A reverse innovation wind blowing from the developing world

It is often thought that innovation requires huge financial resources. However, a closer look at what has happened recently in India shows that stringent economic conditions can substantially fuel it. Frugal innovation, i.e. “making do with what you have and never giving up,” is increasingly seen as a solution

At a time when in the “rich world” large public deficits makes it difficult to meet citizens’ rising expectations, a growing number of Western governments are drawing their inspiration from their developing world counterparts who have extensive experience in generating growth out of an extremely constrained economic and social environment. The idea behind frugal innovation is simple: based on an inversion of the traditional top down approach, take poor consumers’ needs as a starting point, work backwards, and strip the product down to its bare essentials. For example, Indian telecom giant Bharti Airtel has drastically reduced the cost of providing mobile phone services by sharing radio towers with competitors and outsourcing network construction, operation and support to companies such as Ericsson and IBM*.

Books, articles and reports on the topic are flourishing. They attempt to uncover the parameters that make frugal innovation possible and successful. In short, frugal innovation is not just about redesigning products. It requires rethinking entire production processes as well as business models to squeeze costs and reach more customers who will then wonder, ‘Why buy a $10,000 device if the same company offers a slightly simpler one for $1,000?’

Born in the East, i.e. India, frugal innovation is spreading worldwide. Multinationals are starting to take up ideas developed in the emerging world and deploy them in the West. Have you heard of any frugal device developed in India that might soon become a world hit? Please let us know!

*For more details please see the excellent article Innovation’s Holy Grail, by C.K. Prahalad and R.A. Mashelkar, published in Harvard Business Review.