Reverse Innovation

Reverse Innovation – Definition and Examples  What is Reverse Innovation?

Reverse Innovation is the strategy of innovating in emerging (or developing) markets and then distributing/marketing these innovations in developed markets. Many companies are developing products in emerging countries like China and India and then distributing them globally.  Examples of Reverse Innovation:  Tata Motors – Tata Nano While companies like Ford set up its global automobile platform in India and catered to the niche premium segments in India, Tata introduced the Tata Nano for the price conscious consumer in India in 2009. Tata plans to launch Tata Nano in Europe and U.S. subsequently. GE – GE MAC 800 GE’s innovation on the GE MAC 400 to build a portable low-cost ECG machine to cater to the rural population who cannot afford expensive health care was launched as an improved version a year later in 2009, in U.S. as MAC 800. Procter and Gamble (P&G) – Vicks Honey Cough – Honey-based cold remedy P&G’s (Vicks Honey Cough) honey-based cold remedy developed in Mexico found success in European and the United States market. Nestle – Low-cost, low-fat dried noodles Nestle’s Maggi brand – Low-cost, low-fat dried noodles developed for rural India and Pakistan found a market in Australia and New Zealand as a healthy and budget-friendly alternative. Xerox – Innovation Managers Xerox has employed two researchers who will look for inventions and products from Indian start-ups that Xerox can use for North America. The company calls them as ‘innovation managers’. Microsoft – Starter Edition 

Microsoft is using its Starter edition’s (targeted at not so technically savvy customers in poor countries and with low-end personal computers) simplified help menu and videos into future U.S. editions of its Windows operating system. Nokia – New business models Nokia’s classified ads in Kenya are being tested as new business models. Nokia also incorporated new features in its devices meant for U.S. customers after observing phone sharing in Ghana. Hewlett-Packard (HP) – Research Labs in India HP intends to use its research lab to adapt Web-interface applications for mobile phones in Asia and Africa to other developed markets. Tata – Swacch – World’s cheapest water purifier Swacch means clean in Hindi. Tata launched the water purifier – Tata Swacch targeting the rural market in India with the cheapest water purifier in the market. The product does not require running water, power or boiling and uses paddy husk ash as a filter. It also uses silver nanotechnology. It can give purified water enough to provide a family of five drinking water for a year. The company feels it will open a whole new market. Husk Power Systems In India, Husk Power Systems brings light to rural population (over 50,000) by using locally grown rice husks to produce electricity (a unique and cost-effective biomass gasification technology). The company has also received seed capital from Shell foundation in 2009 to scale up operations. LG – Low-cost Air Conditioners (AC) South Korea based LG Electronics (LG) planned to develop low-cost air conditioners targeting the middle and lower-middle classes in India. Their goal was to manufacture air conditioners at the cost of air coolers which were very common. 

Source: http://www.casestudyinc.com/reverse-innovation-definition-and-examples

What is Reverse Innovation?

A reverse innovation, very simply, is any innovation likely to be adopted first in the developing world. Increasingly we see companies developing products in countries like China and India and then distribute them globally.

In our article How GE is Disrupting Itself, we argued that reverse innovation will become more and more common. We also showed that it presents a formidable organizational challenge for incumbent multinationals headquartered in the rich world, and we explained an organizational model for overcoming that challenge.

The fundamental driver of reverse innovation is the income gap that exists between emerging markets and the developed countries. There is no way to design a product for the American mass market and then simply adapt it for the Chinese or Indian mass market. Buyers in poor countries demand solutions on an entirely different price-performance curve. They demand new, high-tech solutions that deliver ultra-low costs and “good enough” quality.

For us, reverse innovation is not a “nice to have” boost to revenue growth rates. We believe it will power the future — not just in poor countries, but everywhere. Many tremendous rich-world business opportunities will arise first in poor countries. To compete, global corporations must be just as nimble innovating abroad as they are at home.

