This review is going to look critically into how frugal innovation is benefiting the people of Africa by specifically looking at 3 different companies that have used frugal innovation to benefit the people of Africa. The reason this topic has been chosen for this review is due to the limited number of publications on Frugal innovation (Howard, 20111) and the limited number of articles and journal entries that focus entirely on frugal innovation specifically in Africa. Africa’s economic growth Is expected to reach 3.7% in 2018 (IMF.org, 2017) due to increases in technological advancements, this is a review that is needed to show how frugal innovation is working well and impacting on people’s lives in Africa.
In Africa their GDP doesn’t grow due to the sales of large quantities of raw materials, however, is driven by the domestic market (Guo, 2010), this is shown strongest by the rapid increase of consumer shops, banks and the use of phones, this is all being driven by the young African professionals who have been taught in the West and have now come back and are driving up the demand for goods and services which in turn are now making a difference to the areas in which they grew up (Mahajan, 2011).
The structure of the review will begin with several different definitions of ‘frugal innovation’ and also different definitions of ‘sustainability’ following this will be the analysis of several different similar concepts and what the different characteristics are. This will be followed with analysis of 3 companies that have been trying to push frugal innovation across Africa as well as numerous people’s views on whether they feel frugal innovation is important and sustainable in Africa, throughout the analysis judgements will be made on whether the literature reviews findings back up the evidence found on the evidence found.
2.0 Aims and Goals
The aim of this review is to by the end have a comprehensive answer to determine if frugal innovation in Africa is delivering sustainable products, a short time goal is for the reader during the review stage to have a better understanding of Frugal and also contrasting concepts that will lead them to by the analysis section understand whether the companies mentioned are having an impact on the lives of the people in Africa as a whole or the individual field they operate in for the better. The problems that will hinder the in-depth nature of this report will be the lack of articles and research that specifically look at Frugal innovation in Africa another concern is the lack of people’s opinions on the companies which were found to be operating using frugal. The issues mentioned will be overcome by performing further research into similar companies that are located on other continents and searching for similarities.
3.0 Literature Review
The definition of frugal innovation is one that has been discussed in great lengths and with numerous examples (Bhatti, 2012; Radjou & Praha, 2015) this is due to the overlaps it has with other concepts including Jugaad and reverse innovation to name a few (Zeschky et al., 2014) this overlap is a reason why there is limited literature specifically focusing on the topic (Praha & Jain, 2015), there is a lot of different definitions of low cost innovation and there tends to be stages where each one is used depending on what’s fashionable (Kunamaneni, 2017) all the varies innovations are show in the appendices.
There is, however, one denominator that links all the concepts which consists of the production of a low-cost but innovative product or service that benefits low-income customers in developing countries.
The first report that discussed frugal innovation was published by the Economist Journal and defined Frugal innovation as ‘the redesign of products in a new way by eliminating unimportant activities to reduce the total cost’ (Economist Journal, 2016) this process of being ‘frugal’ is followed through-out not only the production process but also how the product or service is delivered to the end consumer (Bhatti and Vent esca, 2013).
Due to the lack of knowledge surrounding the subject there have been a wide range of definitions for ‘Frugal innovation’ this section is going to look into the most basic and sophisticated definitions and then move onto the other innovations that are reported to be very similar and connected to Frugal innovation finishing this section by discussing definitions and research on sustainability.
Frugal innovation is a response to limitations in resources this can be financial, institutional or material based limitations and then turns these constraints into an advantage (Bound and Thornton 2012). The most basic definitions are found in dictionary entries and small article entries on the topic, examples of this include the Oxford Dictionaries entry in 2016 that defined frugal as ‘sparing and thrifty’, “simple and plain and costing little”. The products that are described as frugal tend to have qualities such as cheap, easy to use and/or repair and are often made using recycled or local materials (Douglas, 2013; Rao, 2013).
