take trillions of dollars of investment and a lot of time and will involve very difficult behaviour change. But the point of frugal innovation is to show that this need not be the case. And even if there is an investment needed then that is a crucial input that will have a very real payoff, not only in terms of saving the environment for future generations but also in terms of development and jobs opportunities and secure livelihoods for people today. At the local level, therefore, a circular economy means creating local jobs and local value-generating solutions that make lives better, both on the supply and demand side. In emerging markets, this is not just an opportunity or a challenge: it is a necessity! In a country like India: we still have hundreds of millions of people living outside the formal economy trying to get in. Introducing circular solutions and scaling them through frugal innovation offers the opportunity to create high-quality jobs on the supply side while bringing the fruits of development to people on the demand side.
The Circular Collective: Is the concept of Frugal Innovation limited to the emerging markets are there examples where western companies have adopted the frugal approach?
Jaideep: Not at all! Frugal innovation is relevant to both emerging and developed markets. In fact, the phenomenon and practice of frugal innovation have been evolving and spreading globally over the last decade or so. When my co-authors and I first wrote about it, in our 2012 book Jugaad Innovation, we wrote about frugal innovation as it was being practised then in emerging markets like India, China, Africa etc. But we soon realised that the idea of frugal innovation was getting a lot of traction in the west for the west. And we also realised that a lot of this interest was coming from the perspective of ensuring environmental sustainability and reversing or halting climate change. So we began to research how western companies were trying to embed frugal innovation in their operations in the west. Based on that work we published ours follow up book in 2015 called Frugal Innovation which focused a lot on circular economy principles. We then realised that things were coming full circle and that emerging markets like India were picking up on some of these developments in the west and combining them with more traditional approaches like jugaad. So in 2020, we published an update of the 2015 book called Do Better With Less which looks at frugal innovation, jugaad and circularity in India. Based on all this work I really believe that both the problems of environmental sustainability and their solutions such as circularity and frugal innovation are global. Each side—developed and emerging—has much to learn from the other.
The Circular Collective: Can frugal innovations contribute to local economic development? What could the governments do to foster an ecosystem where frugal innovations are promoted?
Jaideep: Absolutely. One of the core aims of frugal innovation is to see how locally available resources can be used, in a sustainable way, to develop and deliver solutions locally. The process of doing this will also create jobs locally and offer better value livelihoods to local communities. The government at various levels—national, regional and local—has a key role to play in fostering and nurturing such ecosystems. There are three things governments can do:
1) create awareness of such local problems and solutions by documenting and disseminating information on them,
2) creating policies and regulations that enable such local innovations and innovators to be able to operate in a stable, supportive environment that protects them and enables them to capture the value they generate, and
3) overcome market failures by facilitating access to local, national and international markets through soft and hard infrastructure and enabling local and global partnerships.
The Circular Collective: Frugal innovation comprises of a frugal mindset, a frugal process and a frugal outcome. For a young startup who wants to contribute to the economy what would be the key features of the frugal economy that could be incorporated into their business model?
Jaideep: For young start-ups, it is crucial that they embed in their business models, processes and culture these core aspects of a frugal approach, namely the necessary mindset and processes with a view to achieving frugal outcomes, not only for their customers (through affordable products and services) but also through a viable business model (through lower fixed and operating costs). A frugal mindset involves always staying flexible and open to new ways of doing more and better with less. In terms of process, this involves embedding in all aspects of the firm’s operations a relentless focus on finding ways to empower all employees to do more and better with less, often in partnership with others including customers.
The Circular Collective: The world is undergoing a major societal upheaval. In the post COVID era, how do you think frugal innovations can help achieve “affordable green excellence” in a world that could do with more effective use of resources.
Jaideep: I don’t just think that frugal innovation can help achieve affordable green excellence, I think it is essential to that aim. The only way we can solve the most pressing global problems of climate change and inequality and poverty is through a systemic shift from a resource-intensive approach to growth to one that is resource neutral or resource renewing. To do that, by definition, we have to do more and better with less. And that is precisely what frugal innovation is all about!
Jaideep Prabhu is Jawaharlal Nehru Professor of Indian Business & Enterprise and Director of the Centre for India & Global Business (CIGB). His research focuses on international business, marketing, strategy and innovation. Specific interests include cross-national issues concerning the antecedents and consequences of radical innovation in high-technology contexts such as banking, pharmaceuticals and biotechnology; the role of firm culture in driving innovation in firms across nations; how multinational firms organise their innovation activities worldwide; the forces that drive R&D location decisions and the factors that influence the performance implications of these decisions; the internationalisation of firms from emerging markets; and innovation in emerging markets.