Say the word ‘frugal’ – and it conjures images of making do, eking out scarce resources, managing on a shoestring. And in the world of innovation there are plenty of examples where this principle has triggered interesting solutions. For example Alfredo Moser’s idea of re-using Coke bottles as domestic lighting in the favelas of Rio has led to its use in around a million homes around the world. And potter Mansukhbhai Prajapati’s Mitticool ceramic refrigerator offers a low cost way of keeping food cold without the need for power.
But frugal is not simply low cost improvised solutions in a resource constrained part of the world. It’s a mind-set with powerful implications for even the most advanced organization. Sometimes crisis conditions and resource scarcity trigger search in new directions, leading to radical and unexpected alternatives.
For example, when Indian eye surgeon Dr Govindappa Venkataswamy retired he wanted to bring safe reliable cataract surgery to the poor in the villages of his home state of Tamil Nadu. The context was not favourable – even by Indian standards the cost of the operation (around $300) put it beyond the reach of millions living close to the poverty line, and there were additional constraints around the availability of skilled staff to carry out the procedure. Undeterred he searched for alternative approaches which could bring the cost down to around $30 – and he found an answer in a surprising place, underneath McDonald’s golden arches. His argument was that the same techniques used for fast food production and service (which relied largely on unskilled labour narrowly trained up in key areas) could apply in eye surgery. His Aravind Clinic was founded in 1976; today it treats upwards of a quarter of a million people every year and has the distinction of having given back sight to over 12 million people around the world who would otherwise have gone blind because they couldn’t afford the operation.
What began as a ‘frugal’ innovation has grown into a global system offering some of the best eye care in the world. It has spawned multiple innovations – in education, preventive care, and in replacing expensive replacement lenses with a much cheaper alternative designed for the Indian context. (Aurolab is now the world’s largest producer, exporting to 87 countries).
This new ‘platform’ model of reliable, low cost but safe healthcare has been taken up by others. Devi Shetty, once heart surgeon to Mother Teresa, has been christened the ‘Henry Ford of heart surgery’ for his application of it to complex operations like by-pass surgery. As with Aravind the massive savings in time and cost are not at the expense of quality; his Narayana Hospitals boast quality rates better than many western hospitals. And like Aravind emphasis is on a systems approach often challenging conventional business models for healthcare; for example 12 million farmers now pay a monthly micro-insurance premium of 12 cents to receive widespread healthcare benefits. Using advanced telemedicine means that problems of skill shortages and expert coverage across a vast sub-continent can be dealt with using sophisticated IT infrastructure.
Others are imitating this approach – for example in China software giant Neusoft are pioneering the use of advanced telemedicine to help deal with the growing crisis in which 0.5 billion people will need health care. Instead of building more hospitals the plan is to develop an advanced IT-supported infrastructure to offer a network of primary care – a ‘virtual hospital’ model at much lower cost and with much wider outreach.
Whilst frugal innovation is associated with emerging market conditions where purchasing power is low there is also potential for such ideas to transfer back to industrialized markets. GE’s simple ECG machine (the MAC 400) was originally developed for use in rural India but has become widely successful in other markets because of its simplicity and low cost. It was developed in 18 months for a 60% lower product cost yet offers most of the key functions needed by healthcare professionals.
Siemens took a similar approach with its Somatom Spirit, designed in China as a low cost computer body scanner (CAT) machine. The target was to be affordable, easy to maintain, usable by low skilled staff; the resulting product costs 10% of full-scale machine, increases throughput of patients by 30%, delivers 60% less radiation. Over half of production is now sold in international markets. In particular Siemens took a ‘SMART’ approach based on key principles – simple (concentrating on the most important and widely used functions rather than going for the full state of the art), maintainable, affordable, reliable, (fast) time to market.
Rajan Tata pioneered a frugal approach in developing the ‘Nano’ – essentially a safe, reliable car for the Indian mass market. The whole project, from component supply chain through to downstream repair and servicing was designed to a target price of $2500. Early experience has been mixed but it has led others to move into the ‘frugal’ space, notably Renault-Nissan. Building on the success of a ‘frugal’ model (the Dacia/Logan platform in Europe) they established a design centre in Chennai to develop products for the local market. The Kwid SUV was launched in 2016 selling at $4000 and has broken sales records with a healthy order book and despite strong competition.