The Evolution of Reverse Innovation: A Historical Perspective

The globalization journey of American multinationals has followed an evolutionary process which can be seen in distinct phases.

Phase 1 — Globalization —Multinationals built unprecedented economies of scale by selling products and services to markets all around the world. Innovation happened at home, and then the new offerings were distributed everywhere. 

Phase 2 — Glocalization — In this phase, multinationals recognized that while Phases 1 had minimized costs, they weren’t as competitive in local markets as they needed to be. Therefore, they focused on winning market share by adapting global offerings to meet local needs. Innovation still originated with home-country needs, but products and services were later modified to win in each market. To meet the budgets of customers in poor countries, they sometimes de-featured existing products. 

Phase 3 —Local Innovation — In this phase, the first half of the reverse innovation process, multinationals are focusing on developing products “in-country, for country.” They are taking a “market-back” perspective. That is, they are starting with a zero-based assessment of customer’s needs, rather than assuming that they will only make alterations to the products they already have. As teams develop products for the local market, the company enables them to remain connected to, and to benefit from, global resource base.

Phase 4 — Reverse Innovation — If Phase 3 is “in country, for country,” Phase 4 is “in country, for the world.” Multinationals complete the reverse innovation process by taking the innovations originally chartered for poor countries, adapting them, and scaling them up for worldwide use.

Of course this is a simplified view of the world, but in essence it holds true. Now, more than ever, success in developing countries is a prerequisite for continued vitality in developed ones.

Reverse Innovation: Organizing Principles

In our view, the "first principles" of reverse innovation are as follows:

- Reverse innovation requires a decentralized, local-market focus

- Most if not all the people and resources dedicated to reverse innovation efforts must be based and managed in the local market

- Local Growth Teams (LGTs) must have P&L responsibility (this is a key hurdle for American multinationals)

- LGTs must have the decision-making authority to choose which products to develop, how to make, sell, and service them

- LGTs must have the right (and support) to draw from the company’s global resources

- Once tested and proven locally, products developed using reverse innovation must be taken global which may involve pioneering radically new applications, establishing lower price points, and even cannibalizing higher-margin products.

- Reverse innovations can be, but are not always, disruptive innovations

A Premise to ‘Reverse Innovation’

The reverse innovation currently happening in the industry will bridge gaps and is expected to meet the needs of the government sector

Value is an important attribute in life. From a marketplace perspective, it defines and dictates what every consumer wants from a seller, and what every seller uses to differentiate among other sellers. It is perhaps the single most influential attribute in the way people perceive products, services, or solutions. In the technology world, how many times do customers ask vendors, ‘But, what value does this product offer me?' and make their purchase decisions based on what ‘value' is offered to them? All the time, I'm sure.

What's Reverse Innovation?

The reason I chose ‘value' to begin this article with is because the perception and acceptance of ‘value' as a quality has always defined economics and because ‘value' has perhaps contributed immensely to the creation of ‘reverse engineering' in the industry. ‘Reverse engineering' is the term coined, made famous and

meaningful by Prof Vijay Govindarajan and Chris Trimble in their book Reverse Innovation: Create Far From Home, Win Everywhere. Authors describe reverse innovation ‘is any innovation that is first adopted in the developing world'.The reasoning behind reverse innovation is that the solution needs of developing countries are better met if they are developed keeping the local market needs in mind, as against keeping a global market in mind.The meaning and influence of the ‘value' of a particular product to a customer in a developing market like India is powerful and very different compared to how a customer from an advanced/developed market perceives it. A fundamental requirement of doing business in India for example is that a product has to appeal to the price sensitivities of the market, or in clearer words, be cost-effective. This is making companies change the way the business has been run historically, which is, to think of a product fit for the mass market globally and distribute it locally.As the needs of customers-enterprises, governments, individuals, etc.-became increasingly local driven by affordability, cultural necessity, relevance, they increasingly looked within (the local market) to give them the right solutions.As a result, strategic changes were made in the manner companies functioned. Offshore development centers were put on a transformational path to enabling solutions that local emerging markets needed, thus becoming ‘local development and innovation centers'. Frugal development became a priority.

