Months ago, I had the opportunity to interview Professor Jaideep Prabhu, after I was impressed by the book he co-authored: Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth, described by The Economist as “the most comprehensive book” on the subject of frugal innovation.
Jaideep Prabhu is the Jawaharlal Nehru Professor of Business and Enterprise at the Judge Business School at the University of Cambridge, England. Professor Prabhu is also the Director of the Centre for India & Global Business (CIGB).
Having this great opportunity, I wanted to ask him a few questions:
A.O: — How do you see the current situation of poverty around the world? Do you think that due to the present global crisis, the poverty model has changed?
J. P: — A lot of progress has been made on reducing poverty over the last 20 years, large numbers of people have been pulled out from big poverty. But I think honestly more can be done, because it is a reality that nowadays, 1 billion people are still living below the poverty line around the world; that’s a very tough problem to deal with. Honestly, progress could be made, specially now with the new UN sustainable development goals and targets. And then above that, there are probably 2 to 3 billion people who are not below the poverty line, but are obviously poor. Typically, they are outside ‘formal economy’, so they don’t have access to banking or clean electricity services, or healthcare, etc. And I think that this group is potentially a very reachable kind of market, which opens up lots of interesting possibilities to new services.
A.O: — Some weeks ago, I was reading an interview to Professor Esther Duflo, a French economist that claims that scientific research can be one of the most powerful weapons to eradicate poverty. She shares an example about why children in Kenia didn’t attend to class at school: they discovered that diarrhea was the main cause. What do you think that could be a good weapon or method to eradicate the poverty (or at least try to solve part of it)? [You can watch the TED conference by Esther Duflo ‘Social experiments to fight poverty’ here]
J.P: — Well, certainly research can be helpful. However, as an academic, I would also say that I am skeptical about how much only academic research can do. Academics probably exaggerate what effect their research could have solving this problem; I mean, after all, lots of economists have been investigating this fact for approximately sixty years, but the simple investigation doesn’t help too much. Analyzing the issue doesn’t make the issue go away. New generations of economists like Duflo are focusing also in practical action, and I think there is the key point. Practical actions carried out by NGOs, foundations, and increasingly, for-profit corporations (usually large companies) are helping to change this impact.
A.O: — I read Jugaad Innovation while I was in Pune, India, four years ago. Can you describe us what ‘Frugal Innovation’ is?
J.P: — Frugal innovation is basically how to do something better or do more of something (bigger) with less resources. Sometimes it is referred as ‘reverse innovation’, ‘inclusive innovation’ and ‘constraint-based innovation’ — and describes a type of innovation in which technological products are customised at low prices and high volumes in and for emerging markets.
A.O: — Can you give us some examples of frugal innovation?
J.P: — M-Pesa. It is a mobile service payment offered by a mobile company, which is a Vodafone subsidiary in Kenya. A basic mobile phone service to allow people to send and receive money in electronic currency, that is not inside the banking system. The target is people that can not afford to pay Western Union (or similar services) and/or have not bank accounts. It was made frugally. They didn’t create any new infrastructure: they took what people needed and what they already had and combined it. Summing up, they created a solution based on existing tools. And it was not even their working area, because they are a telephone company.
Or GravityLight, combining kinetic and potential energy, it works by connecting an elevated weight — filled with rocks or sand — to a pulley system that slowly powers a generator as the weight falls to the ground. It aims to solve the problem that over 1.2 billion people have globally; they have no access to electricity and millions more have an unreliable supply. Instead they use dangerous, polluting and expensive kerosene lamps for light. [You can watch a video explaining how it works here].
A.O: To finish. When I was in India, I was visiting Godrej and they were launching the “chotukool” (mobile food and beverage cooler) as an disrupting innovation. Do you think companies (especially in developing countries) have the moral obligation of launching products that are more adapted to the real situation of a country? Delivering this way goods for the needs instead of creating needs to buy products?
J.P: Yes, there’s a moral responsibility. Why create needs and products for this newborn needs when they are already needs to be solved and aren’t being taken care of? In my opinion a company needs to combine social impact and businesses, so they can do businesses in a responsible way. Definitely it is the new reality where economy is going to arrive soon.
As The Nordic Frugal Innovation says: ‘slow growth or no growth in developed economies along with environmental constraints, rapidly ageing societies and various structural problems will increase demands for more frugal models of production and consumption and will require radical new models in areas such as health care, social care and other aspects that affect directly or indirectly everyday life. This will increase demands for frugal innovation techniques along with the products and services associated with them.’
Also, the developing countries markets continue to grow and are projected to dominate the global economy in the coming decades. Due to this, there is a need to break out of traditional business thinking and challenge the assumptions about how companies research, design, develop, and manufacture products. There needs to be a more entrepreneurial approach from the executive management level in companies. This needs to be done in a manner of win-win-win for the company, the customer and the environment. Frugal innovations should not be just about cost savings. The eventual service or product that comes from the application of it should be more affordable, functional and reliable.
As I talked to Professor Prabhu, few questions came to my mind: How do we rethink our businesses to adapt our impact to this new scenario? And how can we be more frugal when we innovate? Those for sure, are good questions to ask ourselves if we really wanna be able to give the right answer to the new world to come.