Its easy to dismiss these examples as relevant only to a low income emerging world – but there are several reasons why this would be a mistake. Frugal innovation is relevant because:
- Resources are increasingly scarce and organizations are looking for ways to do more with less. The frugal approach can be applied to intellectual and skilled resources as much as to physical ones – something of relevance in a world where R&D productivity is increasingly an issue. For example the Indian Mangalaayan Mars orbiter spacecraft was successfully launched 2013 at the first attempt. Despite the complexity of such a project this was developed 3 times faster than international rivals and for a tenth of their costs. Its success is attributed to frugal principles – simplifying the payload, re-using proven components and technology, etc.
- Crisis conditions can often force new thinking – something which research on creativity has highlighted. So the improvisational entrepreneurial skills of frugal innovators – nicely captured in the Hindi word ‘jugaad’ – could be an important tool to enable ‘out of the box’ thinking
- Frugal innovations have a habit of migrating from their original context to other locations where they offer better value. Think about low cost airlines – the model there was essentially one which stripped away all but the essential function of safe travel between two points. Originally targeted at travellers unable to afford mainstream offerings the model quickly disrupted the entire industry.
So how might an organization begin to think about frugal innovation? There are some core principles which help make up the mind-set:
- Simplify – not dumbing down but distilling the key necessary functions
- Focus on value – avoid overshoot, avoid waste
- Don’t reinvent the wheel – adopt, adapt, re-use, recombine ideas from elsewhere
- Think horizontally – open up the innovation process, engage more minds on the job
- Platform thinking – build a simple frugal core and then add modules
- Continuous improvement – evolve and learn, best is the enemy of better
 More details at http://www.nesta.org.uk/sites/default/files/our_frugal_future.pdf
Innovation matters – of course! Few people would argue with the need to ensure that our organizations change their offerings (products/services) and the ways we create and deliver them (processes) in order to keep pace with a rapidly changing world. If we don’t the message from history is clear – we won’t survive or grow! This theme is as relevant to public sector or social innovators as it is to the commercial world – it’s an innovation imperative.
The challenge comes not in recognizing the need for change but working out how to respond. Anyone might get lucky once but if we want to keep a steady flow of innovation happening then we need to think about organizing and managing the process. Innovation is all about creating value from ideas – but it won’t just happen, it needs some supporting structures and methods. We need to learn to manage innovation.
The good news is that we’ve got plenty to draw upon. In different ways practising managers, academic researchers and consultants have all been trying to understand how to make innovation happen and we can use that knowledge base to help build innovation management capability. But we need to adapt and configure those general principles to work in particular settings. And we need to recognize that whilst lectures and classrooms have their place, there is still plenty to do in terms of getting the message across to the people who will make innovation happen. In other words we need some innovation in the ways we think about teaching and coaching innovation.
That’s the core challenge at the heart of TACIT, a 3-year EU Knowledge Alliance (2016-2018) project under the Erasmus+ programme. Working together academics and practitioner organizations will explore, prototype and roll out a suite of different and complementary approaches to the challenge and make this experience (and the emerging tools and methods) available to a wider audience. The work centres on eight core approaches: storytelling, peripatetic learning, future-based learning, entrepreneurship laboratory, innovation theatre, innovation games, design making, and project based learning.
 Teaching and Coaching Innovation Innovatively (TACIT). Partners include Aachen-Münchener, ASIIN, BMW, ISPIM, LEGO, Lufthansa, Nokia and NHS Foundation Trust together with University of Exeter (UK); Southern Denmark University, Leipzig Graduate School of Management and RWTH International Academy, Aachen, (Germany).
Chances are that as you read that your body went into a well-rehearsed routine. You relaxed, your head perhaps cocked to one side, you settled into a position ready to receive information. It’s the classic start to a story – and we’re programmed to listen, knowing it will entertain and inform. We’ve been doing it for thousands of years and we’re hard-wired to respond to stories.
It’s not just a passive process – story listening is as important as storytelling. The process of seeing and living out the pictures in our minds, becoming the characters and sharing with them the experience of what is going on, is a key element. Which brings in a third dimension – story re-telling. We share stories we have heard with others, adding to them, embellishing them, replaying them to ourselves and to others. It’s a process of co-creation.