Addressing the Government Sector

Emerging markets display one key characteristic that forms the core of their ‘emergence', so to say. Governments of these economies have displayed hunger, ambition, and the will to invest in development to enable widespread access of inexpensive healthcare, education, PC, and internet connectivity, broadband, infrastructure, power, etc.Government is focusing on ICT as the pivot around which development will be catalyzed has been a significant trait. Comparing governments from wealthier nations to that of emerging nations, the former have tighter public debt ratios and increased focus on growth investments, while the latter are focused on ICT investments to enable large infrastructure readiness and citizen access.

Public sector organizations in India have always faced a challenge in securing funds to ably support their IT investments. While this is changing now, they are still plagued by legacy systems, making it challenging to build a transparent and connected government.

Governments in emerging markets are under tremendous pressure to offer better citizen services and keep pace with the increasing citizen demands and queries. In such a scenario, governments need to leverage the power of IT much better. One such way is to move from paper based processes to automated back-office processes.Currently, government departments in India still follow an age old method for case approvals through a paper intensive and manual process. Case approvals are used for all types of government functions, such as tax processing, driver's license applications, visa and passports, criminal justice and the courts, grants management applications, and so on. The paper intensive and manual process is both time consuming and prone to mistakes.

Recognizing this need for localized ICT solutions, IT companies have responded with change. First, they built and based teams locally and strengthened their core engineering teams with the skills and experience needed to develop innovative solutions. They empowered this talent pool to learn from within and outside. Secondly, they got closer to the market's customers by adopting a ‘feet-on-the-street' approach, to understand their needs, cultural sensitivities, and local imple75mentation problems to gain the insight needed to develop solutions ‘from the ground up'. Thirdly, and importantly, they stuck to making these solutions affordable, in line with the needs of governments in the emerging markets.

Conclusion

As government departments in India and other emerging markets deploy more electronic based citizen services, there will be an increasing opportunity for technology vendors to provide solutions customized to meet their needs. While solutions made for the developed world are available, they are mostly only applicable as a best practice, and not necessarily meet the needs of the local market. Reverse innovation has only just begun in the Indian market with examples like Tata Nano, and in the government sector with solutions for education, telemedicine, affordable computing, PC/mobile/broadband connectivity, financial inclusion, and information workflows. It can be well-expected that such instances of reverse innovation will only grow from here, and inspire other emerging markets and developed nations.Watch out for the fact that between 2011 and 2025, the emerging economy GDP is expected to grow at around 4.7% every year, more than double of the 2.3% rate of the developed world (per World Bank projections), as a result of a vastly expanding middle class with higher discretionary incomes and a continuing appetite for consumption. The success of addressing consumer need in emerging economies will be driven by local innovation, not a global approach to a local problem.

Reverse innovation's big impact for consumers

For most of the last two centuries innovations have flowed from rich countries to poor countries, but in the coming decades we are likely to see innovations also flow in the opposite direction, from poor to rich countries.

If “reverse innovation” sounds counter-intuitive, it is. One can readily understand why poor countries will embrace innovations from rich countries. It is no surprise, for instance, that demand is booming in emerging economies for smartphones, washing machines, cars, and the like.

But why would rich countries want innovations from poor countries? To focus on one important reason: there are many more poor people in rich countries than one might expect, and they’re looking for every way to stretch their purchasing power.

In the US, the number of people below the poverty line is at record levels, and many more are being squeezed by stagnant or declining incomes. More than fifty percent of college graduates are unemployed or underemployed and living at home.

Innovations from poor countries are just what the doctor ordered for such consumers.

Take, for instance, the idea of microfinance, which uses novel methods to make affordable micro-loans to poor borrowers. The innovation was pioneered by Grameen Bank of Bangladesh, but it is just as useful in channeling funds to the inner-city poor in rich countries. In fact, Grameen America, with four branches and $56 million in loans, does just that, and it is being joined by big banks like Citigroup, which launched its microfinance business in 2005.

