Reprinted from jugaadinnovation.com
A Q&A with Navi Radjou, Jaideep Prabhu and Simone Ahuja, authors of Jugaad Innovation
1. What is jugaad innovation?
Jugaad is a Hindi word that roughly translates as “overcoming harsh constraints by improvising an effective solution using limited resources”. As such jugaad innovation is a frugal and flexible approach to innovation that is dominant in India. During our research we have found that other emerging markets such as Brazil, China, and Kenya have their own versions of jugaad. We have also found that jugaad is increasingly active in the West where it’s often called Do It Yourself (D-I-Y) innovation.
Jugaad innovation was once a much bigger part of Western economies, too. It was the frugal and flexible mindset of jugaad-style entrepreneurs that catalyzed growth in Western economies like that of the US during the Industrial Revolution. In the twentieth century, however, Western nations progressively lost touch with this jugaad spirit as they matured into post-industrial economies and became attached to a more systematized, predictable way of life and work. Improvised ingenuity—the essence of jugaad—took a back seat to a more formally structured approach to innovation.
And now, jugaad innovation is making a comeback in Western economies—especially in the US. Indeed, as described in our book, leading Western firms such as 3M, GE, PepsiCo, Procter & Gamble, Renault-Nissan, Facebook, Google, Siemens are now using jugaad to generate breakthrough growth in an increasingly complex and resource-constrained world.
2. Why do people say jugaad innovators innovate better?
The jugaad approach stands in marked contrast to the traditional structured approach to innovation—involving large R&D departments, big budgets, planning and control. While this structured approach to innovation has its advantages, it is also increasingly criticized for being expensive, rigid and insular.
For instance, according to the management consultancy Booz & Company, despite spending a whopping $550 billion on R&D in 2010 alone, the thousand companies in the world that invest the most in innovation—many of which are Western firms—have generated limited returns on their huge R&D investments. Moreover, structured business processes and methods such as Six Sigma, while highly effective for activities like manufacturing, are unable to deliver the agility and differentiation that Western firms need to innovate in a fast-paced and volatile world. Finally, in today’s interconnected world powered by social media, top-down R&D systems struggle to open up and integrate the bottom-up input from employees and customers.
Jugaad on the other hand is flexible, frugal and democratic: it is often bottom-up rather than top-down and involves a much larger number of people beyond those who are typically tasked with doing innovation in corporations. The strength of jugaad innovators lies in their ability to get more from less, experiment continually, and creatively engage people who are typically left out of the innovation process.
3. What are the six principles of jugaad innovation?
The 6 principles of jugaad innovation that we have identified as being common to jugaad innovators worldwide are:
Seek opportunity in adversity
Do more with less
Think and act flexibly
Keep it simple
Include the margin
Follow your heart
4. Can you share an example of jugaad in practice?
YES BANK, a leading private bank in India, has implemented a mobile payment solution that allows money transfer via mobile phones without the need for a bank account. This innovative solution piggybacks on India’s highly scalable mobile telephony infrastructure that extends to even the remotest villages in India (a nation where nearly 900 million citizens have cellphones, but 600 million lack a bank account). By thinking and acting flexibly, YES BANK sought an opportunity in adversity and invented a simple solution that delivers more value at less cost to thousands of economically- marginalized Indians.
Closer home, 21-year-old Yuri Malina is a flexible-minded entrepreneur who co-founded Design for America (DFA). Yuri’s team, along with his DFA advisors, collaborated with a local hospital in Chicago to design a portable ‘‘roll-on’’ hand-sanitizer called SwipeSense for busy physicians and nurses so they can clean their hands on the go. SwipeSense is intuitive to use and easy to carry—it doesn’t require clinicians to go back and forth to remote hand sanitizing stations—and it is very cheap (costing only $1.50 per unit). This is a frugal, flexible, and yet highly practical innovation since about two million people in the US get infected during hospital visits each year (and nearly a hundred thousand die prematurely from this infection.)
5. How is jugaad innovation a bottom-up agile model based on collaboration?
Jugaad innovation is akin to jazz improvisation: fluid, and collaborative within a framework of deeper knowledge. Consider the following two examples as illustration. An open-source software provider called Ushahidi has created an elegantly simple solution—the Ushahidi Platform—that relies on mobile SMS (text messaging) to coordinate bottom-up responses to devastating events like hurricanes, earthquakes, or epidemic outbreaks. After being rolled out successfully in Africa, the Ushahidi Platform is now being widely deployed worldwide—including in the US—as a simple yet highly effective crisis management tool that works faster, better, and cheaper than traditional top-down, hit-or-miss relief management approach.
In the US, Google practices this improvisational, agile approach to innovation really well. The search giant has structured itself as a flexible and dynamic network of small teams that can swiftly sense and respond to dynamic market needs—by creating and launching new products in rapid-fire fashion. According to Eric Schmidt, Google’s executive chairman, Google doesn’t have a two-year plan but only a “next week” plan.
6. How does jugaad enable an entire organization to be involved in innovation?
Thanks to social media tools like Facebook, creativity has been democratized. Jugaad innovation enables corporate leaders to unleash and harness the creativity of all employees, customers, and partners.