Stories matter – they are powerful devices not only for spreading information but for many other purposes. Not surprisingly storytelling been recognised as a powerful tool in organizational life – to help communicate, to allow for explanation and elaboration, to help people make sense of their organization and the complexities of life within it, and to reinforce the values and beliefs which bind the organization together.
And it’s a powerful resource in managing innovation, one which we can deploy in a variety of ways. For example, stories can act:
- as a carrier of messages – stories reinforce our models and understanding of how innovation works in a vivid way. Not for nothing do they form the staple diet of most conference presentations, and in a more restrained fashion form the core of our teaching. (After all the case method is all about stories, reading, interpreting and retelling). Think about some famous innovation stories – 3M’s Post it notes, Dyson’s heroic battles with his arch enemy Hoover, Edison’s 1000 filaments, Steve Jobs the troubled genius – and add your favourites to the long list……
- as educator – there is a long tradition of using stories to carry important messages about directions and desirability for change. The world’s oldest soap opera is the UK series, ‘The Archers’ which is broadcast daily and draws over 5 million listeners. It originated in 1951 as a way of communicating important information about farming innovations with the other storylines wrapped around the core message. (The programme still has an ‘Agricultural story editor’). Or consider ‘The Goal’ – Elihu Goldratt’s story about a struggling factory owner and his gradual adoption of radical process innovations. Published in 1984 it became the top-selling business book and still has wide readership, now available in many different formats including a movie!
- as diffuser – in viral fashion ideas spread out from their source via the stories around them. Everett Rogers highlighted the key role which perceptions play in the adoption of innovation – and stories offer powerful ways of shaping those perceptions. (Ask anyone who works in advertising!) Stories can help overcome anxieties and concerns about various attributes of innovations, and in doing so accelerate the take up of new ideas. Or they spread like wildfire, becoming amplified as they get retold and acting as a strong brake on diffusion. They can affect our perceptions of the person trying to persuade us to adopt something new – if they are good storytellers then we are more likely to believe in them and accept the new idea which they are promoting.
- as knowledge management tool – there’s a famous quote, attributed to Winston Churchill amongst many others, suggesting that people who forget their history are condemned to repeat it. Organizations need some kind of memory, some way of remembering what they did and how they dealt with past problems. Being able to retrieve these memories can be a powerful resource for dealing with today’s innovation challenges. Stories act as powerful repositories of this learning – they are accessible and remind us of core lessons. Every large company today must have been a start-up once upon a time – and sometimes reflecting on the stories of how the organization handled the crises from that time helps. A growing number of organizations – Corning, 3M, Philips – are trying to capture their organizational history not as a vanity project but as a way of codifying key lessons from the past to make them available for the future. Stories from the past provide both a roadmap for what to do and the courage to know it can be done.
- as a change lubricant – managing change is not a matter of imposing decisions – people are pretty creative about the many ways they can resist an innovation which they don’t want! That’s especially true in process innovation where we’re trying to change working methods or technologies. Storytelling can help by creating a picture, a vision of how things are going to be – but it’s not a good idea to sell a story without allowing a response. The trick is to engage in an element of co-creation, giving people and opportunity to participate and create the future which they will be a part of. It’s a well-known tool in organizational change management, giving people voice and autonomy around innovations which will affect their working lives. But it’s also not a bad tool to use in product/service development – engaging people in prototyping makes them co-authors of the story….
- as a ‘rough guide’ resource – one way of looking at entrepreneurship is to focus on the ‘hero’ embarking on a journey to a far-off land, encountering strange people, slaying dragons, getting into tight situations and picking up surprising friends and resources which help him or her along the way. And much of the new thinking about how to manage this journey describes the importance of effectuation and bricolage, making the best use of whatever is to hand and muddling through towards a goal rather than planning each step in careful fashion. Stories capture this kind of approach and give others a ‘hitch-hiker’s guide’ to help them in their own journeys….
