jugaad innovation - uxpa 2013 keynote from navi radjou

Frugal Innova,on: Collabora(ng To Innovate Faster, Be4er, Cheaper Navi Radjou Co-‐author, Jugaad Innova+on Co-‐author, From Smart To Wise World Economic Forum faculty member Fellow, Judge Business School, University of Cambridge

UXPA 2013 Conference — 11 July 2013, DC

Western firms are being forced to innovate faster, be4er, cheaper

•  Demographic shifts •  Rapid technology changes •  New regulations •  Global competition •  Dwindling purchasing power

2 Copyright © Navi Radjou

Western consumers are now “frugal”

E P I B R I E F I N G PA P E R #324 • AU G U S T 31, 2011 • PAG E 19

Persistently high unemployment causes family incomes to fall, poverty to rise ! e labor market is the foundation of income for nearly all American families, so when the labor market deteriorates, family incomes su" er. Fam-ily incomes are a" ected through both job loss and through hours and wage cuts for those who have work. As Figure P shows, the median working-age household saw an income decline of $2,700 from 2007 to 2009. Furthermore, this recession came on the heels of one of the worst business cycles (2000-07) on record in terms of job creation, one in which the income of the median working-age household

fell $2,250 – the fi rst business cycle on record in which incomes did not end higher at the end of the recovery than at the peak of the last one. Conse-quently, the typical working-age household brought in roughly $5,000 less in 2009 than it did in 2000. Incomes will stay reduced until the unemployment rate drops toward full employment, a prospect that is years away. ! e weak labor market of the Great Recession and its aftermath has produced a substantial rise in poverty. In 2009, one in seven people, and one in fi ve under the age of 18, was living in poverty. For chil-dren under age 6, one in four live in poverty. Racial and ethnic minority families are more likely to live

Real median income of working-age households, 2000-09

F I G U R E P

NOTE: Shaded areas denote recessions.

SOURCE: EPI analysis of U.S. Census Bureau data.

Med

ian

inco

me

($ 2

009)

$53,000

$54,000

$55,000

$56,000

$57,000

$58,000

$59,000

$60,000

$61,000

$62,000

$63,000

2009200820072006200520042003200220012000

$60,746

$58,495

$55,821


“Bigger is be4er” innova(on model

$603 billion spent in R&D

in 2011



Source: Strategy & Business Source: Strategy & Business


Source: Strategy & Business

featuresspecial report

3

Not so fast. The results of our recent study of theBooz Allen Hamilton Global Innovation 1000 — the1,000 publicly held companies from around the worldthat spent the most on research and development in2004 — may provoke a crisis of faith. The study, whichwe believe is the most comprehensive effort to date toassess the influence of R&D on corporate performance,suggests that nonmonetary factors may be the mostimportant drivers of a company’s return on innovationinvestment (ROI2). The major findings:

Money doesn’t buy results. There is no relationshipbetween R&D spending and the primary measures ofeconomic or corporate success, such as growth, enter-prise profitability, and shareholder return.

Size matters. Scale leads to advantage. Larger or-ganizations can spend a smaller proportion of revenueon R&D than can smaller organizations, and take nodiscernible performance hit.

You can be too rich or too thin. Spending more doesnot necessarily help, but spending too little will hurt.

There isn’t clarity on how much is enough. Instead of clustering into any coherent pattern, R&D budget levels vary substantially, even within industries. Thissuggests that no single approach to spending money oninnovation development is universally recognized as themost effective strategy.

It’s the process, not the pocketbook. Superior results,in most cases, seem to be a function of the quality of an

organization’s innovation process — the bets it makesand how it pursues them — rather than the magnitudeof its innovation spending.

Collaboration is key. The link between spending andperformance tends to be strongest in those areas mostunder the control of the R&D silo, such as productdesign, and weakest in those areas where cross-functionalcollaboration is most difficult, such as commercialization.

These findings conjure up familiar images of frus-tration. Hardworking R&D teams invest time andmoney in the wrong projects; manufacturing, market-ing, and sales drop the ball on winning products andservices; and senior executives and policymakers simplythrow more money at research and development in themistaken belief that it will make a difference. When itcomes to innovation investment, it appears that in manycases, less may be more.

Innovation’s New ContextThe myth that higher R&D spend translates into com-petitive advantage has been around for decades, but itappears to be particularly strong now. Pick up any busi-ness magazine or newspaper. You’ll find ample evidenceof the belief in the effectiveness of larger budgets, forboth corporate and national competitiveness:

• “U.S. spending on R&D will also have to in-crease if the country wants to remain technologicallydominant.” —Fortune, July 2005 P

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The quest for innovation has long been a faith-based initiative: Spend more, and profitwill come. Are you losing out to nimbler competitors? On the high-cost end of global-ization? Is your sales growth flattening? Are your margins narrowing? Want to prove toWall Street you’re serious about growth? Don’t worry; just increase the R&D budget. Newproducts or services will emerge that make the difference — won’t they?

