ECONOMY

Frugal innovation

Jugaad is a Hindi word that roughly translates as “overcoming harsh constraints by improvising an effective solution using limited resources”. As such jugaad innovation is a frugal and flexible approach to innovation that is dominant in India. Other emerging markets such as Brazil, China, and Kenya have their own versions of jugaad. A form of jugaad is increasingly active in the West where it’s often called Do It Yourself (D-I-Y) innovation. Jugaad or frugal innovation was once a much bigger part of Western economies, too. It was the frugal and flexible mindset of jugaad-style entrepreneurs that catalyzed growth in Western economies like that of the US during the Industrial Revolution. In the twentieth century, however, Western nations progressively lost touch with this spirit as they matured into post-industrial economies and became attached to a more systematized, predictable way of life and work. Improvised ingenuity—the essence of jugaad—took a back seat to a more formally structured approach to innovation.

And now, jugaad innovation is making a comeback in Western economies—especially in the US. Indeed, as described in the book, leading Western firms such as 3M, GE, PepsiCo, Procter & Gamble, Renault-Nissan, Facebook, Google, Siemens are now using jugaad to generate breakthrough growth in an increasingly complex and resource-constrained world.

The jugaad approach stands in marked contrast to the traditional structured approach to innovation—involving large R&D departments, big budgets, planning and control. While this structured approach to innovation has its advantages, it is also increasingly criticized for being expensive, rigid and insular. For instance, according to the management consultancy Booz & Company, despite spending a whopping $550 billion on R&D in 2010 alone, the thousand companies in the world that invest the most in innovation—many of which are Western firms—have generated limited returns on their huge R&D investments. Moreover, structured business processes and methods such as Six Sigma, while highly effective for activities like manufacturing, are unable to deliver the agility and differentiation that Western firms need to innovate in a fast-paced and volatile world. Finally, in today’s interconnected world powered by social media, top-down R&D systems struggle to open up and integrate the bottom-up input from employees and customers.

Jugaad on the other hand is flexible, frugal and democratic: it is often bottom-up rather than top-down and involves a much larger number of people beyond those who are typically tasked with doing innovation in corporations. The strength of jugaad innovators lies in their ability to get more from less, experiment continually, and creatively engage people who are typically left out of the innovation process.

Jugaad Innovation_website

Website: http://jugaadinnovation.com/

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