In a world where all organizations potentially face global competition, productivity and innovation play a vital role for business especially when it is to compete with its international counterparts. Businesses today have become highly difficult to manage, markets are now more complex, risky and unpredictable, economic trends uncertain, product life cycles are becoming shorter etc. it is no surprise companies have turn to innovation to gain competitive advantage over its competitors in the fight for resources and market share. Today, change has become a constant, and uncertainty a certainty. Companies in all industries worldwide are faced with a stressful external hypercompetitive environment (D’Aveni, 1994). According to Tidd and Bessant (2009), whilst competitive advantage can come from size, or possession of assets, the (innovation) pattern is increasingly coming to favor organizations that can mobilize knowledge, technological skills and experience to create novelty in their offerings (product/service) and the way in which they deliver those offerings. Innovation has become a growing trend in emerging markets today such as India or china.
The recent rise of frugal innovation has captured the interest of many scholars. This essay attempts to understand and talk about the unique type of innovation called frugal innovation which has become a growing phenomenon over the past decade in emerging markets all over the world while showing the principles of frugal innovation and highlighting a few factors that lead to the rise of frugal innovation in emerging markets, the essay also seek to explore the key innovation competences and capabilities that underline the success of frugal innovation, using a case study approach. The perfect example of a company that exhibited frugal innovation are the phone giants Nokia with the product Nokia 1100 and I will be using them for the case analysis section of this essay.
1. LITERATURE REVIEW
Innovation has now become an important factor for economic development and the maintenance of competitiveness for organizations. Schumpeter understood innovation very broadly as a product, a process and as organizational changes which do not have to arise from new scientific discoveries, but which may combine already existing technologies or their applications in a new context.
WHAT IS FRUGAL INNOVATION?
The term has been defined by many scholar and there is no one meaning of frugal innovation. Prahalad and Mashelkar (2010: 132) offer a succinct definition of frugal innovation as ‘doing more with less for more (people). Another definition could be that of Tiwari and Herstatt (2012: 98) and they defined frugal innovation as ‘innovations that seek to minimize the use of material and financial resources in the complete value chain with the objective of reducing the cost of ownership while fulfilling or even exceeding certain pre-defined criteria of acceptable quality standards’ It’s mainly about cutting off unnecessary parts and producing goods of good quality with a less resource intensive approach. It’s much more than just producing a cheaper version of a product and involves a whole new mindset of understanding the primary needs of the consumers and satisfying this need.it could also be seen as an extreme case of innovation in which radically new applications are innovated for an environment of extreme resource and cost constraints.
Frugal innovation responds to lack of resources whether human, material or financial and using a range of methods this constraints into advantages. As mentioned before lower cost doesn’t necessarily mean that frugal innovation has been productive, frugal innovation has been achieved when the primary need of the consumer has been meet
For many frugal innovation means just producing cheaper or low tech product that isn’t the case. Key features of frugal innovations are explained below to rectify this perceived wisdom.
Better not just cheaper
This is the first…