Multinational companies like Unilever and Nestle discovered that the poor in emerging economies could not afford to buy standard sizes of coffee, toothpaste, or shampoo, but loved single-serve sachets priced at pennies per packet. Guess what? In the aftermath of the 2008 financial crisis, Unilever discovered that the same approach worked well with millions of recession-ravaged consumers in Greece, Spain, and the US.

Or take the example of telephone service in India, where 95 percent of users have low-cost prepaid plans in which they top-off balances in tiny amounts, because they live hand to mouth. According to the Wall Street Journal, more and more Americans are cancelling service with high-priced providers like Verizon and AT&T and switching to prepaid plans with no long-term contracts or minimum usage requirements. Today, almost one in four US users is on a prepaid plan!

These examples illustrate the beginnings of reverse innovation. Think of all the products and services where value-conscious US and European consumers might welcome the low-cost and innovative solutions adopted in poor countries.

For instance, consider wireless banking of the kind pioneered in Kenya, which would require no minimum balance, low transaction costs, and eliminate the need for brick-and-mortar branches and ATMs? Or car-sharing and ride-sharing solutions of the kind inspired by Zimbabwe that are gaining in popularity in California? Or inexpensive healthcare based on telemedicine, specialization, and low-cost medical devices of the kind pioneered in China and India? Or low-cost education that leverages distance-learning and other technologies to drastically lower the cost of going to college?

Reverse innovations will likely disrupt many US industries in the years to come—and low-income citizens will be the better for it.

'Jugaad has hurt India a lot'

The world is witnessing something extraordinary: Innovations are happening first in the poor countries and then they are migrating to advanced nations, says one of the world's most influential business thinkers.

Vijay Govindarajan, Earl C Daum 1924 Professor of International Business at the

Tuck School of Business, Dartmouth College, says the word jugaad has distracted India from the real issues.

Govindarajan, who has been ranked number three on the Thinkers 50 list of the world's most influential business thinkers, tells Faisal Kidwai in an interview that strong America and Europe are good for India.

Here are the excerpts:

You have written an article, How GE is Disrupting Itself, that pioneered the concept of reverse innovation. Harvard Business Review has rated reverse innovation as one of the 10 big ideas of the decade. What is reverse innovation?

Historically, innovations happened in rich countries, such as the US, and then they moved to a poor countries like India. That's why most Nobel-prize winners are in the US or a rich country like Germany. People had money and they were willing to pay, so innovations happened there.

But now we are seeing something extraordinary: Innovations are flowing the other way. They are happening in the poor countries first and then they are migrating to advanced nations. This is what reverse innovation is all about.

Could you cite any examples?

There are lots of examples. John Deere, a major manufacturer of tractors in the US, is now producing utility tractors that are more suited to farming in India, where farmers don't have acres of farm land. John Deere now considers its Indian operations a centre of excellence.

Second example is Narayana Hrudayalaya Hospital in Bangalore, which is doing open-heart surgery for as little as $2,000, while the same operation costs as much as $50,000 in the US.

They are offering world-class technology for such complicated procedures as heart surgery for such a low price only because they want to serve the masses.

Now, they are opening a 2,000-bed hospital in Cayman Islands, which is a 50-minute flight from Miami, to serve the Americans. That's a classic case of reverse innovation.

Third is General Electric. They have made an ECG machine in India that sells for $500, while the same machine costs anywhere from $3,000 to $5,000 in the US. This is an ultra-low-cost ECG machine primarily meant for rural India. It's creating exciting opportunities for GE, but it's also helping Indians and the machine is now being sold in several countries.

You have said that Indian companies should not dumb-down technology and that innovation doesn't mean just products. What is innovation?

Innovation is about using latest technology, not yesterday's technology. In India, we use the word jugaad a lot, which means improvisation and that has distracted us from the real issue. Jugaad is not innovation.

