Innovation on a small budget: what frugal approaches can achieve

Frugal innovation is an approach that aims to create innovations in a simple and efficient way and with a minimal use of resources. The term is derived from the French word “frugal” (simple, economical, moderate) or from the Latin word “frugalis”, which means “economical” or “usable”.

Frugal innovations are often the result of creative problem solving in resource-poor environments where people are forced to achieve the maximum with the minimum of resources. This includes not only the development of new products, but also the improvement of existing technologies, processes and services to make them more accessible, sustainable and affordable. Added to this is access to new markets, particularly in developing countries (bottom of the pyramid). Due to the frugal means that underlie its philosophy, frugal innovation produces methods that can enrich companies with strategies of sustainable development, resilience and social responsibility.

Examples of frugal innovations

Frugal innovations are a particularly relevant approach for export-oriented companies that want to open up new markets in Africa, Asia or Latin America. The following successful examples can be mentioned here:

1. Solar home system M-KOPA: The M-KOPA solar system, which can be financed flexibly, was developed in Kenya. It enables households without an electricity connection to use solar energy on an installment basis. Payment is made via cell phone (mobile money), which makes the technology both accessible and affordable. The innovative thing about M-KOPA is the payment model: users pay in small installments, and once they have paid in full, the system belongs to them. The offer helps to reduce dependence on expensive and harmful energy sources such as kerosene lamps. The company is on the “TIME100 Most Influential Companies 2024” list.
2. ChotuKool refrigerator: ChotuKool is a small, low-cost (from € 60) and energy-saving refrigerator that was specially developed for the rural market in India and for households with an income of around € 5 a day. It runs on a thermoelectric system and does not require a continuous power supply. It is also used by small stores and kiosks and opens up new business opportunities.
3. Solar solutions from Schneider Electric: In 2009, the company launched the BipBop program (Business, Innovation and People at the Base Of the Pyramid), which is now part of the company's strategy to promote energy access in developing and emerging countries. This led to product developments such as portable solar lanterns (Mobiya Portable Products) and home solar systems for remote, off-grid households (Homaya Solar Home Systems). The latter enable cell phones to be charged and fans, televisions and refrigerators to be powered.
4. KubeKo biogas plant: The autonomous “KubeKo” system for composting and biogas production was developed in Côte d'Ivoire. The biogas plant can be set up on the plantation, the processing site or in the garden. Small farmers can use it to compost their agricultural crop waste and use the gas for cooking, for example. Engineer Noël N'guessan won the 2021 Africa Prize for Innovation from the British Royal Academy of Engineering for his work.
5. Tata Nano mass-produced car: Indian car manufacturer Tata Motors developed the Tata Nano to offer a low-cost transportation solution for the masses. When it was launched in 2008, it was considered the cheapest car in the world and cost 100,000 rupees (approx. €1,440). Despite its attractive price, the disruptive innovation was unable to establish itself on the market as a “people's car” due to image problems.
   
   

Left: Barack Obama informs himself about M-KOPA (Image: M-KOPA).
Center: The ChotuKool refrigerator is on the road in India. (Image: Godrej and Boyce)
Right: Small farmers at the demonstration of the KubeKo biogas plant (Image: KubeKo)

What advantages does frugal innovation offer companies?

Reduction in production costs

The aim of frugal innovation is to significantly reduce production costs by streamlining manufacturing processes and using inexpensive and available materials. For example, by choosing simplified manufacturing techniques and utilizing local resources, companies can reduce their expenses and deliver more affordable products to consumers. This cost reduction allows companies to maximize their profit margins and end consumers to find quality products at affordable prices.

Development of suitable products

Frugal innovation enables the development of products that are perfectly tailored to the actual needs of consumers. By focusing on the essentials, companies are able to design functional and cost-effective solutions that meet customer expectations. This relevance right from the design process increases customer satisfaction and loyalty and opens up new market segments.

Development of emerging markets

The affordability of products from frugal innovation is attractive to emerging and developing markets, which are often referred to as the “bottom of the pyramid”. By lowering the retail price of products, frugal innovation creates a new economic dynamic in these markets where purchasing power can be low. It makes it possible to meet the needs of local people and gives new impetus to companies that are able to offer suitable solutions.

Conclusion

Overall, frugal innovation is an important approach to addressing the needs of people in resource-poor environments in a creative and sustainable way. It shows that innovation does not always have to be expensive and complex, but that simple, intelligent solutions can often make the biggest difference. This enables companies to revolutionize their business and become more competitive in developing and emerging countries.

EurA supports companies from brainstorming and identifying target markets to implementing and promoting their innovations. As a listed consulting firm that supports companies as part of the Consulting Vouchers Africa funding program, we also assist companies with their business projects on the African continent.

Use the potential of frugal innovations as a door opener for your company's success in future markets. Please feel free to contact us. We look forward to sharing our expertise with you.

 Text: Aristide Loli