The benefits of Frugal as stated by Kahlo et al. (2013) includes improvements in security, education and the infrastructure especially for poor people who live in LEDC’s and the surrounding areas, this definition is one that backs up Bhatti and Ventresca (2013) definition that frugal innovation is a novel, effective and efficient way to produce more at a low cost that is for and helps many people. Due to the cheap manufacturing nature there is a reduction in the need of hi-tech labs that often are needed in the production of ingenious time-saving products and the sole focus relies entirely of the entrepreneurs who often have none or very little past experience in the manufacturing of new consumer items (Mandal, 2014), research tells us that focus at all times should be on the innovation and ways in which it helps improve lives rather than wonder about the entrepreneurs capabilities (Phalls et al, 2008).
A definition that best links all the above definitions and characteristics is one written by Simula et al (2015) states that frugal innovation… “as a product, service or a solution that emerges despite financial, human, technological and other resource constraints, and where the final outcome is less pricey than 3 competitive offerings (if available) and which meets the needs of those customers who otherwise remain un-served”.
Frugal innovation is also sometimes referred to as reverse Innovation, this is an innovation that aims to develop and sell new products or services in a cheap way without reducing the quality level in emerging markets and then modify the product and sell in developed countries (Nunes and Breene, 2011), it is well reported that often companies that begin with the use of frugal innovation after the success of the product often begin the use of reverse innovation and open the product up to different countries (Govindarajan & Ramamurti, 2011; Hossain et al., 2015)
Developing countries in Africa have become ever-more positive about the use of differing innovation and have placed the need for more in their national innovation policies (Dellestrand, 2015) and in particular places a focus in agendas to boost frugal innovation (Bound & Thornton, 2012).
4.0 Combination of Sustainability and Frugal innovation
The relationship between Sustainable Development and Frugal innovation is one which has been discussed in great depths specifically in India where the president has stated that innovation has the possibility to ‘generate considerably more business without reducing scarce resources’ (Kumar, 2014). Sustainable development is a much older concept that first become apparent in a report that was published in the World Commission on Environment and Development in 1987. A clear definition that explains this concept was written by the United Nations in 1987 ‘sustainable development seeks to meet the needs and aspirations of the present without compromising the ability to meet those of the future’. Sustainability is able to deliver long-term successes to an organization whilst also contributing towards economic, social development, a healthy environment and a stable society (Mani and Bollinger, 2002).
Due to the situation specifically in Africa where there is limited availability of resources and social inequality, there has been a shift towards a sustainable future, this is a view that has recently shifted from just profitability to also sustainability. A greater importance has started to lie with companies and entrepreneurs having not only achievable visions and goals but also that these are achieved sustainably and also by using frugal innovation, this combination is one that is going to benefit society.
As mentioned previously the low-cost restrictions in the process of production requires the use of resources that are in excess. This results in a product which only uses the exact number of parts required with no waste elements and also functions at the same level than the previous best alternative. The production of more frugal innovations results in a significant decrease in the number of resources used in manufacturing especially as the products that are going to be mentioned are produced on a mass scale, this will not only have a positive impact on society but also aid in the preservation of scarce resources for future generations (Levänen et al. 2015; Rosca et al. 2016).
This cycle of producing low-cost frugal products should encourage other entrepreneurs in the area to do the same, this will create an influx of frugal products that will both be beneficial to the customers as the price is affordable but also the environment as the products also sustainable due to the resources used.
When evaluating if frugal innovations are sustainable at a local and national level in Africa, an understanding of the current alternatives need to be appreciated for example are the alternatives comparable and solve issues similarly to the frugal innovations.
The companies chosen have been specifically chosen to mostly agree with the evidence put forward in the literature review, it is important to note that not every company that has tried to implement frugal products in Africa has been successful and been able to manufacture and implement them sustainably. The structure of the analysis should be in such a way that the reader is able to gather information about the particular company and then be able to link the similarities between theory discussed and the way the companies operate. The three case studies have been chosen due to their direct relevance to answering the report question, all three have used frugal innovation to impact the lives of people in their area in different ways; ‘NanoFilter’ provides clean water, ‘Moladi’ provides affordable housing and ‘Upesi’ provides a stove to cook with.