Frugal Innovation and Its Implementation

The target market for frugal innovations is predominantly the developing countries, where institutions that facilitate market and economic transactions are either weak or non-existent. Though the institutional conditions in developing countries are likely to affect frugal innovations significantly, this important aspect of innovation management is yet to receive research attention. To highlight this scholarly oversight, and address this unchartered territory, our chapter explores the institutional factors that influence the development and diffusion of frugal innovations. Using a systematic review of three well-known frugal innovation cases, this study explored the background and contexts of these innovations to extract the institutional factors by which they are characterised. The findings suggest that frugal innovations are influenced by eight major institutional factors: culture and tradition; legal and regulatory regimes; activism of non-governmental organisations; government arrangements and systems; informal relations and partnerships; market/trade arrangements and systems; media influence; and family relations. The extensive discussion section highlights the effects of these factors and their implications for frugal innovation management.

Healthcare systems around the globe are making efforts to decrease cost and improve medical services. Frugal innovation as defined by the Economist (2010) “instead of adding more bells and whistles, strip down the products to their bare essentials.” This is becoming an interesting phenomenon for academia and practitioners for solving the challenges of healthcare systems. Previous studies primarily highlight the importance of frugal innovation in healthcare. The diffusion of frugal innovation in different geographic areas and socioeconomic conditions still needs further discussion. This study aims to identify the factors that affect the diffusion of frugal innovation in healthcare in low-income emerging economies. To do this, 28 semi-structured interviews in the medical specialties of orthopedics and cardiology were conducted in Pakistan from January to March 2018. The sample includes professionals from public, private and NGO hospitals. The main findings suggest that innovation attributes, hospital administration and government recommendation are the main drivers for the diffusion of frugal innovation. Our findings provide guidelines for the diffusion of frugal products and techniques in low-income emerging economies, which enable policy makers and researchers to tackle one on the largest challenges for frugal innovation.

The phenomenon of frugal innovation gains increasing attention among practitioners and academics. However, the literature on frugal innovation is still in its infancy, lacking theoretically grounded studies to explore why and how multinational corporations (MNCs) apply this innovation approach. We propose that frugal innovation holds cross-departmental and cross-market learning potential for multinational corporations. The organizational learning theory offers a fruitful perspective to investigate the underlying motivation of MNCs to engage in frugal innovation and to examine how frugal innovation can be implemented in firms’ global operations. Given the scarce empirical literature on frugal innovation, we decided to apply an explorative research agenda. As the healthcare industry is a vital breeding ground for frugal innovation, we gain in-depth insights into frugal innovation through a multi-case study of Siemens Healthineers projects. From our case study, we develop a comprehensive framework to depict the factors that drive and hinder MNCs’ engagement in frugal innovation from an internal as well as an external perspective. Furthermore, we suggest a five-step approach to align frugal innovation with traditional innovation in MNCs’ innovation strategy. Our approach includes full management support (Step 1), carving-out a frugal innovation satellite from the organization (Step 2), establishing of corresponding interfaces (Step 3), feeding-back information from the corporate level to the frugal innovation team (Step 4), and feeding-forward best practices and innovations from the frugal innovation team to the corporate level (Step 5). This study provides valuable implications for practitioners in MNCs, offering a hands-on approach to leverage the benefits of frugal innovation while exploiting traditional innovation know-how. Additionally, our research fosters academic understanding of the underlying motivations of MNCs to engage in frugal innovation. Our findings open promising avenues for further research, including longitudinal qualitative and large-scale quantitative investigations.

Frugal innovations or frugal products are catching up technologically to serve the needs of humankind. Their features including minimal material consumption, affordability and good functionality make them green from the point of view of sustainable development. However, their no-frills structure typically also necessitates application of rigorous procedures for their design. This chapter stresses on the need for stringent quality control after creating a frugal product out of the rigorous frugal-design process. The quality checks would aid in developing long-term competitive solutions for frugal products while the control would facilitate adherence to stringent product specifications. Accordingly, this chapter stresses the breaking up of quality check into two parts for confirming both the rigor of design procedures and also performance of resulting frugal products.

