With mention of concepts such as the ‘circular economy’ and ‘resource efficiency’ now becoming the norm, it is generally well accepted that ensuring the security of our resources for current and future use is a priority.
One approach that is increasingly being employed is that of frugal innovation, through which organisations seek to develop high-quality products and services by adding value to the limited resources available. There are a number of examples of frugal innovation already in place. One of the best known is the Tata Nano marketed as the ‘world’s cheapest family car’. Other examples include the Aakash a seven inch, touch screen, internet enabled tablet that is being sold for less than $30, and Aetna the US insurer which utilises a business model that value-based care model (rather than a fee-for-service reimbursement model), rewarding providers for successful health outcomes for patients. For example, doctors are paid based on their ability to keep a patient’s cholesterol levels healthy, rather than to perform blood tests to ascertain a patient’s cholesterol levels.
An excellent text on the subject is Frugal innovation: how to do better with less by Navi Radjou and Jaipeed Prabhu, which won the CMI Management Book of the Year Award 2016 and the CMI Innovation and Entrepreneurship Book of the Year Award 2016. It gives an overview of principles, perspectives and business concepts such as the sharing economy and the maker movement, which frugal innovation embodies.
It is estimated that the global market for sustainable products is worth US$Trillion, and that there are potentially huge cost savings to be gained. Frugal innovation therefore offers significant opportunities and is revolutionising the manner in which organisations seek to do business.