Reverse Innovation, Frugal Innovation, and Jugaad

Increasingly, companies need look beyond their domestic borders for growth in emerging markets. Traditionally, companies have sought to take products developed for their home markets and adapt them for the newer markets, where cost and infrastructure may be bigger considerations. More recently, innovators have sought to turn the equation on its head: to innovate specifically for the emerging market context and to adapt the innovation for the home market—often reaping significant competitive advantages. Three related concepts fall under this rubric: reverse innovation, frugal innovation, and jugaad.

Reverse Innovation

Reverse innovation was the first of the three concepts to be articulated. In 2009, Vijay Govindarajan and Chris Trimble published “Is Reverse Innovation Like Disruptive Innovation?,” which Harvard Business Review recently named one of its 100 most influential and innovative articles ever published. In the article, the authors write, “A reverse innovation, very simply, is any innovation likely to be adopted first in the developing world.” The concept emerged out of Govindarajan’s work helping General Electric create the world’s first portable electrocardiogram to service the needs of people in India. The authors argue in their article that reverse innova­tion would become more and more common.

In an RTM interview “Reverse Innovation,” Vijay Govindarajan says, “Reverse innovation is not about hitting low price points; it is about creating fundamentally different products to meet the needs of people in these markets. People at the middle of the pyramid don’t necessarily want low-price products; what they want is products that meet their needs.” Govindarajan further explains, “Reverse innovation is a tremendous opportunity for R&D folks to take a lead and enable not only globalization of technology development, but also globalization of ideas. Ideas can also be mobile. R&D should be prepared to borrow knowledge and ideas and technology from every part of the world for every part of the world.” In Reverse Innovation, the book Govindarajan coauthored with Trimble, the authors provide an outline for making reverse innovation happen.

“Barriers and facilitators of reverse innovation: An integrative review” is a comprehensive literature review by Tatiana Tombini Wittmann and her coauthors. The authors identify several primary barriers to reverse innovation: the assumption that reverse innovations are of low quality; the distance between corporate headquarters and subsidiaries; regulatory barriers in emerging markets; and the fear of cannibalization of products. The authors suggest that the demand for new products in emerging markets, the need of multinational corporations (MNCs) to expand their markets, and the increased decentralization of R&D are key facilitators for reverse innovation.

Marine Hadengue, Nathalie de Marcellis-Warin, Max von Zedtwitz, and Thierry Warin explore how French ophthalmic lens maker Essilor has experimented with reverse innovation in their RTM article “Avoiding the Pitfalls of Reverse Innovation.” Through their analysis of several reverse innovation projects, the authors identified four categories of challenges reverse innovators may face: 1) corporate culture challenges, such as “Not-Invented-Here Syndrome” and resistance to innovations that come from emerging market units; 2) business model challenges that arise when trying to implement new business models to support an emerging market innovation, supply chain, or technical capability; 3) customer challenges, such as the differing perceptions customers in developing markets have vs. emerging markets, and differing responses to value propositions; and 4) ethics and legal challenges, such as regulatory differences that prevent a product from being tested or offered in some markets. The authors offer guidance for overcoming these challenges.

The Italian company Speres developed a product exclusively for the Chinese market that was ultimately more successful in Europe. In their RTM article “Reverse Innovation at Speres: A Case Study in China,” Simone Corsi, Alberto Di Minin, and Andrea Piccaluga explore the challenges and difficulties Speres encountered at both the subsidiary and corporate levels. The authors offer important lessons learned: 1) a champion is crucial; 2) companies need to recognize that innovation can be generated in emerging economies; and 3) a global team is needed for global innovation.

In “Reverse Innovation: A Conceptual Framework,” Suresh Malodia, Shaphali Gupta, and Anand Kumar Jaiswal present a conceptual framework that identifies the antecedents, moderators, and consequences of reverse innovation. The authors write, “RIs [reverse innovations] can be adopted as a well-thought-of strategy for attaining sustainable growth and achieving a competitive advantage, especially in the emerging marketplace. Also, rolling out such innovations back to their [the MNC’s] home country can be seen as a great opportunity in achieving a global competitive advantage and serving the untapped market segment in the developed markets by creating value both in upstream and downstream activities.” They caution MNCs to pay attention to emerging markets holistically in the RI context.

Dominik Dellermann, in his article, “Going East: A Framework for Reverse Innovation in SMEs,” offers a framework for Western small- and medium-sized enterprises (SMEs) to drive reverse innovation success. Dellermann argues that SMEs “can use emerging markets growth opportunities by leveraging open business networks and a clear strategic focus on emerging economies as well as reverse commercialization.”

The pandemic created opportunities for reverse innovation, argues Govindarajan in Matt Kefford’s article “Vijay Govindarajan: Reverse Innovation Is Key to Pandemic Recovery.” Specifically, Govindarajan says the pandemic thrust hundreds of millions of people into poverty and created an even bigger mass market; it increased adoption of technologies in education and health care; and it gave local entrepreneurs and MNCs time to come up with new innovative ideas. Reverse innovation could become more influential than ever before, he posits.