This paper emphasises the continued and renewed relevance of user-driven, frugal innovation for economic development in China, thus challenging the increasingly prevalent, technology-centred approach to explaining local economic growth in that country. Taking up inspirations from other emerging economies’ discourses, it demonstrates that business models aimed at innovation for mid- to low-income markets continue to play a role for China. Acknowledging that “frugal innovation” as such is not a common term in China to date, it underlines that three fundamental elements of frugal activities are indeed very vividly present in China and deserve further attention. First, the awareness for and ability to designing focused, user-oriented solutions in unorthodox ways, second, the ability to leverage and network distributed capacity outside of the nation’s geographic centres of innovation and, third, ability to explore new models of collaborative innovation that reach beyond corporate boundaries. Furthermore, it highlights that, nowadays, digital technologies enable novel approaches to matching different types of innovation supply and demand at various levels throughout the country.

Frugal innovation has recently attracted the attention of scholars and practitioners seeking new approaches for innovating in both established and emerging economies. However, hitherto, the literature has been concerned mainly with defining the topic; few empirical studies exist on the development process underlying frugal innovation. This study, thus, explores if and how the digital simulation tools of computer-aided engineering (CAE) can foster frugal innovation and what the organizational challenges are that affect this process. Three firms from different industries in Brazil are analyzed through a multiple-case study. The results reveal that CAE can help firms by promoting the development of affordable and quality products, thereby fostering frugal innovation. CAE also contributes to sustainable development by facilitating the design of products that use fewer raw materials along with equipment that consumes less energy. Further, CAE can support business and organizational activities related to marketing and learning. However, firms need to first overcome organizational challenges related to software, hardware, and technical skills to achieve a minimum level of reliability for CAE outcomes. Otherwise, the development of frugal innovation may be jeopardized by inaccurate simulation results.

Frugal Innovation has gained a lot of importance over the past few years, in research as well as industry. Various scientific conferences feature Frugal Innovation as a key topic, and it is a popular focus area of student theses. High-end manufacturers have leveraged the opportunity to explore new markets in Asia and Africa with simple solutions in parallel to their well-known quality brands, such as Daimler (BharatBenz transport vehicles), Claas (Crop Tiger combine harvester) and BSH Home Appliances (Bosch Modern Chulha).

Prior frugal innovation studies have highlighted their role in promoting ecological and social sustainability. The way enterprises coordinate a value proposition with the upstream and downstream value chain activities and a workable financial model is noted to be key in the delivery of innovations. However, the extant literature does not explicitly explain how enterprises combining socially oriented practices with economic rationality, successfully deliver their frugal innovation to low-income consumers. The current study thus contributes to this gap by employing the business model theoretical framework via a single case study design for a Kenyan enterprise supporting precision farming by serving smallholder farmers with digitally enabled low-cost soil sensors and interactive support services. Analysis of the case reveals four approaches that led to the successful delivery of the innovation: long-term focus, adjustable commitment, continuous experimentation, and the bricolage principle. In addition, digital technologies positively influenced the success of the soil sensors and respective business models. This study contributes to the literature streams around frugal innovation and social entrepreneurship, by expanding knowledge around bringing frugal innovations to the market. Moreover, the study develops a framework of value creation and capture, in digitally enabled frugal innovation. This is of practical significance to enterprises engaging in frugal innovation in low-income contexts.

The goal of this research is to show how the frugal innovation concept is perceived and run on product and process strategies in small industrial companies in the state of Alagoas, in the Northeastern Brazilian Region, the state with the least favored social indicators in the country. Frugal innovation shows itself as a new approach to technological solutions focused on solving local problems in emerging markets. Frugal innovation can be considered as a summarized concept encompassing other concepts related to low costs innovations in resource-scarce environments, according to Bhatti and Ventresca (2013), Brem and Wolfram (2014), and Hossain (2018). For this exploratory and cross-sectional research, data was collected in September 2018 through questionnaire application to 25 small industrial entrepreneurs from a selected universe of 80 entrepreneurs in the state of Alagoas. The data was made available for this research by the Federation of Industries of Alagoas (FIEA). Descriptive statistics and multidimensional scaling were used to capture the characteristics and perception of these entrepreneurs about: (a) target market; (b) product strategy; (c) the perception of the entrepreneur concerning their product. The main findings show that the companies surveyed do not perceive the low-income customer in the specific market in which they operate, considering that about 2/3 of the surveyed companies expressed that they supply the upper and middle classes market and that they do not have to be engaged in solving emerging problems of the lower-class market. From the perception map, a methodology called Enterprise Positioning Matrix was developed that shows qualified business standards and practices from the quadrants of the perception map. The matrix shows four general characteristics developed by the companies: technological software; technological differentiation; technological hardware; local adaptation. The contribution of this research to the knowledge field of frugal innovation is to enlighten why not all companies in the context of scarcity develop solutions oriented to the local market conditions. So, the contribution that comes up with this research can facilitate to emerge new methodologies and business-oriented solutions to develop and manage frugal innovation capabilities.

