May 02, 2015
Few weeks back when we went on a week long vacation, I packed "Jugaad Innovation - A Frugal and Flexible Approach to Innovation for the 21st Century" by N. Radjou, J. Prabhu & S. Ahuja as a possible lite read. When we were leaving for the airport from my SIL's home after a bit of repacking, I couldn't locate the book. Since I figured it didn't make sense to head out without any reading material, grabbed "The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail" by Clayton Christensen from my SIL's home book shelf. By the time we boarded the plane, located the first book as well. This turned to be a blessing in disguise since both books were of the lite variety and were quite related to each other in their content. So, before the vacation was over, I could read the older Innovator's Dilemma (ID) first and then finish more than half of the Jugaad book that dove tailed into the first one nicely. Whenever I saw book reviews on The Economist magazine that often discussed two books together, I used to wonder how they found two different books that came out around the same time that are so closely related. Used to brush that thought aside thinking that topic must be the current fad inspiring multiple people to write books. Though these two books were published more than 10 years apart, serendipity had me reading them back to back in the same week. So, here I am talking about them together.
The ID book is more than 17 years old and is sort of a classic since the thoughts put forth in the book were new in the late 90's. By now the ideas are part of the common business wisdom. But are still plausible threats to existing large businesses. Main ideas presented can be summed up in these three bullets:
- Often when disruptive new ideas or technologies bring in new products to market, customers using older products won't know what to do with the new products (since they may not match their present needs nicely). But the other advantages such as cost, portability, ease of use may help other customers pick it up. Once the market grows, the cheaper, newer alternative can eat into the main market.
- Established companies who pay all the attention to existing customers taking care of all their needs with evolutionary products may miss this change in the market place and may end up on the side lines while new companies move in and start eating their lunch.
- Established companies should not try to manage this dilemma by trying to do both old and new products with one set of development & marketing teams since the messages/market may be contradicting each other. Instead, they should establish a subsidiary or a standalone group with its own development, marketing teams and P&L center. If the idea succeeds, it can eventually be mainlined.
About one fourth of the book talks about hard drive development by famous tech companies in the 60's to 90's and how despite having the right new product that is quite different from the current crop of products, those companies repeatedly failed to capture the market losing out to new comers. This is due to the fact that the new products are of no interest to their existing customers. For example, a much smaller and cheaper drive that is is slightly slower may not be of interest to the top end computer maker. So, the drive maker puts this product on the shelf and goes back to making incremental improvements to their existing form factor drives to suit the needs of the their customers, as they were taught to in the business school. But a new company starts selling the smaller, cheaper, slower drives to a totally new market such as game consoles. As their sales volume increases, they manage to make the drives faster and thus eat into the high end market due to lower price and smaller form factor.
Author spends so many pages and charts to convey this idea. While all the charts and tables are important for his analysis, I am not sure it contributes a lot to the book's message. A good editor could have trimmed it down considerably. He then moves on to point out similar slips occurring in very different industries such as earth moving equipment manufacturers. Overall idea is certainly quite important for large enterprises. I was quite amused to see the last chapter where the author discusses how automobile manufacturers should handle the vexing problem of developing and marketing an electric car. Based on all the ideas discussed in the book, the author suggests developing a cheap car, and finding a market that can use a slow car that will drive only about 100 miles between recharging which may take hours. But in the last ten years, Tesla Motors has been doing very well by designing high performance electric cars that drive 300+ miles between charges and are extremely expensive!
That takes me to the Jugaad book. A friend of mine bought this book as a present to my son when we were in India one year back. It came out only in 2013 when the idea of Jugaad had been raising rapidly becoming a course in Harvard Business School, being talked about as Frugal Engineering by characters like Carlos Ghosn (Nissan CEO) and so forth. In Hindi, the term means improvising something cheap to take care of the local need.
The three authors have provided a large number of examples and case studies illustrating how R&D conducted in economically poorer societies to develop products and services to meet the local needs have been making tremendous progress in bringing costs down despite being high quality products. These products are then sold back to affluent societies as well! This is very different from last century's model of taking an expensive product with bells & whistles developed for richer societies and then stripping it down to make a cheaper version for poor countries. Often such stripped down versions don't even work well in the targeted markets since the atmospheric conditions, usage models are all quite different compared to the original markets.
In general most well known consumer products (cars, phones, food items, medicines, appliances) or even industrial products (heavy equipment, MRI machines) & services (banking, manufacturing) that we usually hear about seems to be coming out of the US or Western Europe companies. So, one might be easily lead to think that other nations such as India don't seem to do much of innovation. This books dispels that myth pointing out to all the new products and services that are being developed and sold in countries like India, Brazil and China at often less than one tenth of the price making them affordable to not only local communities but also to poorer countries around the world first and then to US and Western Europe's affluent societies next. Examples range from an infant baby warmer (a simpler model developed by a woman pediatrician in India that costs <$100 vs. $3000 model sold by GE) to selling solar panels not as a product but more as a service in Brazil. Authors have tried to break down the Jugaad idea into 6 steps, such as
- Seek opportunity in adversity: e.g. http://www.mitticool.in/ that is selling refrigerators that work without electricity.
- Do more with less: e.g. An Argentina farmer that invented the idea of asset light farming to overcome difficulties in owning land, equipment, labor needed for farming and is able to scale this model up now.
- Include the margins, meaning bring in the resource poor consumers who still need various products and services by making them extremely affordable, easily available using existing infrastructure.
- Think and act flexibly, meaning get early models out in the open and be ready to change the product/business model if the first idea fails. Doing this early/quickly limits losses.
- Keep it simple
- Follow your heart, since strict focus group study and ivory tower R&D may not be always right. Innovators living in the actual society/atmosphere where the product is going to be used may have a better understanding of the actual need.
Apparently Western companies such as Phillips, Ericsson, Pepsi, GE, Nissan, etc. are all learning these ideas and implementing them successfully. You can search YouTube with the term Jugaad and can see literally 100s of Jugaad examples. Most of those may look funny and sad at the same time making us realize how people around the world get by with so little so cheerfully. Still, the ideas can be extended to big and complicated projects as well. I remember reading how ISRO (Indian Space Research Organization) just dug a one foot deep trench with a 1KM radius around the launching pad that turned out to be a simple solution to route lot of cables easily while protecting them from the heat of the launching pad. When the Prime Minister of India quipped last year that the Mars probe they launched successfully cost less than what was spent to produce the movie Gravity, I was able to make that connection. :-)
Naturally, variations of this concept is in practice in various societies. (If you haven't heard of a Liter or Light, see this site: http://literoflight.org/#/) But this book particularly being centered on India, with all the numbers listed in Crores (i.e. Indian equivalent of 10 Million) and money in Indian Rupees (instead of US dollars), sounded quite different since I am so used to US being the center of the universe all the time! :-)
In the last chapter, they have managed to cover themselves saying Jugaad is not the next great thing after sliced bread that will eliminate hunger and bring world peace but is a complimentary model for R&D that should be part of an organization's overall MO. Authors have setup a website that is supposed to bring all the related material together and is promoted in the book quite a bit. But I found the site quite disappointing when I visited. I also found the innumerable subsection titles that appear once every two paragraph a bit annoying. Still, this book as well as the ID book, both are easy reads and should be worthy of your time if you choose to pick them up.
-sundar.
