Frugal innovation or frugal engineering is the process of reducing the complexity and cost of a good and its production. Usually this refers to removing nonessential features from a durable good, such as a car or phone, in order to sell it in developing countries. Designing products for such countries may also call for an increase in durability and, when selling the products, reliance on unconventional distributions channels. Sold to so-called "overlooked consumers", firms hope volume will offset razor-thin profit margins. Globalization and rising incomes in developing countries may also drive frugal innovation. Such services and products need not be of inferior quality but must be provided cheaply.
Several US universities have programs that develop frugal solutions. Such efforts include the Frugal Innovation Lab at Santa Clara University and a two quarter project course at Stanford University, the Entrepreneurial Design for Extreme Affordability program.
Variety of terms
Many terms are used to refer to the concept. "Frugal engineering" was coined by Carlos Ghosn, the joint chief of Renault and Nissan, who stated, "frugal engineering is achieving more with fewer resources."
In India, the words "Gandhian" or "jugaad", Hindi for a stop-gap solution, are sometimes used instead of "frugal". Other terms with allied meanings include "inclusive innovation", "catalytic innovation", "reverse innovation", and "BOP innovation", etc.
Spotlighted in a 2010 article in The Economist, the roots of this concept may lie in the appropriate technology movement of the 1950s although profits may have been first wrung from underserved consumers in the 1980s when multinational companies like Unilever began selling single-use-sized toiletries in developing countries. Frugal innovation today isn't solely the domain of large, multinational corporations, however, as small, local firms have themselves chalked up a number of homegrown solutions. While General Electric may win plaudits for its US$800 EKG machines, cheap cell phones made by local, no-name companies and prosthetic legs fashioned from irrigation piping are also examples of frugal innovation.
The concept has gained popularity in the South Asian region, particularly in India. The US Department of Commerce has singled out this nation for its innovative achievements saying in 2012 that "there are many Indian firms that have learned to conduct R&D in highly resource-constrained environments and who have found ways to use locally appropriate technology..."
Frugal innovation is not limited to durable goods such as the GE US$800 EKG machine or the US$100 One Laptop Per Child but also services such as 1-cent-per-minute phone calls, mobile banking, off-grid electricity, and microfinance.
- ChotuKool fridge
A tiny refrigerator sold by Indian company Godrej, the ChotuKool may have more in common with computer cooling systems than other refrigerators; it eschews the traditional compressor for a computer fan. (It may exploit the thermoelectric effect.)
- Jaipur leg
A low cost prosthetic developed in India, the Jaipur leg costs about $150 to manufacturer and includes some clever improvisations such as incorporating irrigation piping into the design to lower costs.
- Mobile banking
Mobile banking solutions in Africa, like Safaricom's M-Pesa, allow people access to basic banking services from their mobile phones. Money transfers done through mobiles are also much cheaper than using a traditional method. While some services can be accessed on a mobile alone, deposits and withdrawals necessitate a trip to a local agent.
- Nokia 1100
Designed for developing countries, the Nokia 1100 was basic, durable, and–besides a flashlight–had few features other than voice and text. Selling more than 200 million units only four years after its 2003 introduction made it one of the best selling phones of all time.
- Sorghum beer
In Africa, several companies including SABMiller and Diageo, following in the footsteps of local home brewers, have made beer more affordable by using sorghum or cassava in place of malting barley and reducing packaging costs by selling kegs not bottles.
- Solar light bulb
In some Philippine slums, solar skylights made from one liter soda bottles filled with water and bleach provide light equivalent to that produced by a 55 watt bulb and may reduce electricity bills by US$10 per month.
- Tata Nano
- Mangalyaan(Mars orbiter Mission)
Mangalyaan is the cheapest inter-planetary mission that, at just $74 million, a tenth of Nasa's Maven mars mission. ISRO developed the orbiter, pulling of an incredible feat of being the first to succeed in its maiden attempt
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- For Santa Clara University's lab, see "About Frugal Innovation". Santa Clara University. Retrieved June 20, 2012.
- For Stanford University's course, see "Hasso Plattner Institute of Design at Stanford: Entrepreneurial Design for Extreme Affordability". Stanford University Institute of Design. Stanford University. 2010. Retrieved June 20, 2012.
- Nirmalya Kumar, Phanish Puranam (2011). India Inside. Harvard Business Press. p. 114. ISBN 9781422142400.
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- Bhatti, Yasser Ahmad and Ventresca, Marc. 2012. The Emerging Market for Frugal Innovation: Fad, Fashion, or Fit? (January 15, 2012) Available at SSRN: http://ssrn.com/abstract=2005983
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- Tiwari, Rajnish and Herstatt, Cornelius (2012): "Assessing India's lead market potential for cost-effective innovations", Journal of Indian Business Research, Vol. 4 Iss: 2, pp.97 - 115
- "U.S. Commerce Secretary John Bryson Visits Jaipur Foot". US Department of Commerce. March 28, 2012. Retrieved June 24, 2012.
- Roberts, Sandy (March 16, 2014). "Origami Microscope for Just 50 Cents". makezine.com. Maker Media, Inc. Retrieved 25 May 2014.
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- For transferring money with only a mobile, see "Send (Transfer) Money". Safaricom. Retrieved June 23, 2012.
- For paying bills with only a mobile, see "Pay Bill". Safaricom. Retrieved June 23, 2012.
- For necessity of visiting an agent when depositing money, see "Deposit Cash to Your Account". Safaricom. Retrieved June 23, 2012.
- For necessity of visiting an agent when withdrawing money, see "Withdraw Cash". Safaricom. Retrieved June 23, 2012.
- Virki, Tarmo (May 3, 2007). "Nokia's cheap phone tops electronics chart". reuters.com. Thompson Reuters. Retrieved June 20, 2012.
- Herrman, John (Oct 19, 2010). "The Most Popular Phone in the World". gizmodo.com. Gawker Media. Retrieved June 23, 2012.
- "Beer in Africa: From lumps to lager; The race to slake a continent’s thirst". The Economist. Mar 24, 2012. Retrieved August 12, 2012.
- "SABMiller strives to make beer affordable in Africa". reuters.com. Thompson Reuters. Mar 13, 2012. Retrieved August 12, 2012.
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- Frugal innovation: A new approach pioneered in the Global South, Ideas for Development.
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