Frugal innovation: unlocking lucrative markets
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“Frugal innovation” derives from “frugal engineering,” a term coined by Carlos Ghosn, CEO, Renault-Nissan.* Its increasing influence and adoption is visible particularly in the manufacturing sector. However, by embracing frugal innovation, organizations across all sectors, including consumer products and financial services, can transform not only products, but entire business models and markets. In a slow-growth global economy, frugal innovation, and the organizational revolution it requires, is predicted to be essential for continued success.
To make frugal innovation really work, corporate leaders must put their reputations on the line by repeatedly making public statements of commitment to their goals.
In this article, we provide examples of how well-known companies have looked for and found frugal solutions to a range of challenges. We explain what drives successful frugal innovation, including “hypercollaboration” and “innovation-brokers.” We also warn against potential obstacles and advise how to leverage existing assets.
Frugal innovation can be seen to be driving many changes in markets and within organizations, and will continue to do so as its influence spreads from economies, such as in India and China, across Western Europe and Japan, to the US, where frugal innovation is still in its infancy.
* http://blog.alliance-renault-nissan.com/blog/less-more-ceocarlos-ghosn-frugal-engineering, accessed September 2015.
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