Narayana Hrudayalaya is not doing jugaad at heart surgery. It's using the same technology that's used at Mayo Clinic, a famous medical facility in New York. If you want to drive the cost down, then you will have to use the latest technology.

Innovation is not attaching bullock cart to a tractor. Innovation is using latest technology to solve India's problems.

Then we have to go beyond product innovation. Tata Nano is a great example. They have a car that works but, somehow, it hasn't reached the same level of success it was hyped to.

Part of the problem is that business-model innovation hasn't taken place. Product is just one part. Business-model innovation means marketing strategy, branding, distribution, etc. These areas all important and innovation is lacking there.

Sometimes, there is no need of a new product at all. The business model of an existing product can be innovated. Apple's iPod is a perfect case. People had been listening to music long before Apple came, but it innovated the business model and launched the iPod. That's a great example of using latest technology.

Indians should not stop at product but also focus on business-model innovation. Again, Narayana Hrudayalaya is the best example.

The global economy, especially Europe and US, is going through some tough economic times. How do you see the global economic scenario playing out?

The overall growth, both in the United States and more so in Europe, had been dramatically reset after the 2008 financial crisis and, although there is a recovery, but it's a very slow recovery and it's going to take a long time before we see the good old days.

This has put the spotlight on companies from the US and Europe to seek avenues of growth, which happens to be in the so-called emerging markets. That is the reason why my latest book, Reverse Innovation, has touched such a nerve and has been a bestseller.

Indian economy is facing its own difficult period. Are you optimistic about India?

Absolutely. Firstly, strong America and Europe are good for India and a strong India is good for America and Europe. If the US is strong, it will buy more products from India, it will invest more in India and it will develop more business ties with India.

A competitive US or Europe is very important for India because we are in a global

world and interconnections between countries is very high.

After every recession there is a boom. Are we seeing signs of markets picking up?

I'm always an optimist and things are improving but we are some ways away from the boom. In the US, there are signs of improvement, but it's like two steps forward, one step backward and five steps sideways. The recovery isn't consistent and there's uncertainty.

What are your thoughts on political and economic impasse in India?

I'm an optimist but, of late, I've been worried and the worry is coming from the political gridlock. While it's true that, unlike China, India's growth is based on private sector and Indian entrepreneurs are doing a fantastic job worldwide, but the country cannot grow until it has a good political system and a strong leader. Recent regional elections show that a strong and leading party is unlikely to emerge any time soon.

What happens without strong leadership is that reforms get stalled, technology development doesn't receive focus and other such important areas take a back seat.

I hope in the next elections Indians are able to create the strong leadership that is needed.

We are hearing a lot of talk about increasing protectionism in the US? Do you think the US is headed towards more protectionism?

The greatness of America is its openness. The founders of this country knew that to make a nation strong they needed to be as open to immigrants as possible. It's a fact that immigrants make the pie bigger. They create jobs and opportunities.

But recently there has been some talk of reducing this openness. Some of it has to do with the slowdown in the economy. When the economy is not working well and when jobs are in short supply, 'outsiders' get blamed.

That's a very wrong way to look at things. Those who come from the outside create jobs. America should focus on the global economy and also continue the policy of freedom.

But, all said and done, America is still the most welcoming and the most open country in the world.

Jugaad Innovation…Think Frugal, Be Flexible, Drive Growth: India’s Gutsy Art of Improvising Ingenious Solutions