Take the case of IBM. In 2003, the then-CEO Sam Palmisano launched ‘‘ValuesJam’’—a three-day brainstorming session conducted online in which IBM employees were invited to update the corporation’s century-old values. This bottom-up, collaborative exercise helped recontextualize the very notion of innovation—a core value for IBM—as something that would not be measured by the number of patents filed or products shipped but by the impact that IBM had on society. The ability to reassess the company’s values and the willingness to change its direction has subsequently enabled IBM to embark on its Smart Planet initiative, one in which the firm uses technology to build sustainable communities worldwide.
7. What are the benefits of jugaad innovation?
Jugaad innovation has three major benefits. First, it is frugal: it enables innovators to get more with less. Second, it is flexible: it enables innovators to keep experimenting and rapidly change course when needed. Third: it is democratic: it can therefore tap into the wisdom of otherwise marginalized customers and employees.
Here are two examples to illustrate these benefits. The Indian engineers at Siemens—a leading European industrial conglomerate—and their German colleagues co-developed Fetal Heart Monitor, a device that monitors the heartbeat of fetuses in the womb. This device uses simple but ingenious microphone technology instead of costly ultrasound technology. As such, the device delivers more value at less cost and is highly relevant in the US economy where healthcare costs are skyrocketing and 50 million Americans still cannot afford medical insurance.
Similarly, in 2010, Ford invited one hundred active bloggers to test-drive its upcoming Fiesta subcompact car and continually post videos and unfiltered impressions on YouTube, Twitter, and their individual blogs. Ford’s jugaad innovation in marketing—named ‘‘Fiesta Movement’’—was a smashing success: it generated seven million YouTube views and forty million enthusiastic Tweets. This bottom-up marketing effort helped Fiesta become one of Ford’s best-selling cars ever.
8. Is jugaad innovation more responsive to customer needs? If so, why?
In contrast to the traditional structured approach to innovation, jugaad is inherently more customer-centric rather than technology or product centric. Because jugaad innovators seek to solve a customer problem first and then develop a suitable solution, jugaad is more market-based than more structured approaches (that may be driven by the motivation to develop technology for technology’s sake) are.
Also, because jugaad is more flexible than traditional structured approaches, jugaad innovators are constantly looking to tailor not only their products but also their business models to the constraints their customers face. Thus a major focus of jugaad innovators is making their solutions not only good enough but also affordable and accessible to their customers.
Philips, the consumer electronics giant, was surprised to learn that its consumers were not wowed by the technological sophistication of its electronic products like digital TV sets; instead, consumers felt intimidated by the complexity of using and maintaining such products. Rather than attempting to over-engineer its products—the traditional R&D approach used by most companies—Philips set out to simplify its products and make them easier to use for customers. As a result, Philips’s “good enough” products today deliver more value to customers than its competitors’ over-engineered products do.
9. What is the importance of inclusivity?
50 million Americans currently do not have medical insurance. And a whopping sixty million Americans are unbanked or under-banked, i.e., they are unable or unwilling to avail of the full gamut of financial services offered by traditional banks. One might expect numbers like these to go up significantly as economic conditions stagnate or even worsen. More worrisome is the hollowing out of the American middle-class: median incomes in the US have remained stagnant for the last thirty years. For a growing number of disenfranchised middle-class Americans, the American dream will remain just that: a dream.
What does all this imply for Western corporations? Marginal groups that have traditionally been perceived—and therefore ignored—as the ‘‘long tail’’ of the consumer economy (i.e., as niche segments) are rapidly becoming the ‘‘fat tail’’ (i.e., dominant consumer groups). These groups can no longer be ignored. Companies that actively embrace them, and shape their businesses around their needs, are likely to find, just as jugaad innovators in emerging markets are finding, that doing so increasingly makes business sense.
One company that is employing jugaad innovation to successfully—and profitably—include the margin is Procter & Gamble. Rather than spending all its R&D dollars on premium products with high-end features—as it has traditionally done for many decades—Procter & Gamble has started creating “value-for-money” products that are affordable and accessible to the growing low-income consumer base in the US. It is also ratcheting up its marketing efforts to make its products appealing for budget-conscious US middle-class consumers.
10. What do you mean by “Follow your Heart” (the sixth jugaad principle)?
The heart is the seat of intuition, empathy, and passion. Jugaad innovators in emerging markets often depend more on their intuition than on logical thinking to successfully navigate a highly unpredictable and volatile environment. They rely on their gut intelligence and innate empathy for customer needs to innovate breakthroughs that turn conventional wisdom on its head. Their passion sustains their efforts to improve the lives of the communities they serve.
Western executives, inured to data-driven decision making, are frequent victims of analysis paralysis. These executives can benefit from relying more on their intuition to succeed in an increasingly complex world. Rather than second-guessing from a remote R&D lab what customers want, Western innovators should immerse themselves in customers’ natural contexts to better empathize with their needs.
Further, rather than merely seeking to harness their employees’ brainpower, Western companies should learn to tap into their employees’ ‘‘heartpower,’’ thus unleashing the passion of individuals and channelling this into innovation that serve a greater purpose. For instance, the global design and innovation consultancy frog has launched ‘‘centers of passion’’ across its global network of design studios where employees freely discuss their left-field ideas and engage with colleagues, customers, or external partners who share similar passions.