Source: Strategy & Business

Firms need a new innova(on model


Thinking outside the (ice) box:

what if my fridge can talk to my phone?


Thinking outside the (ice) box: WHAT IF my fridge

can operate without electricity?



Scarcity is mother of inven(on

h4p://economic(mes.india(mes.com

h4p://nif.org.in


Kanak Das

Source: Prof Anil Gupta, IIM-‐Ahmedabad

Adversity is father of inven(on

Source: gcstz.com/products

African ingenuity

Source: www.quotednews.com

Filipino ingenuity


Frugal ingenuity


Frugal ingenuity

Ratan Tata, Chairman, Tata Group


Frugal ingenuity at a large scale

FRUGAL PRODUCTS

JUGAAD mindset


JUGAAD The gutsy ability to improvise an effective

solution with limited resources… …using ingenuity & resilience

Also known as: Jeitinho or Gambiarra in Brazil

Zizhu Chuangxin in China Système D in France

Do It Yourself (DIY) in USA



Jugaad: frugal, flexible, inclusive

Tradi,onal innova,on: costly, rigid, eli(st

Doing more with Less: Frugal Innova,on


FI = RESOURCES VALUE -‐  Customers

-‐  Shareholders -‐  Society

-‐  Financial resources -‐  Natural resources -‐  Time

Frugal innova(on pioneer: Unilever

Paul Polman, CEO, Unilever

“I want to double Unilever’s revenues

by 2020 while cueng our

environmental impact by 50%”

Source: upload.wikim

edia.org


Frugal innova(on pioneer: PepsiCo

Shiv Singh Global Head of Digital, PepsiCo

“Marketers should invest HALF of their budgets on mobile

marke(ng—and look at smart investments on medium vehicles that

generate instant conversa(ons.”

Source: upload.wikim

edia.org



Takeaway #1: Focus on customer value

Jane Chen Co-‐founder EMBRACE




Source: Siemens

Takeaway #2: Keep it Simple

Keeping it simple: SIEMENS


Simple Maintenance-‐friendly Affordable Reliable Timely-‐to-‐market

Elie Ohayon CEO, Saatchi & Saatchi + Duke

“We must radically change the way we innovate. The new approach should be: « I have an idea:

I develop it cheaply, put it in market quickly,

get feedback, and reiterate.»


Takeaway #3: Rapid experimenta(on


Takeaway #4: Leverage partnerships

State Agriculture Marke(ng Boards

NGOs

Thomson Reuters

Bhar(

Syngenta

NOKIA LIFE

TOOLS

OnMobile

Local villages

Nokia Life Tools

Shil from Linear Value Chains…

DESIGN CUSTOMERS PRODUCE SELL


…to Open Innova(on Networks

Market discovery partners Solu,on design partners Go-‐to-‐market partners


DISCOVER


…to Open Innova(on Networks


Beth Comstock, CMO, GE

“Our tradi,onal teams are too slow. We're not

innova,ng fast enough. We need to systema,ze change.»

Takeaway #4: Leverage partnerships

GE CFSI Rock Health TechShop


Applying Frugal Innova,on to Sogware Development

Frugal solware development: Intuit


•  “Follow Me Home” program •  Rapid prototyping and iterative development

–  Don’t solve “world hunger”—solve one specific customer pain point –  Aim for “good enough” vs. “perfect” solution –  Don’t try to change customer behavior—dovetail into it –  Love metrics


•  AppHaus: – Cross-functional and

autonomous teams – 90-day development cycle – Design thinking

(customer-centricity) – Business & social apps

•  Boost in productivity and employee engagement

V.R. Ferose MD, SAP Labs India

Frugal solware development: SAP Labs

The Emerging Frugal Innova,on Ecosystem in the West


US government is suppor(ng “bo4om-‐up” frugal innova(on


FEMA Think Tank Conference at White House, 6 February 2013

Richard Serino Deputy Administrator FEMA

Desiree Matel-‐Anderson Innova(on Advisor FEMA Yours truly

US government is suppor(ng “bo4om-‐up” frugal innova(on: FEMA

Top US universi(es are training “frugal” engineers & managers


Source: CellScope


CellScope

Young entrepreneurs are driving the frugal innova(on revolu(on in healthcare

Source: http://etaglive.com

Young entrepreneurs are driving the frugal innova(on revolu(on in educa,on



Young entrepreneurs are driving the frugal innova(on revolu(on in finance

MAKER Movement in US: From DIY to Do-‐It-‐Ourselves

h4p://fetosoap.com/blog/index.php?s=faire


Open Source Hardware Movement


Slide with J&J

52

Discussion

Navi Radjou [email protected]

jugaadinnova,on.com Twi4er @JugaadAtWork

Facebook.com/jugaadinnova(on

jugaad innovation - uxpa 2013 keynote from navi radjou

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