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The preferred business model in the West has long been the driving force for rapid technological development. This has enriched our society in many ways. But constantly aiming for the new ‘it’ has its backsides and makes it difficult to rethink and develop already existing products. Once a product has been launched, this model will try to reinvent the wheel over and over again. It is an innovative model that does not allow developing existing products or services which is very demanding and corrosive to the world’s resources. This is where frugal innovation comes into play. As a counter-movement driven both by the desire to make products and services available to the billions of people who have limited purchasing power and to spare our globe by thinking more sustainable.
Frugal innovation is a process of reducing complexity and costs for a given product or service. Popularly, you cut to the bone to specify and exclusively focus on the product’s or service core functions. In reverse innovation your main goal is to focus on what is ‘need to have’ rather than implementing inessential and expendable attributes to it. You reduces the complexity and hereby the price to a level that will benefit both people localy in your respected field and worldwide.
A specific example of tech-based frugal innovation, is the transfers and savings of money completely without a bank account. While mobile phones are becoming widely spread in Kenya, there are still many inhabitants without a bank account. The mobile service provider Safaricom discovered this gap and saw its potential. Because of them, the inhabitants are now able to make money transfers and save money through their mobile account. This makes life easier and safer for them.
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Frugal innovation can be an incentive to rethink your company’s innovation- and growth strategy. Everyone in the business can benefit from it. As a start-up, one-man business or freelance. It can be difficult to find your niche in a competetive market, that is why you should take the following 5 frugal innovation bulletpoints into consideration:
Why not think innovation on existing products, services or resources and improve these instead of deleoping new things that are unnecessarily expensive and complex? This is where Navi Radjou hits the head on the nail: “I think of the individuals who devise them as being like alchemists: they can magically transform adversity into opportunity, turning something of low value into something of high value.” In other words, they master the art of doing more with less. This is the essense of frugal innovation.
Frugal innovation has primarely been used in emerging markets, or in companies with limited resources, but in 2012 The Economist also recognized the potential for the Western world to innovate in the reversed way: “ argue convincingly that frugal innovation will change rich countries, too”. Next Billion also states that his type of innovation is not limited to low-tech sectors. There is a huge unresolved potential in the way the IT-industry works in the West, and in order to change this companies should be able to embrace frugal innovation. The quotation from The Economist is a clear sign of a long-lasting change process, where the companies starts to implement frugal innovation in practice.
In 2011, the Danish company Strategos made the report ‘Is the IT-industry prepared for the future?’ 126 of the respondents are CEO’s in the IT-industry. The report has three major points:
It is a report that is eight years old, but relevant as never before. The percentages show clear signs of a unresolved potential in the industry. Frugal innovation could never stand alone in the pursuit of higher growth rates, but must be an incentive to also see opportunities for renewal in existing products and services. In the long run, it will be possible to see the impact of the implementation of frugal innovation. Frugal innovation can be a tool to reach out to completely new markets, because the product or service can be offered at a lower price and can be adapted to a different usage context than the one we are used to in our part of the world
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