Frugal innovation turns limitations in resources – whether financial, material or institutional – into an advantage by using them in new ways. This can be achieved through reducing the complexity of a product or its production process, or by removing non-essential features.
For companies in established markets, frugal innovation allows a company with a quality product to compete effectively with cheaper manufacturers as it makes a better product more affordable.
Within emerging markets, frugal innovation is used to purposefully target the bottom and then additional functionality is incorporated to provide benefits for all users.
Frugal Innovation Index
To assist companies assess their potential for frugal innovation, Fraunhofer IAO has developed a Frugal Innovation Index. The index uses a simple questionnaire to measure, assess and increase the capability of organisations to be frugally innovative.
The aim of the Frugal Innovation Index is to help management answer two key questions:
“What is the potential for my company to successfully develop frugal products and services?”
“What measures need to be taken to achieve this potential?”
Within a masters thesis 20 success criterions for frugal innovation managements were identified using a scientific literature search, which included real-life case studies.
These success criterion are sorted into four categories: “strategy”, “organisation”, “innovation process” and “culture” and made measurable by using simple statements.
The participant ranks agreement with each statement on a Likert-type scale.
Upon completion of the questionnaire a score is calculated. This is used to evaluate the current status of the organisation with regards to its capability to innovate frugally.
A score is given for each of the four categories, so the users can quickly gain an overview of the areas where good progress has been made and those that can be improved.
The data is anonymised but as more individuals complete the questionnaire it will be possible to benchmark your responses against those of the industry.
In a final step, the respondent is provided with five ad-hoc recommendations for potential courses of action.
For more information about the Frugal Innovation Index, click here.
Dr Sven Schimpf
Fraunhofer IAO / IAT University of Stuttgart
Competence Centre R&D Management