Jugaad Innovation is about: Less, but better… it concentrates on the essential aspects and not burdened with non-essentials… back to purity, back to simplicity.Jugaad is a colloquial Hindi word that roughly translates as ‘an innovative fix; an improvised solution born from ingenuity and cleverness’. Jugaad innovation is, quite simply, a unique way of thinking and acting in response to challenges; it is the gutsy art of spotting opportunities in the most adverse circumstances and resourcefully improvising solutions using simple means. Jugaad is about doing more with less.  The entrepreneurial spirit of Jugaad is not limited to India. It is widely practiced in other emerging economies such as China and Brazil, where entrepreneurs are also pursuing growth in difficult circumstances. Brazilians have their own word for this approach ‘gambiarra’, and Chinese call it ‘zizhu chuangxin’, and Kenyans refer to it as ‘jua kali’. The French have the term‘Systeme D’, and the U.S. has  ‘yankee ingenuity’.  Jugaad was once a big part of Western innovation and it was the flexible mindset of innovators that catalyzed growth during the Industrial Revolution. In the twentieth century, as North American and European economies expanded, large corporations began to institutionalize their innovation capabilities, creating dedicated R&D departments and standardizing the business processes needed to take their ideas to market. They focused on managing innovation, just as they managed any other business activity. This industrialization of the creative process led to astructured approach to innovation with the following key characteristics: big budgets, standardized business processes, and controlled access to knowledge. This approach delivers ‘more with more’. According to Booz & Company, the three industries that spend the most on R&D; computing and electronics, healthcare, and automotive, struggle to generate a steady stream of ground breaking inventions, despite their hefty R&D investments. Hence there is a weak correlation between how much money a firm spends on R&D and how well it performs in terms of developing and marketing products that generate a significant financial return. To put it bluntly, money can’t buy innovation. Jugaad is a wake-up call for mature companies with over-developed processes for innovation…

In the article “Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth” by Navi Radjou, Jaideep Prabhu, & Simone Ahuja write:  The processes, systems, and mindsets that underpin the structured approach to innovation in most Western firms are now failing. Today’s highly complex and turbulent business environment demands a new approach to innovation and growth– one that is frugal, flexible, and participative.  Many Western firms’ structured approach to innovation is ill-equipped to help them innovate faster, better, and cheaper as they seek to cope with five major components ofcomplexity; scarcity, diversity, interconnectivity, velocity, and breakneck globalization. The basic principles of Jugaad can be distilled into six guiding principles, which anchor the six practices of highly effective innovators in complex settings like emerging economies. Collectively, these six principles of Jugaad help drive resilience, frugality, adaptability, simplicity, inclusively, empathy, and passion, all of which are essential to compete and win in a complex world. Adopting these principles could also help Western firms innovate and grow in a highly volatile, hypercompetitive environment. The six principles are: Seek opportunity in adversity. Do more with less. Think and act flexibly.

Keep it simple. Include the margin. Follow your heart.

In the article “India’s Next Global Export: Innovation” by Reena Jana writes: Jugaad, India’s improvisational style of invention focuses on being fast and cheap– attributes just right for these times. A Hindi slang word, Jugaad (pronounced ‘joo-gaardh’) translates to an improvisational style of innovation that’s driven by scarce resources and attention to a customer’s immediate needs, not their lifestyle wants.  Like previous management concepts, Indian-style innovation could be a fad. Moreover, because Jugaad essentially means inexpensive invention on the fly, it can imply cutting corners, disregarding safety, or providing shoddy service. Jugaad means; ‘somehow get it done, even if it involves corruption’, cautions M.S. Krishnan, a Ross business school professor. ‘Companies have to be careful. They must pursue Jugaad with regulations and ethics in mind’. Nonetheless,Jugaad seems aligned with the times. Recession-slammed corporations no longer have money to burn on R&D. Likewise, consumers are trading down to good-enough products and services. Meantime, the Indian economy continues to plow ahead despite the global recession suggesting its executives have a winning strategy.  Indian engineers have long known how to invent with a whole alphabet soup of options that work, are cheap, and can be rolled out instantly… Jugaad.