Frugal Innovation and Jugaad

Frugal innovation and jugaad are close cousins of reverse innovation, but it is useful to make a few key distinctions. Frugal innovation starts with economic constraints as a key driver of innovation. Jugaad is focused on innovating with what is at hand, with what some Westerners may think of as “hacks.”

Ravi Nadjou did much to popularize both concepts. He coauthored the books Frugal Innovation and Jugaad. In an RTM interview titled “The principles of frugal innovation,” Nadjou explains that jugaad, a Hindi word that means “makeshift solution,” evolved into what has become known as frugal innovation. He says, “We recommend multinationals to do pilot projects in emerging markets because the context lends itself well to frugal innovation. You have the people with the right mindset in emerging markets.” Nadjou recommends companies study the market they want to serve and learn about the value-conscious customers firsthand. “Go beyond market research and do ethnographic field studies of customers. If you do that, you will identify the two or three essential attributes that have to be in the product. That’s a better way to design a frugal product: start with the nail and then design the hammer, not the other way around,” he says. Companies can engage with frugal innovators to “frugal-ize” their industries.

In his 2017 article “The Genius of Frugal Innovation,” Radjou gives examples of frugal innovation: a fridge in India made of clay that can keep fruits and vegetables fresh without electricity, and an advertising billboard in Peru that absorbs humid air and converts it into more than 90 liters of purified water daily. He writes, “The frugal innovation revolution is being led by creative entrepreneurs who are brainstorming amazing solutions to common problems in the US and Europe.” Keep it simple, do not reinvent the wheel, and think and act horizontally are the three principles of frugal innovation, he writes. Nadjou concludes, “Let’s harness the collective ingenuity of innovators around the world to co-create frugal solutions that will improve the quality of life of everyone, while preserving our planet.”

“Although frugal innovation is ­commonly associated with emerging economies, there is now a rising interest from healthcare providers in developed countries, to find and apply effective, and lower-cost solutions,” write Soumodip Sarkar and Sara Mateus in their article “Doing More with Less: How Frugal Innovations Can Contribute to Improving Healthcare Systems.” The authors synthesize extant knowledge of how frugal innovation is used in health care and provide a conceptual framework that researchers can use to undertake observation and guide managerial practices.

Dean A. Shepherd, Vinit Parida, and Joakim Wincent conducted a case study of 12 problem solvers in rural India. The authors “identified the antecedents, dimensions and duality of outcomes” for jugaad (“improvised fix”). As they explain, “Jugaad relies on assertive defiance, trial-and-error experiential learning and the recombination of available resources to improvise a frugal quick-fix solution.” The authors provide new insights into the dual outcomes of creative problem solving from an Eastern perspective and contend that “jugaad is unlikely to be a source of competitive advantage for firm growth but represents a source of enhanced wellbeing for inclusive growth.”

In “Frugal Innovation and Sustainable Business Models,” Mokter Hossain explores the connection of frugal innovation to business models. He analyses three cases of frugal innovation through the lens of value proposition, value creation, and value capture. His study “shows how individuals with limited education, funds, and resources can bring affordable products to market using outside the box thinking to meet the needs of underserved customers in developing countries.” Hossain explores the dark side of frugal innovation in another article titled “Frugal Innovation: Unveiling the Uncomfortable Reality.” Hossain discusses a definition dilemma, overlapping concepts, and the scope of frugal innovation. He suggests his paper has implications for theory, practice, and policy.

G. N. Bajpai speaks about innovation in India in an RTM interview “Innovation on Emerging Markets.” India has a large mass of consumers that want high-quality goods and services but who cannot afford a big price. Bajpai says innovators in India “innovate to the price point… . they innovate: simplify, increase volume, and start making profits.” The basics of innovating in India, Bajpai says, are to target the market, find out what the market needs, and find a solution to it at a price the target can afford.

A twist on these concepts is discussed in The Business Solution to Poverty: Designing Products and Services for Three Billion New Customers, by Paul Polak and Mal Warwick. They argue that innovation by the West for developing markets will not be able to address the basic needs of the world’s 2.7 billion poor. Instead, Polak and Warwick propose that mainstream capital markets fund large-scale, global enterprises that enable innovation in the market for the market. Their book discusses zero-based design, which entails starting from scratch to create innovative products and services tailored for the world’s poorest populations. Zero-based design can be used to provide electricity, clean drinking water, irrigation, housing, education, and health care “at a fraction of the usual cost and at profit margins attractive to investors.” In his RTM interview “Innovation to Reduce Poverty,” Polak says, “Western markets are increasingly difficult places to achieve growth, and they’re highly competitive… . When I look at the earnings and profit margins of corporations, emerging markets are leading the way to the future in many of them. I really believe that innovation to find profitability at scale with the world’s 2.6 billion $2-a-day customers is the major opportunity for growth and profitability for most corporations in the future.”

