Jugaad Innovation

A New Way of Innovation and Creativity:

SEPTEMBER 20, 2014 MUKUL PARASHAR

14020841084 (Section B)

1 | P a g e

Contents Introduction: ........................................................................................................................................... 2

Need of Frugal and Flexible approach to innovation .............................................................................. 3

Changing scarcity into opportunity ......................................................................................................... 5

Basic Principles of Jugaad Innovation ..................................................................................................... 6

Adopting Jugaad Innovation ................................................................................................................... 6

Suggestions ............................................................................................................................................. 9

Bibliography .......................................................................................................................................... 10

2 | P a g e

Introduction:

The Best Ideas Can Come From Anywhere – Virgin.com

Innovation is a main directive for companies worldwide that not only ensure growth of the

organisation, but sustainability. It enables a company to create market of a new product,

create product to meet demands and create demands to the users. There are ample number

of example till now, such as Xerox, who create a new product which was never imagined, it

created a new innovative product then created market for the same. Apple has made enough

money through innovation in entertainment market by innovating new products.

Sometimes companies ignores innovation, and thus they are destined to vanish. For ex: IBM,

who missed the PC bus. And those who do not learn from history are condemned to repeat it

(quote by George Santayana), for ex Hindustan Motors who ignores innovation and now it is

vanished completely.

These are the reason which make innovation inevitable. That is why companies are investing

hugely in R&D. It is shown in below graph that investment is increasing over the years:

But now when technology, product and services have very short life, companies find difficult

to invest hugely in new product. If company invest huge amount to come up one innovation

that has some impact, then they have to keep prices high so that they can recover the amount

they have spent in R&D of the product, also to keep feed R&D to come up next innovation.

Thus companies cannot rely upon top-down approach of innovation, where they spend huge

amount in R&D in terms of infrastructure, developing team, training them etc. Instead of that,

they are developing innovation culture, when their employee come up with new products.

3M has such culture where employee finds new innovative way to fulfil their requirement,

and 3M launch it so that it fulfils many others requirement.

That is why companies are now emphasizing on bottom-up approach of innovation. They

develop such culture which motivates their employees to come up with new products.

3 | P a g e

Need of Frugal and Flexible approach to innovation

“Nobody has a monopoly on good ideas, and you can never tell exactly when you will come

up with them.” Richard Brasnon

In the today’s scenario when real income is falling (shown below), companies cannot afford

to launch a new product which has significantly higher price that its real value. Thus investing

in R&D is now alien concept.

On the other hand side, competitor always have other way to find similar product in

significantly lower rate. One classical example is Apple, who develops new things, spend huge

to come up new innovative product and sell at higher rate. While Samsung who copies and

sell at lower rate.

The thousand companies in the world spend US550 billion on R&D in 2010 alone. But they did

not get enough return on it. It means they were not able to develop enough impact on it. As

per a study conducted by Booz & Comoany, three Western Industries that spend the most on

R&D- computing and electronics, healthcare and automotive – they struggled to generate

revenue from their innovative product developed in R&D. Thus they were not able to get the

money that they spent in developing in it from sale of the product.

There is significant shift in consumer behaviour, where people having low income wish to

enjoy the product which is supposed to be made for those who have higher income level.

4 | P a g e

There are many companies who find this as an opportunity and come up with product that

has almost same feature but significantly lower prices. Such companies who try to meet such

unmet demands, ends up making huge profit, mainly because there are huge chunk of people

who have lower income, also shown below:

The same is applicable in Indian context. Shown below:

Thus companies find new way to innovate which are frugal and flexible. The old formula that

has sustained over the decades for innovation, which involves huge investment in R&D and

5 | P a g e

highly structured innovation processes, is outdated. The need of the hour is to innovate at

frugal ways which can be sold to those who belongs to the lower part of economic pyramid.

Changing scarcity into opportunity

Kutch, Gujaat, where temperature rise to a debilitating 120 degrees, one can easily feel the

weight of the desert's oppressive heat. Although the real problem is not the temperature,

but the electricity, which comes like salary, once in a month and much lesser than what is

promised and expected. At such place, cold water is just a word to listen and speak, not to

feel. Masukhbhai Raghavjibhai Prajapati, a famous rural innovator, who sense these

adversities and scarcity, and come up a innovative product that does not need any

electricity and huge amount. It is “Mitticool” (Mitti means earth in Hindi). This product does

not need any electricity, no cable.

Prajapati doesn't work for NASA or Whirlpool, and he doesn't have a Ph.D. in quantum

physics or an MBA from Stanford. In fact, he didn't even finish high school. His R&D lab—a

simple open-air room with clay in various shapes and forms arrayed on the floor and an

oven tucked away in the corner—is a far cry from the sprawling campuses of GE and

Whirlpool, which swarm with hundreds of engineers and scientists.

In 2001, an earth quake devastated his village and the surrounding area. He was going

through the report, he found one caption: “Poor man's fridge broken!” The photo featured a

smashed earthen pot commonly used by villagers to fetch water and keep it cool. That is

where Prajapati found his eureka moment. He thought why not make a fridge which is made

up of clay and no electricity, which can fulfil requirement of villagers and looks like a real

fridge. ? Over five hundred million Indians live without reliable electricity, including most of

the people in Prajapati's village. That is where Prajapati found its market. The positive

health and lifestyle benefits of owning a fridge in a desert village where fruit, vegetables,

and dairy are available only intermittently would be tremendous.

Prajapati had training as a potter and had intuition of developing the product. He

experimented various things and for several months. Finally he came up with Mitticool. He

6 | P a g e

sold that to the villages in just 2000 Rs. The product was huge hit. He started making

Mitticool on mass level and selling it into many villages. To make Mitticool on mass level, he

developed various innovative methods to use clay and operate them.