- as a way of exploring the future – science fiction is a branch of storytelling which creates pictures of the future which we can climb inside and explore safely and early. Its value in thinking about innovation comes particularly because unlike trend extrapolation or forecasting it presents a rich connected picture of possible futures. The narrative carries not just the score storyline but also a wealth of information about context. (Think about a movie like ‘Blade runner’ – there’s so much interesting stuff going on at the edge of the screen, around the corners, in the background…) Organizations can use such stories to create new future worlds which they can then crawl inside and explore – where are the threats, how could we move to take these opportunities, etc.? And they can use this exploration to identify what they need to start doing now in order to build the capabilities for working effectively in these futures. At the heart of powerful futures methodologies like Shell’s ‘Game changer’ approach or Procter and Gamble’s storytelling lofts is the ability to construct and share compelling stories….
- as vision statement – organizations aren’t just collections of people, they have a sense of purpose. Creating a vision is a key element in their success and long-term survival, whether we are looking at a start-up or a centuries old corporation trying to reinvent itself. The trouble with so many vision statements is that they are just words and aspirations. What separates out the effective vision is the ability to embed it in a story, to allow people to identify the core elements, and then bring their own storytelling capabilities to it. Human beings have evolved to deal well with vague data and half formed patterns in our environment – we fill in the gaps with a storyline which makes sense of it. So a compelling storyline around a vision is something which people can pick up on and elaborate in their own minds, shaping their own creative activities towards realising it.
If stories are such an important element in innovation it makes sense to try and develop skills around using them. In particular we need to explore three areas:
- Story writing – the craft of writing compelling stories
- Story telling – delivering them in compelling fashion
- Story listening /retelling – engaging users in the stories, using them as boundary objects for co-creation
I’ll explore these in more detail in my next blog post…….
In our increasingly open innovation world wouldn’t it be useful to have ‘‘the ability …. to recognize the value of new, external information, assimilate it, and apply it to commercial ends’? If all the smart guys don’t work for you then it’s going to be important to have the skills and processes to make sure that what they know somehow finds its way into our organization and that we make effective use of it. It’s really a case of building some capabilities in this area – and the good news is that we’ve known about this problem for a long time. The ‘ability’ referred to above is what two researchers, Cohen and Levinthal, talked about in a very influential paper back in 1990 – they termed it ‘absorptive capacity’.
Having given it a neat label you might expect that the next stage in the process would be for researchers and practitioners to put some flesh on the bones and identify just what organizations need to do to build absorptive capacity. Unfortunately whilst the initial question was elegantly framed a sort of ‘academic fog’ has grown up around the term, with many competing and even conflicting definitions and a lot of discussion about what AC is rather than how to do it. Great conference fodder but not so useful in answering the question ‘ so what do I do on Monday morning?’
One notable exception to this was the work of another couple of researchers, Zahra and George who suggested that AC wasn’t a single ting but actually a series of linked behaviours. Whilst there might be great potential in new knowledge out there, realising it would depend on pulling off four key tricks – identifying what’s out there (and relevant to us), acquiring it, assimilating it (making sense of it in our context) and finally deploying it in ways which add value.
So we’re still left with the key challenge of how to make this happen? The good news is that there are now some excellent tools t help us in the process – for example, identifying what’s available becomes much easier using web-based search, innovation markets like Innocentive.com, employing specialist brokers to search at our periphery and running crowd sourced campaigns for new and different ideas.
But in order to work with this ‘knowledge spaghetti’ and weave the strands into something which creates commercial or social value we still need to look to our own capabilities and be clear how we address those four key questions. Strengthening our absorptive capacity to operate effectively in an open innovation environment not only means learning some new tricks – it’s also worth revisiting our old repertoire and dusting it off. A classic example of ‘dynamic capability ‘ – reviewing, revising and sometimes replacing our innovation routines.
Here’s a framework to help start that reflection process…..
|Of our innovation management routines …||Which should we do more of, strengthen?||Which should we do less of, even stop?||Which new ones do we need to learn and add?|
|…to help us handle these key tasks in absorptive capacity:|
|Identify useful external knowledge|
|Assimilate it – connect it with what we know and do|
(There’s more, including an Absorptive capacity audit tool, on our Innovation Portal: http://www.innovation-portal.info/?s=absorptive)
 Details of their work are in Cohen, W. and D. Levinthal (1990). “Absorptive capacity: A new perspective on learning and innovation.” Administrative Science Quarterly 35(1): 128-152.
 Details of their work in Zahra, S. A. and G. George (2002.). “Absorptive capacity: A review, reconceptualization andextension.” Academy of Management Review, 27:: 185-194.