Friday, March 03, 2017

Looking for innovation, looking for frugality

Frugal Innovation
How to do better with less

Navi Radjou and Jaideep Prabhu
Hachette India
pp.252, Price Rs. 599

Ron Adner’s “Wide Lens” (2012) looked at innovations, why they succeed, and why successful innovations could be business failures. He used a series of cases to build a story that was coherent and consistent. Theory building in an area like innovation is difficult. Innovation by definition should break the status quo and the existing understanding. Therefore an attempt to find the “principles” of innovative business should be lauded for courage. The authors usually expect is to decipher a pattern that could be applied on an untested area, and based on the principles, we should be able to predict success. However, an easier path would be to put the principles upfront, or develop principles from a handful of instances and then populate each principle with multiple examples, even if the example that illustrates principle one, contradicts principle six.

Navi Radjou and Jaideep Prabhu have written another book – Frugal Innovations. This follows their highly successful first book Jugaad Innovation. Both these try to retrofit a series of real-life examples into the pre-canned principles. “Jugaad”, was meant to be innovation carried out by untrained people finding a localized solution from available resources – possibly meant for a different purpose, but innovatively fitted to the purpose that the innovator had to use at a given point in time. Maati Cool – a refrigerator based on locally available resources to cool vegetables, using a washing machine for churning lassi could be Jugaad. But could a car – based on a conviction that there was a market at the right price – a Tata Nano – based on the principle of target pricing be called Jugaad? Or frugal innovation? The objective might be to make a frugal product, but is the innovation itself frugal? Much the way products delight customers on some attributes, the pricing could be a delight, but the innovation itself was not Jugaad – with serious engineering and design that went into Nano.

There is a problem in how Radjou and Prabhu look at frugality. Whatever they see, they have to see from the perspective of a frugal innovation. It becomes easy, because then, you have millions of examples. That is what they do in Frugal Innovation. They advocate six principles of frugal innovation: (1) Engage and iterate; (2) Flex your assets (3) Create sustainable solutions (4) Shape consumer behavior (5) Co-create value with prosumers and (6) Make innovative Friends. While in several parts of this book and the previous, the authors admiringly talk of Apple and Steve Jobs, the first principle was blatantly and consistently violated by Jobs. One of the principles of frugal innovation (p.28) is to involve customers from the outset. But by the time we move to the sixth principle we see this quote which has got nothing to do with co-creating value with customers – (entrperenuers) “create breakthrough solutions out of sheer (personal) necessity” (p.163)  .

For a person with a hammer everything looks a nail. We have two here. A lot of space is devoted to Unilevers’ sustainable living plan: doubling the company’s revenue by 2020 and cutting environment footprint by half. I will not argue on whether this is frugal innovation, I will let that pass. But the gem is here:

“It is important to convince employees, but it is equally important (and possibly harder) to convince shareholders and analysts of the need for change. In some cases, board members may worry that shareholders will punish the company for focusing on frugal products. To make a strategic shift, CEOs will need to take on hard-headed analysts and the board.” (p.204).
This is followed by a quote from Paul Polman, CEO Of Unilever: “I don’t think our fiduciary duty is to put shareholders first. I say the opposite…..Most CEOs go to visit their existing shareholders; we go to visit the ones we don’t yet have” (p.205)

Aren’t we happy that this is not a book on corporate governance?

Or let us try to understand what Radjou and Prabhu are advocating through this quote: “after spending millions on developing its Android operating system, Google gave away the technology so it could be incorporated into the maximum number of devices, thus securing a vast market for its search engine and other digital services. Google’s open source strategy paid off: Android is now available in over 1 billion devices, overtaking Apple’s iOS as the world-leading mobile operating system”(p.172).

So, what is frugal? who was the innovator? (Google or Apple?) and what was the innovation? (operating system or putting it on open source after spending millions). The above sentence does not make sense for the overall argument of the book, but if the chapter title is “make innovative friends” then it is justified.

One thing that is not frugal is the endorsements – 6 pages for the current book and 4 pages for the previous. They would need it, when the product does not speak for itself.

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