In the article “Jugaad: Lessons in Frugal Innovation” by Mitali Sharma writes: What can companies in the developed world learn from innovators who make irrigation pumps from bicycles or solar ovens from old suitcases? Quite a bit, as it turns out. Frugal innovation and Jugaad principles are especially important in today’s economy, for two reasons. First, corporations adversely affected by the slow economy lack resources for R&D. They need an alternate approach and Jugaad inspires offerings that are economical for the consumerand the supplier, without having to sacrifice margin. Second, the practice has long been considered an ‘antidote’ to the complexity of India, a country of perpetually shifting cultures and profound scarcity. Now the same principles can help address issues faced by multinationals whose capacity for breakthroughs has been stifled by rigid internal processes, long R&D cycles, and above all else, multiple layers of complexity. This alternate approach to innovation is an excellent disruptor of rigid legacy processes because it democratizes innovation, stripping away extraneous features and processes, while opening the door to ideas from unconventional sources. The result is a clean slate, and a chance to re-orient innovation around the customer.

In the article “Jugaad – A Model for Innovation” by Vijay Govindarajan writes:  There isalways a danger when you come up with concepts like Jugaad. It could be mistaken as ‘chalta hai’ or ‘everything goes’. But Jugaad, at the heart, is about a new model ofinnovation, which is based on constraints. Jugaad really means solving a customer problem in the most innovative way when your resources are constrained. There are three keys to Jugaad: One, for jugaad to really work, start by understanding the customer problem. Talk to customers, understand what they really want. Two,

for a zero-based solution approach, forget about what exists now. Take a clean sheet of paper; start with the customer’s problem, and ask, ‘How do I solve it?’ Three, focus on execution. Innovation is not creativity. Creativity is about the big idea. Innovation is about executing it, and making money out of your idea. It’s about making the right resource allocations, building the right team, and getting the product to the market.

In the article “Monday Morning Motivation: Jugaad – the Art of Frugal Innovation” by Cherian Joseph writes: Adjustment is a way of life in India. Systems are broken and they do not, for the most part, get fixed. Instead, ingenious attempts are made to circumvent the broken system, for two reasons: the painful ordeal of battling government bureaucracy, and the frugalness that is in the DNA of most Indians. Everyone is scrambling to live the best possible life with the least possible resources. Life seems like a constant compromise. Interestingly, this situation has resulted in a new class of innovation– a class not led by scientists using expensive resources, but one led by every housewife, street hawker, farmer, transporter or trader. Here innovation is led by creativity, common sense and, more importantly, the need to survive. There is even a colloquial name for this class of innovation for adjustment– Jugaad. Jugaad means a workaround solution with limited resources. Management gurus now call this ‘frugal innovation.’ The power of Jugaad is amplified in the rural areas where resources are scarcer and the needs more pressing. The concept of Jugaad is finding its way into large-scale industries in India as well. Despite the positives, I am still wary. I noticed how all these innovations are in some way a result of the need to circumvent the core issue of lack of access to basic amenities like electricity, water, transportation and agricultural tools. The art of Jugaad is well placed for an India where there is so much hardship in securing daily needs for so many. The overwhelming force of life here that drives people to create their own solutions to intractable problems is inspiring. This is evidence of the resiliency of the human spirit, and if there is anywhere that can come up with its own innovative solutions, it is India. What will be truly ingenious is to see is how we leverage our frugal innovation strength to attack core issues and not circumvent them.

Jugaad is a ‘bottom up’ innovation approach that provides organizations in both emerging and developed economies the key capabilities they need to succeed in a hypercompetitive and fast-moving world: frugality, inclusivity, collaboration, and adaptability. Highly resource-constrained and chaotic environment inspires Jugaad innovators; i.e., entrepreneurs and corporations who practice Jugaad to develop market-relevant products and services that are inherently affordable and sustainable. Rather than reinventing the wheel or splurging on expensive R&D projects, they develop new solutions by building upon existing infrastructure and assets, as well as by recombining existing solutions. Jugaad innovators recognize that consumers in emerging markets are low earners, but high yearners. As such, Jugaad innovators attempt to meet customers’ high aspirations by developing solutions that are not only affordable, but that also deliver superior value. In summary, they strive to deliver more (value) for less (cost)…

The traditional approach (structured R&D projects) to innovation has become too rigid, insular, and bloated… it consumes a lot of resources and makes a lot of noise but produces little of significance.