The Path Forward

Current global challenges require novel and innovative solutions. The solutions may emerge from large-scale initiatives, like those discussed by Govindarajan and Trimble and Paul Polak, or small-scale innovations, as discussed by Radjou, and Corsi and coauthors. The power of reverse innovations is that they may create value in all types of economies. We hope the resources included here provide food for thought on how companies can employ reverse innovation, frugal innovation, and jugaad to find much-needed solutions.

Resources

PRINT

Vijay Govindarajan and Chris Trimble. 2012. Reverse Innovation: Create Far from Home, Win Everywhere. Harvard Business Review Press.

Paul Polak and Mal Warwick. 2013. The Business Solution to Poverty: Designing Products and Services for Three Billion New Customers. Oakland, CA: Berrett-Koehler Publishers.

Navi Radjou and Jaideep Prabhu. 2015. Frugal Innovation: How to do more with less. London: The Economist.

Navi Radjou, Jaideep Prabhu, and Simone Ahuja. 2012. Jugaad Innovation. Think Frugal, Be Flexible, Generate Breakthrough Growth. Hoboken, NJ: Jossey-Bass.

ONLINE

G. N. Bajpai and James Euchner. 2011. Innovation in emerging markets: An Interview with G. N. Bajpai. Research-Technology Management 54(4): 12–16. doi: 10.5437/08956308X5404004

Simone Corsi, Alberto Di Minin, and Andrea Piccaluga. 2014. Reverse innovation at Speres: A case study in China. Research-Technology Management 57(4) 28–34. doi: 10.5437/08956308X5704215

Dominik Dellermann. 2017. Going East: a framework for reverse innovation in SMEs. Journal of Business Strategy 38(3): 30–39. doi: 10.1108/JBS-02-2016-0014

Vijay Govindarajan and Jim Euchner. 2012. Reverse innovation. Research-Technology Management 55(6): 13–17. doi: 10.5437/08956308X5506003

Vijay Govindarajan and Chris Trimble. 2009. Is reverse innovation like disruptive innovation? Harvard Business Review, September 30. https://hbr.org/2009/09/is-reverse-innovation-like-dis.html

Marine Hadengue, Nathalie de Marcellis-Warin, Max von Zedtwitz, and Thierry Warin. 2017. Avoiding the pitfalls of reverse innovation. Research-Technology Management 60(3): 40–47. doi: 10.1080/08956308.2017.1301002

Mokter Hossain. 2021a. Frugal innovation: Unveiling the uncomfortable reality. Technology in Society 67:101759. doi: 10.1016/j.techsoc.2021.101759

Mokter Hossain. 2021b. Frugal innovation and sustainable business models. Technology in Society 64:101508. doi: 10.1016/j.techsoc.2020.101508

Matt Kefford. 2022. Vijay Govindarajan: Reverse innovation is key to pandemic recovery. BusinessBecause.com, March 2. https://www.businessbecause.com/news/insights/8093/vijay-govindarajan-reverse-innovation

Suresh Malodia, Shaphali Gupta, and Anand Kumar Jaiswal. 2020. Reverse innovation: a conceptual framework. Journal of the Academy of Marketing Science 48:1009–1029. doi: 10.1007/s11747-019-00703-4

Paul Polak and Jim Euchner. 2012. Innovation to reduce poverty. Research-Technology Management 55(1): 11–15. doi: 10.5437/08956308X5501006

Navi Radjou and Jim Euchner. 2016. The principles of frugal innovation: An interview with Navi Radjou. Research-Technology Management 59(4): 13–20. doi: 10.1080/08956308.2016.1185339

Navi Radjou. 2017. The genius of frugal innovation. Ideas.Ted.Com, March 21. https://ideas.ted.com/the-genius-of-frugal-innovation/

Soumodip Sarkar and Sara Mateus. 2022. Doing more with less – How frugal innovations can contribute to improving healthcare systems. Social Science & Medicine 306:115127. doi: 10.1016/j.socscimed.2022.115127

Dean A. Shepherd, Vinit Parida, and Joakim Wincent. 2020. The surprising duality of jugaad: Low firm growth and high inclusive growth. Journal of Management Studies 57(1): 87–128. doi: 10.1111/joms.12309

Tatiana Tombini Wittmann, Daniela de Oliveira Massad, Gertrudes Aparecida Dandolini, and João de Souza, J.A. 2021. Barriers and facilitators of reverse innovation: An integrative review. In: Proceedings of IDEAS 2019, edited by Luciana Pereira, José Carvalho, Peter Krus, Magnus Klofsten, and Victor Juliano Negri. doi: 10.1007/978-3-030-55374-6_1

Additional information

Notes on contributors

Tammy McCausland

In this space, we offer a series of summaries on key topics, with pointers to important resources, to keep you informed of new developments and help you expand your repertoire of tools and ideas. We welcome your contributions, in the form of suggestions for topics and of column submissions.