Later he developed non-stick frying pan in just 90 Rs to meet demand of rural market. He

started industrial revolution in pottery in a remote village. He trained many woman in rural

areas in the pottery techniques and finally hired them to work in his new factory.

Basic Principles of Jugaad Innovation

Understanding importance of Jugaad innovation, companies are trying to understand basic

principles of Jugaad innovation. Below are 6 basic principles of the same:

Seek opportunity in adversity.

Do more with less.

Think and act flexibly.

Keep it simple.

Include the margin.

Follow your heart.

Tbasic hese six principles of jugaad help drive resilience, frugality, adaptability, simplicity,

inclusivity, empathy, and passion, all of which are essential to compete and win in a complex

world.

Adopting Jugaad Innovation

“Company cultures are like country cultures. Never try to change one. Try, instead, to work

with what you've got.”- Peter Ducker

It is very hand for companies to adopt such techniques where innovation comes out of the

R&D department. But looking at the histories many has adopted it. General Electrical is one

of major company who adopted this techniques after spending billions in its structured

research methods in R&D.

GE Heathcare, which operates in developed nations and emerging markets as well. GE

integrate Jugaad innovation with Six Sigma to get more out of it.

1. GE Seeks Opportunities in Adversity: The PET/CT Scanner which is used to detect

cancer, is too costly. They also require a cyclotron—which is as costly as a PET/CT

scanner—to generate a radioisotope called fludeoxyglucose (FDG) that is injected into

patients to help produce the diagnostic images that can precisely locate the disease.

Many a times it is time, delivering such machine on urgent basis is not possible. Thus,

seeing such adversity, GE sensed opportunity and came up with a new innovative idea.

GE contacted private diagnostic centers and local airlines to domestically produce

7 | P a g e

FDG. Thus they supply FDG when needed which is Just In Time (JIT) approach in six

sigma.

2. GE does more with less: ECG devices are too costly and bulky as well. A local

practitioner cannot afford it. Also he cannot take ECG machine with him to a remote

location because they are bulky as well as need electricity to operate. Thus GE's

researchers in India invented in 2008 the MAC 400—a portable electrocardiogram

that costs one-tenth and weighs one-fifth. It boasts a super-long battery life and uses

several off-the-shelf components.

3. GE Thinks and Acts Flexibly: Most of the medical equipments are costly. Thus

individual doctors in emerging countries like India cannot afford it. Thus GE come up

with a new innovative financing method “Pay as you go” pricing model for medical

equipment. GE partnered with local governments where it operates to provide more

flexible solutions to deliver medical equipments to local government hospitals.

4. GE Keeps It Simple: After seeing that doctors use only thermometer and stethoscope

and ignores bulky machines like ultrasound. But each doctor carries small devices like

cell phone. Thus GE developed a new portable ultrasound machine that weighs

merely one pound, is as small as a smartphone, and has a user interface as simple as

an iPod's: Vscan. The device is highly successful in developed and developing nations.

. Indeed, a study conducted by Scripps Health validated Vscan's ability to accurate

diagnose structural heart conditions

5. GE Includes the Margin: GE has initiated campaign, Healthymagination to provide

affordable and accessible healthcare for all. Delivering low cost machines like Vscan

and MAC 400 is part of this initiative. To make it successful they have partnered with

companies like P&G, Johnson & Johnson, Anthem, and UnitedHealthcare.

6. GE Follows Its Heart: GE traditionally used to server business customers such as

airlines, hospitals, factories, and governments. But now they have recognized the

importance of developing empathy for end users. Thus they started affordable

heathcare for poor pateints. They started intiative like Healthymagination. For

instance, GE's R&D engineers are immersing themselves in village clinics in India and

Bangladesh to develop empathy for rural patients and understand how to come up

with health care solutions that are affordable and accessible for low-income

communities worldwide

Other than GE, many other companies are setting up Jugaad playground for employees, as

shown below:

8 | P a g e

Renault-Nissan is another company who has adopted Jugaad mechanism for emerging

nations like India. Shown in below image:

Many Universities have adopted this and have lab to come up with a product and apply ideas.

For ex: Stanford University teach Jugaad techniques and have lab for the same.

9 | P a g e

Suggestions

After discussing various aspect of Jugaad innovation, which is frugal and flexible approach and

highlighting importance of such innovation techniques, teaching technique must talk about

these methods and principles.

Lowering cost, meeting unmet demands of customer can incorporated only if it is in the

organisations culture. Many companies have adopted it and many universities have started

lab to teach such techniques to come up Jugaad innovation. Thus only suggestion is that

management courses must have one major part of the same to teach such methods so that

management aspirants must understand the importance of these methods. Teaching

methods should not, only, include discussions of the methods to adopt structured approach

and standardized methods, but frugal and flexible methods.

10 | P a g e

Bibliography 1) Jugaad Innovation: A Frugal and Flexible approach to innovation for the 21st century. By Navi

Radjou, Jaideep Prabhu, Simone Ahuja

2) http://www.marketingcolloquium.be/wordpress/wp-content/uploads/2014/06/Jugaad-

Innovation-Vlerick-Jaideep-Prabhu.pdf

3) http://www.mitticool.in/

4) http://www.hindustantimes.com/india-news/mitticool-son-of-the-soil-keeps-things-cool-with-

his-desi-gadget/article1-1172621.aspx

5) http://www.ge.com/about-us/healthymagination

6) http://en.wikipedia.org/wiki/Frugal_innovation