Frugal innovation

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 telephone, 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 distribution channels. When trying to sell 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. While frugal innovation has been associated with good-enough performance, in some sectors such as in healthcare, frugal innovation must offer maximum performance without compromising on quality. In May 2012 The Financial Times newspaper called the concept "increasingly fashionable". 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. Many terms are used to refer to the concept. "Frugal engineering" was coined by Carlos Ghosn, then 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 "bottom of the pyramid (BOP) innovation", etc. At times this no frills approach can be a kind of disruptive innovation. 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.