Frugal innovation: Keep it simple

Frugal innovation - a definition

Frugal can be described as "plain, simple or modest". The goal of frugal innovation is to focus only on basic components. In doing so, one does not focus on the innovation performance itself, but on the requirements and the users or target group of the innovation. A frugal solution is therefore simple and reliable to use and thus meets customer needs much better. On the one hand, production is more resource-efficient, and on the other hand, the result can be offered at a lower price. Frugal innovations are therefore more often found in developing and emerging countries. This is because people living there have a lower income than people in industrialised countries.

But frugal innovation does not only take place there and does not only have to refer to a product itself. The approach is also becoming more and more popular in industrialised countries and entire business models can be subjected to the concept. The Swedish furniture store IKEA and the hotel chain Motel One are good examples of frugal innovation. Apple is also using frugal thinking with the different variants of the iPhone 12. Because the more target groups can be addressed, the larger the customer base and the market share. Starting with the concentration on the basic components, the frugal idea continues to a more local and shorter value chain. Frugal innovation is therefore not limited to one industry or one specific sector, but is possible everywhere - in line with the motto "Keep it simple" or "More from Less". And digitalisation is taking the concept to a new level.

How does a Frugal Innovation come into being?

The assumption of companies often deviates from the wishes and needs of consumers. They want a functioning product or service that does the job and nothing more. This is where frugal innovation begins - functional, user-friendly and local.

In concrete terms, frugal innovation of a product or service means the following:

• Remove features that are not part of the basic functionalities
• Making materials, design or processes more environmentally friendly or local, e.g. re- and up-cycling.
• Adapt existing resources, e.g. reuse them instead of making new ones.
• Add new features only through minimal changes, e.g. software updates
• Simplify complicated, expensive or time-consuming parts or processes
• In addition, adapt the business model to reduce costs
• Build an ecosystem in the sense of open innovation, e.g. by involving advisors, experts, researchers, organisations, etc.