Frugal Innovation

Frugal innovation is the ability to generate considerably more business and social value while significantly reducing the use of scarce resources. It’s about solving—and even transcending—the paradox of “doing more with less”. Frugal innovation is a game-changing strategy for an “Age of Austerity” in which firms are being compelled by cost-conscious and eco-aware consumers, employees, and governments to create offerings that are simultaneously affordable, sustainable, and of high quality. Even more than a strategy, frugal innovation is a whole new mindset, a flexible approach that perceives resource constraints not as a debilitating challenge but as a growth opportunity.

The practice of “frugal innovation” in emerging economies such as those of India, Kenya, Brazil and China, is rooted in low cost approaches, constrained resources, and flexible improvisation. The traditional paradigm for innovation is “fail fast, fix fast, learn fast”, while frugal innovation is based on “fail cheap, fail fast, fail often” (Radjou, Prabhu, and Ahuja, 2012). This distinction in the approach and implementation of innovation practices in resource-constrained environments can potentially lead to the emergence of new cost-effective innovation programs in various organizations. The six principles of frugal innovation are: seek opportunity in adversity, do more with less, think and act flexibly, keep it simple, include the margin, and follow your heart (Radjou, Piranha, and Ahuja, 2012). Nonetheless, challenges remain in establishing business models that can be enabled and supported by frugal innovation and combining frugal innovation with digital capabilities. Examples of frugal innovation in digital contexts are increasingly common, as shown in the following: salvaged electronic parts reconfigured and retrofitted to serve new functions such as medical screening devices and low cost projectors (Frugaldigital.org, 2013); the world’s cheapest mobile tablet device; and GE’s frugal “pay-peruse” pricing and just-in-time delivery model for radioisotopes providing affordable PET/CT scan equipment for cancer diagnosis in rural areas (Radjou, Prabhu, and Ahuja, 2011).