How can Frugal Innovation become Inclusive Innovation?

Irmgard Jansen
By on December 28, 2015

Professor Saradindu Bhaduri holds the Prince Claus Chair in Development and Equity for a period of two years, this period started on the 1st of September 2015. The objective of the Prince Claus Chair is to continue the work of the late Prince Claus in the field of development and equity. The chair rotates annually between the Institute of Social Studies of Erasmus University (ISS/EUR) and Utrecht University.

Sara BhaduriThe thematic focus of Professor Bhaduri, based at IS/EUR, will be on ‘Frugal Innovation for Development and Equity’. Frugal Innovation is a new field of innovation studies concerning a mode of design and doing business that brings relatively sophisticated products, services and systems within the reach of relatively poorer consumers in resource-constrained environments. The challenge is not simply to provide stripped down versions to poorer consumers, but instead to provide value-sensitive innovations without sacrificing user value. Such frugal innovations need to fit local circumstances and cultures.

Professor Bhaduri has an extensive network in his field of studies, especially on frugal innovations in informal settings, the so called ‘bottom up frugality’, and is therefore able to connect researchers across borders and support the exchange of knowledge and experience from the frugal Innovation hotbed India, to other emerging markets.

We had the opportunity to ask Prof. Bhaduri about his work and how it is relevant for the IB Accelerator’s services in the field of Inclusive Innovation.

Is inclusive innovation different from frugal innovation?

“There are many words that point to innovation with and for low income markets, including: frugal innovation, inclusive innovation, reverse innovation, pro-poor innovation and BoP innovation with sometimes overlapping, but often, very different implications.

Frugality is about how things are achieved rather than what is achieved. Frugality leads to minor innovations that come into existence at the shop floor level, outside the R&D departments of larger companies. The outcomes are very uncertain. Generally, we have neglected the informal sector for a long time, despite the fact that the informal sector includes many people who have the urge to solve their day to day problems and have the curiosity to use the available technologies around them.

I want to explore the learning dynamics and find out how policies and interventions can be shaped to encourage frugal innovations. Frugal innovations in informal settings are bottom-up innovations that are, quite often, inclusive by nature. People from low income communities have to be incorporated in the design of innovative solutions. It is also important to know how the tacit knowledge can be included in the inclusive innovations to improve the lives of people in low income groups. In my research I am not looking at low income communities as a market. I am looking at these communities as sources of knowledge and innovation.”

How, in your view, can frugal innovations be used in business?

“I have not really done much research into the aspects of (large to medium scale) commercialization of frugal innovations carried out in informal settings. The local processes and the local validity as such are more important aspects in my research. I am not against (larger scale) commercialization but I would not put all our hopes on innovations that can be ‘commercially viable’.

Scaling up and commercializing are extremely complex processes as such. For example, in the pharmaceutical industry only 5 % of the newly invented drugs can be successfully sold in the market. Imagine the huge investments that are needed to solve just a few problems. Therefore, looking at low cost bottom-up innovations to solve problems has a merit in itself. Bottom-up innovations should be encouraged without looking at commercial viability in the first place.

By doing so, we will probably be able to solve more problems with less money. Over time, a few of these innovations can be commercialized, but that should not be the point of departure. Most of these frugal innovations are being developed in very particular contexts. Whether or not these innovations can also be used in other contexts has to be considered from case to case. The context is extremely important. Most technologies and innovations from the northern hemisphere do not work really well in developing countries.”

Could organizations like BoPInc play a role in the application and contextualization of frugal innovations in the effort to develop inclusive business activities?

“You can probably combine the top-down approach with the bottom up innovations. However, it is extremely hard to scout relevant bottom-up innovations. Over the last decades, there has been a total neglect in making local innovations accessible through organizing the knowledge in databases.

In addition, in most cases bottom-up innovations need to be combined with solutions originating from elsewhere to make them applicable in other communities and under different circumstances. My message is that ultimately every innovation can only work if local knowledge is taken into account. Organizations like BoPInc should always make sure that this knowledge exchange takes place and reserve time for many iterations of innovations before they will be ready for the market.”

How can formal innovators or R&D departments of corporate businesses find local knowledge and how can they find these frugal innovators?

“Larger corporations should use their CSR budgets better and apply them in local contexts. For example, in India much of the CSR budgets are directed towards not very useful objectives such as beautifying parks. I think that should change. There should be an obligation to use the CSR budgets towards sustainable innovations for the poor.

