Developing cutting edge electronics, computers, and software may seem to have little to do with a $40 terracotta fridge used by villagers in rural India, but executives in Silicon Valley are eager to explore the connection. A group of business leaders, government officials, and entrepreneurs recently gathered in San Francisco to discuss the concept of Jugaad innovation – a sort of do-it-yourself-on-a-shoestring method of creating new products embodied by Mansukhbhai Prajapati, creator of the Mitticool fridge.
Mr. Prajapati is a high-school dropout and grew up in rural India, but he was determined to create an inexpensive fridge that could run without electricity –and he didn't give up until he had designed the Mitticool, a rectangular box made of baked clay that cools food and filters water at the same time.
Jugaad is Hindi word meaning an improvised solution born from ingenuity in the face of scarcity, and it's become the newest management trend. Jugaad is not confined to India; people in developing countries worldwide have always come up with ingenious, low-cost inventions despite huge hurdles, and large, innovation-dependent companies want to harness some of this can-do mentality. In the U.S., this same spirit is seen in the DIY movement, popularized by Make magazine and the Maker Faire.
Technology companies such as Apple, Cisco and Google – as well as corporations in healthcare, CPG, automotive, insurance, and other industries – have embraced Jugaad. By creating special innovation groups and internal programs, these companies are urging engineering and product teams to come up with outside-the-box ideas that cost as little as a tenth the average R&D expenditures to develop, said Navi Radjou, a strategy advisor based in Silicon Valley and co-author of the new book Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth.
"Jugaad is really nothing new, America's early settlers had a can-do attitude referred to as Yankee ingenuity, but U.S. companies somehow lost this spirit in the last 100 years," he said at the San Francisco event "Jugaad Innovation", hosted by the Bay Area Council Economic Institute and the Asia Society of Northern California. "Instead, today most companies spend billions on structured innovation through R&D, but much of the innovation created is locked away in labs and stymied by legal and regulatory holdups."
With prices rising on everything from healthcare to consumer goods to education, while middle class purchasing power stagnates, American companies across industries will be forced to embrace the more improvisational, flexible, and cost-effective Jugaad approach to innovation, said several speakers at the event.
"Jugaad innovation is critical in America,because U.S. corporations are lagging behind," said Simone Ahuja, founder of Blood Orange Media, a marketing and strategy advisory company, and co-author of Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth. Instead of spending huge amounts of money and time to create products few people can afford, U.S. companies need to "do more with less and embrace frugal innovation," she said.
"We surveyed major companies in the Bay Area and found there was actually no correlation between how much a company spends on R&D and how innovative it is," said Sean Randolf, president of the Bay Area Council Economic Institute. The most innovative companies not only had great ideas and popular products, but had higher revenues than their peers, Randolf said. "R&D is great, but you don't need a big R&D budget to be highly innovative."
Putting Jugaad into practice is a challenge in large, R&D-driven companies. A good way to start, said Radjou, is to put "artificial constraints" into place. For example, an automotive maker could put out a call to the engineering teams to design a car for less than $10,000, or a software company could launch an internal contest to see which development team could be first to solve a problem.
"Healthy competition within a company is a great way to spur Jugaad," said Radjou. "Engineers love to innovate within constraints, because they thrive on challenge."
Top executives at Cisco, which opened what the San Jose (Calif.) company calls a second global headquarters in Bangalore in 2007, are importing the Indian mindset as they meld teams of U.S. engineers with Indian supervisors. Dr. Ishwar Parulkar, CTO, Provider Access Business Unit said, "Coming up with creative solutions under severe constraints comes naturally to the engineering teams in India who recently conceived, developed and launched a next generation router product that is extremely affordable and radically power efficient."
Google has long been a supporter of Jugaad-style, bottom-up innovation through its 20% program that lets engineers spend one-fifth of their time on their own projects, but it doesn't just apply the concept to technology development, said Peter Weng, director of Search Quality Evaluation at Google. For example, one employee based in Poland came up with the idea to create an internal "couch surfing" network to cut travel costs. She got buy-in from operations, convinced a tech team to create the site, and secured agreement from HR to reimburse employees $50 for lending out their couches to colleagues – and now hundreds of employees in 26 countries use the service.
"We give everyone in the company the space to innovate by simply allowing experiments to happen," said Weng.
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