Companies can address resource constraints and environmental problems with technological innovation. This chapter focuses on the disruption of public transportation with battery-operated electric three-wheelers in the emerging market of India. Electric rickshaws have gained and continue to gain much popularity as alternative transportation in this market. The first part discusses what defines these vehicles as frugal innovations. They are a comfortable and economic mode of transport compared to vehicles with traditional combustion engines. Electric rickshaws disrupt transportation by automotive rickshaws and cars with traditional combustion engines and also offer a sustainable solution to environmental problems. Based on this foundation, the next part presents and applies a conceptual model on constraints and diffusion of frugal innovations. This section further illustrates specific affordability and resource constraints and ways of overcoming them in order to help the diffusion of electric rickshaws. The final section concludes and discusses further research opportunities for market disruptions with frugal innovations.

Recent research has highlighted the potential of employee behavior and organizational capabilities to enhance the sustainable renewal and change process. Research investigating various dimensions of employee behavior and organizational capabilities and their effect on value creation in a resource constrained environment is scarce. This is especially true for the effect on sustainable innovation, a topic that requires further investigation. Thus, this chapter makes a contribution to the literature by investigating what dimensions of employee behavior and organizational capabilities are connected to the sustainable innovation of organizations. This chapter provides an empirical examination of the topic for 160 Finnish organizations. The empirical evidence shows that employees’ role clarity, citizenship, and motivation are connected to the sustainable innovation of an organization. Second, the more an organization invests in organization capabilities (in terms of communication), the more likely it is to achieve sustainable innovation. The practical contribution of these findings is to increase the understanding of the determinants of sustainable innovation and thereby assist practitioners in constructing their value propositions.

While the concept of frugal innovation originated in the previous decade with a focus on resource-constrained, under-served consumers living in the Global South, it is finding increasing acceptance and adoption in the economically developed nations of the Global North. Furthermore, frugal solutions are today neither exclusively targeted at (household) consumers nor at the “poor” per se, nor are they confined to a “low tech” context. We can increasingly observe frugal products and services that enable “affordable excellence” to users across customer segments, industrial boundaries, societal strata, institutional domains, and national geographies. A large, but still somewhat unnoticed role in this development is played by the technical advancement in the form of digital transformation. Cutting-edge, general purposes technologies, such as Internet of Things (IoT) and artificial intelligence, are enabling high-quality and context-sensitive products, processes and services that are affordable in terms of their financial and environmental costs. High affordability, high target-specificity and highly effective (not just efficient) resource utilization characterize a digitally frugal solution. This paper is contextualized in the global wind power sector. With the help of illustrative case studies and content analysis, the study generates preliminary evidence that frugal innovations in conjunction with digital transformation can enable “affordable green excellence.” Propositions are made for further research and a definitional update for frugal information is provided.

Digital platforms are changing the nature of business across the world. Firms orchestrate digital innovations and break traditional business boundaries through participation in ecosystems enabled by digital platforms. This chapter focuses on a specific type of ecosystem called a frugal ecosystem. A frugal ecosystem is an entrepreneurial ecosystem usually found in the developing world and is highly constrained by resources, poor infrastructure, and scarcity. Therefore, firms focus on low-cost, sustainable, and social innovation to succeed. Using a case study approach, the chapter provides insights from two frugal digital platform ecosystems in India: 1) the JobMatch platform that is used to orchestrate informal, low-skilled job seekers, connecting them with potential employers; 2) the IGG platform that orchestrates a community of waste management workers to integrate them into the recycling ecosystem of the city. The chapter extends the discussion on digital platform ecosystems in a frugal context and brings new insights. It also leverages literature on digital and spatial affordances to interrelate constraints, institutional voids, and frugal innovation. The novelty of the findings will guide future research in this area.