Frugal Innovation Report: Developments, Role, and Examples

This report provides an overview of frugal innovation, a concept focused on generating innovative ideas to achieve beneficial results by rediscovering models, redesigning products, and reconfiguring value chains. It differentiates frugal innovation from standard innovation by targeting bottom-of-the-pyramid users. The report explores the developments in frugal innovation, including the "Jugaad" approach in India, with examples such as frugal innovation in cardiac surgery, Tata Motors' Nano car, the Indian Mangalyaan spacecraft, and frugal innovation at Renault-Nissan. It also discusses the role of frugal innovation in business, focusing on cost reduction, price reduction, gaining a competitive advantage, generating beneficial results, and enhancing brand image. The report references key academic and industry sources to support its analysis.

FRUGAL INNOVATION

Table of Contents
1.1 Developments in frugal innovation .................................................................................1
1.2 Role of frugal innovation..................................................................................................2
REFERENCES................................................................................................................................5

1.1 Developments in frugal innovation
Frugal innovation is the process of regenerating the previously generated creative ideas,
in order to gain more beneficial results. In general terms, frugal innovations deals with
rediscovering models, redesigning products and reconfiguring the value chain, in case of any
dissatisfaction or loss generated in the context of operational activities carried in an organisation.
Frugal innovation is a different concept from the standard innovational activities undertaken in a
venture, as it deals with targeting bottom users more rather than targeting top users of offerings
provided (Hartley, 2015). Hence, this type of innovation practices adopted in a company
generates more beneficial results.
A frugal innovative technique is introduced in an organisation, with a view of increasing
the level of profits generated from operational activities carried out in that venture. This process
can be adopted by minimising the use of various resources in production process, thus, reducing
the cost of production activities, which leads an organisation towards the path of creating new
ways for producing products with low cost, thus, resulting in creation of low pricing strategy by
a firm. Thus, frugal innovation is associated with finding more innovative ways in the context of
acquiring more customers for the products or services offered and hence, earning more amount
of profits (Neumann and Gassmann, 2017). The frugal innovation technique was introduced in
India, under the name “ Jugaad.” a few examples of Jugaad that have been undertaken in the
organisational context in India are explained in detail as below: Frugal innovation in cardiac surgery: This innovation was initiated during the 1980s,
in order to provide medical access to those individuals who are deprived of having an
access to medical facilities due to their low income standards. Dr. Narayana
Hrudayalaya, a cardiac in Mysore is establishing this chain of providing cardiac care at
cheapest rates, in order to fulfil medical requirements of low income group people. Tata motor's innovation: Tata group of companies operating in India has innovated a
small car, suitable for a four members family called Nano. This is the cheapest car, which
is affordable by even middle as well as lower class people. The object behind this frugal
innovation was to provide an access to luxurious facilities of life to those individuals of
society, who cannot afford it due to the high level of costs involved in having access to
these luxuries of life. Thus, this kind of creative technique used y Tata Motors has led to
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an increased access to luxurious lives for many people, thus, fulfilling their dream
(Frugal Innovation in cardiac surgery, 2012). The Indian Mangalyaan spacecraft: This Indian spacecraft, which reached Mars in
September 2014, was developed as well as launched by India at a cost which was
approximately 10 times lower than that, which was designed by NASA. This reflected
the frugal innovation system that has been adopted by Indian Astronauts with a view of
launching a spacecraft that can reach Mars and that too at a relatively low costs.
 Frugal innovation at Renault-Nissan: CEO of Renault-Nissan had introduced a major
term, i.e. frugal engineering, in the year 2006. This term clearly stated the ability of
Indian engineers to creative more innovative as well as cost effective techniques of
undertaking production activities. The firm is recognised as one of the leading frugal
innovators of the world, in producing electric cars, which are cost effective as well as
other vehicles which are available at low prices for customers (Radjou and Prabhu,
2015).
The above mentioned are some of the major frugal innovations that have taken place in
the context of reducing cost of production and thus, availing product6s and services to customers