Of course one could still be suspicious of greenwashing but the government and the civil society have the obligation to negotiate about the use of the CSR budgets. It should not be used as a marketing device. There is no easy solution, but policies and regulations are possible. If the bigger firms want to use local knowledge they should seek assistance of local opinion leaders to apply local knowledge in the design of prototypes. Once corporates perceive of local knowledge as legitimate knowledge, innovations will become more acceptable. That is what I would like to encourage.”

On the Indian continent, where you have done most of your research, there is a huge informal economy where local knowledge is being applied. The learning dynamics center around the urge to solve day-to-day problems. You even state that 90%of employment in India is in the informal sector and you state that this is where the innovations should come from. How would you compare this to the African situation?

“Africa also has a very large informal sector. Africa is ahead of India in terms of including the informal sector in their policy making processes. In some African countries the policy makers explicitly mention that they want to include the informal sector in policy making, in particular in Kenya, Rwanda and Nigeria. India’s current innovation policies do not incorporate such frugal innovations so far. There are, of course, attempts to influence policy making by some private groups, and the Honey Bee Network.

The setting up of the National Innovation Foundation is a big step. But the policy enthusiasm is not there as much as we want it to be for a country as vast as India. In particular, there is yet to emerge a clear policy articulation of the problem. The coordination among the various organizations working on popularizing this issue also has a huge scope of further improvement. There are a couple of ways of making better use of informal innovations in policy making. First of all, the topic of informal innovations should be formally linked to poverty alleviation policies.

A good example is the Bank for Ideas and Innovations that was recently set up by the government of India. This can be used by entrepreneurs and civil society organizations to encourage frugal innovations. Secondly, government funding for such innovative ventures should become more flexible because the outcomes cannot always be clearly defined beforehand.

And last but not least I recommend that research collaborations with the universities and formal innovators should take place in the fields, where these innovations take place. There should an exchange of knowledge based on equality and not only a top-down transfer of knowledge. This applies both to India and to Africa.”

Recently the opportunities for South – South replication have received a lot of attention. Could the frugal innovations you study in India be suitable for replication to Africa?

“There are striking similarities between African and Indian informal sector entrepreneurs in how they innovate. They both use local knowledge and apply innovations around them and use the local feedback. However, even transferring technology from one rural setting in India to the other rural setting in India is hard. South-south replication has chances of succeeding but it is still an avenue that we need to explore. I will do research to explore this as part of my time here, to better understand the complexities of these processes.

During the following years we at the Leiden-Delft-Erasmus (LDE) Centre for Frugal Innovation in Africa (http://www.cfia.nl/) will compare India and Africa in terms of frugal innovations. However, we will not focus on transferring innovations from one continent to the other. Once we have a better understanding of how innovations take place on both continents, the way innovations can be transferred will come up as the next question.”

What are the implications of your research and insights for the programs that the Dutch government is financing?

“If the Dutch government encourages project based funding with clear time lines, then in my view that should change. They should change the thinking and not only measure success against pre-defined performance indicators. The current policies and intervention and the way governments of many countries measure success suit the private sector better than the people in low income communities for whom the interventions should bring better living conditions. I can be very short about this.

Governments should be more generous. The main point is that most governments should have longer horizons. They should recognize that frugal innovations help the society, but take a long time. So, governments should become patient. With the current focus on commercially viable innovations the success rate is not always good. Innovations that are not motivated by economic objectives are not less sustainable than business-driven innovations.

There are plenty of examples of inclusive business initiatives funded by governments and the private sector that have failed. I am convinced that looking at frugal innovations and taking a long term perspective will make success rates higher. Uncertainty will remain, but governments should give frugality more of a chance and bank on local knowledge.”

You have been appointed the Prince Claus Chair for two years. What do you hope to have achieved in those two years?

“I would like to do what I have been doing with a greater opportunity to collaborate with colleagues here at ISS with diverse expertise on different domains and countries of focus. The Netherlands is well known for having a very interesting and competent group of people working on many related areas and, of course, a fantastic research environment.

I am looking forward to cooperate and I am convinced that this will result in synergies and new insights in the field of frugal and inclusive innovations in India and Africa with implications for the theoretical research on frugal innovations.”