at relatively low prices. These developments undertaken in the context of frugal innovations has
brought fruitful results both for society as well as the organisations which has initiated this
practice of innovation.
1.2 Role of frugal innovation
The frugal innovative techniques adopted by an organisation results in various fruitful
aspects or benefits for that venture. The major role of frugal innovation undertaken in an
enterprise is develop more effective ways, which are cost effective , in order to serve those
customers, who are deprived of high income. Role of frugal engineering in the context of
Renault-Nissan is wide and has generated many beneficial returns, which are explained in detail
as follows: Reduction in cost: The basic object of an organisation to resort to frugal engineering or
innovation is to reduce its cost of producing goods or services that are being offered by
that firm. The frugal engineering techniques that has adopted in Renault-Nissan has
assisted that venture to produce electric cars that are cost effective, i.e. it does not
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involves huge investment in the production activities of this type of cars (Winterhalter
and Gassmann, 2017). Also, other vehicles that have been provided by mentioned firm
are being produced at comparatively low costs from before. Reduction in prices: Frugal innovation plays a major role in reducing the prices that
have been incurred by a brand on its offerings. The pricing policy is prepared by an
organisation in accordance with its cost of production involved in producing that
particular product. As the present venture has been able to reduce its cost of production
incurred in producing cars, by manufacturing electronic cars, the prices that are being
charged for customers have also been reduced. This clearly states the role of frugal
innovation techniques in reducing cost of production, thus, reducing the prices charged
for that product or service produced (Zeschky and Gassmann, 2014). Gain competitive advantage: Offerings provided at low prices, enables an organisation
to gain an advantage over its customers, by stealing their customers. This is possible only
when customers are attracted towards an unique product or service offered by a firm and
that too at a comparatively lower price. Mentioned brand of cars has gained significant
image in the market due to its frugal engineering methods adopted, as a result of which it
has gained an advantage over its competitors in the market by attracting more customers
and capturing a large market area. Generation of more beneficiary results: Frugal engineering to be initiated in a venture
requires the executives as well as engineers appointed in that firm to undertake effective
and high yielding research and developmental plan, which further brings more
beneficiary results for long term. Similarly, the Jugaad that has been introduced in cited
company has played a major role in undertaking global R&D programme, which has
benefited firm in many ways.
 Brand image: It is a well known fact that, innovation brings success to an organisation,
thus, generating a good brand image for its products or services offered in the market. It
can be concluded that, frugal innovative techniques introduced in mentioned venture has
resulted in creating more enhanced image of its brand in the market, thus, creating a good
impact on the minds of customers. Brand image is considered as an important asset for an
entity, as it enhances its value in the market, thus, achieving advantage over its
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competitors. With the past records of Renault-Nissan, it can be stated that it has earned a
high level of brand value due to its innovative techniques used in manufacturing process.
With the above points, it can be concluded that frugal innovation plays an important role
in the context of gaining success in an organisation by achieving a good brand image, reducing
costs, reducing prices and thus gaining an advancement over the competitors.
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REFERENCES
Books and Journal
Hartley, J., 2015. EIGHT-AND-A-HALF PROPOSITIONS TO STIMULATE FRUGAL
INNOVATION IN PUBLIC SERVICES. MANAGING UNDER AUSTERITY,
DELIVERING UNDER PRESSURE, p.139.
Neumann, L. and Gassmann, O., 2017. Insights on Organizational Processes and Structures for
Frugal Innovation.
Radjou, N. and Prabhu, J., 2015. Frugal Innovation: How to do more with less. The Economist.
Winterhalter, S. and Gassmann, O., 2017. Business Models for Frugal Innovation in Emerging
Markets: The Case of the Medical Device and Laboratory
Winterhalter, S. and Weiblen, T., 2014. Business models for frugal innovation: the role of
Resource-Constraints.
Zeschky, M. B. and Gassmann, O., 2014. From cost to frugal and reverse innovation: Mapping
the field and implications for global competitiveness. Research-Technology Management.
57(4). pp.20-27.
Online
Frugal Innovation in cardiac surgery. 2012 [Online] Available through
.<https://economictimes.indiatimes.com/industry/healthcare/biotech/healthcare/frugal-
innovation-devi-shettys-narayana-hrudayalaya-to-conduct-heart-surgeries-at-worlds-
cheapest-rates/articleshow/17762516.cms>.
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