What Is Frugal Innovation? Frugal Innovation and Why Less Is More

In the TED talk entitled “creative problem-solving in the face of extreme limits” Navi Radjou defined frugal innovation as “the ability to create more economic and social value using fewer resources. Frugal innovation is not about making do; it’s about making things better.

Indian people call it Jugaad, a Hindi word that means finding inexpensive solutions based on existing scarce resources to solve problems smartly.

The word Jugaad was popularized in the book Jugaad Innovation, where Jaideep Prabhu defines it as “frugal, flexible, and inclusive approach to problem-solving and innovation.

In this article, we’ll use frugal innovation and “Jugaad” as synonyms.

The three key ingredients of frugal innovation

For some people, frugal innovation might sound in a way as the art of improvising. However, frugal innovation or Jugaad has three key ingredients:

Inexpensive but not cheap

Frugal innovation is about finding smart solutions with limited resources.

As those solutions are inexpensive, many associate frugal innovations with “cheap” or of scarce quality. Instead, frugal innovation creates solutions that work well at a low cost.

Thus, passing those economic advantages to the final customers.

It’s not an art; it is a mindset

Thus, frugal innovation isn’t the art of improvising. Instead, that is a process of channeling creativity to develop and market an idea with limited resources. 

Even though many see limited resources as a drawback, in reality, in the frugal innovation model, the limited resource is what makes those applying the frugal innovation framework able to find smart solutions. 

Jugaad is also about the informal economy

In the western world, it’s easy to think about an economy as a set of official data that uncovers how the real world works.

In reality, the real world, especially in emerging economies, is as much (if not more) driven by informal processes as formal ones.

Examples of frugal innovation

Let’ see some examples of frugal innovation:


The Nano car from Tata Motors is often cited as an example of frugal innovation.

However, this car which was thought of as an inexpensive version for the Indian market has stopped production as of May 2018.


This is the listing price of the Nano in Indian Rupee:


M-KOPA: the home solar solution that comes in a box


As specified on the website:

Customers buy the solar home system on an affordable M-KOPA payment plan, with an initial deposit followed by daily payments for up to one year. After completing payments, customers own the product outright.

The most interesting part though isn’t only the product itself, but the alternative business model used to allow anyone to purchase one.

How do you pay for it? The cost of $200 would be too expensive for Kenyans, which is the market that this product targets.

Therefore, you pay with a simple deposit of $25; then you make daily micropayments of 45 cents using the mobile phone. Why is this special at all?

Well, those micropayments are made via a mobile payment system that is itself the result of frugal innovation.



As reported on

The gStakes talk to each other and to the gLink base station over a proprietary radio link. The gLink connects to the Internet over your Wi-Fi network, or uses the cellular telephone network (and requires a low cost subscription). You can access your data from our secure servers over the Internet, whether on your computer, smart phone or tablet. Set-up is easy, and the gStakes are simple to move at any time.


As specified on Be-Bound:

 It optimizes data and expands mobile and IoT coverage to reach 95% of the population worldwide, using pre-existing networks

Our frugal innovation allows you to do more with less, and presents three major advantages :

  • No additional infrastructure costs, no investment required.
  • Easy to deploy on existing networks (already operational in several countries).
  • Connect more people immediately, even in untapped areas.

Creative problem-solving in the face of extreme limits

From Navi Radjou TED there are a couple of critical aspects of frugal innovation.

As Navi Radjou pointed out, you take what’s abundant to deal with what is scarce. In short, abundance in some areas can be used to deal with scarcity in other areas.

Take the Be-Bound case above; it uses existing technologies available to most of the population to bring connectivity.

Frugal innovation often opens up a new and smarter business model based on “more with less” instead of the “more for more” existing business models in the western world are often flawed and carry many hidden costs for society. As Navi Radjou points out:

This more for more model is running out of gas, for three reasons: First, a big portion of customers in the West because of the diminishing purchasing power, can no longer afford these expensive products. Second, we are running out of natural water and oil. In California, where I live, water scarcity is becoming a big problem. And third, most importantly, because of the growing income disparity between the rich and the middle class in the West, there is a big disconnect between existing products and services and basic needs of customers.

Key takeaway

As the western world dominates the global economy, we give for granted that the process, methodologies, and business models we adopt are the best possible.

However, what we like to call the “Third World Country” can teach us way more about innovation and sustainable business models than we might like to think.

In this article about frugal innovation, we’ve seen how alternative business models, based on limited resources, can create smarter solutions than the traditional ones we see in the western world.

Resources for your business

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Related Business Concepts

Innovation Theory

The innovation loop is a methodology/framework derived from the Bell Labs, which produced innovation at scale throughout the 20th century. They learned how to leverage a hybrid innovation management model based on science, invention, engineering, and manufacturing at scale. By leveraging individual genius, creativity, and small/large groups.

Business Competition

In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.

Business Scaling

Business scaling is the process of transformation of a business as the product is validated by wider and wider market segments. Business scaling is about creating traction for a product that fits a small market segment. As the product is validated it becomes critical to build a viable business model. And as the product is offered at wider and wider market segments, it’s important to align product, business model, and organizational design, to enable wider and wider scale.

Disruptive Innovation

Disruptive innovation as a term was first described by Clayton M. Christensen, an American academic and business consultant whom The Economist called “the most influential management thinker of his time.” Disruptive innovation describes the process by which a product or service takes hold at the bottom of a market and eventually displaces established competitors, products, firms, or alliances.

Innovation Funnel

An innovation funnel is a tool or process ensuring only the best ideas are executed. In a metaphorical sense, the funnel screens innovative ideas for viability so that only the best products, processes, or business models are launched to the market. An innovation funnel provides a framework for the screening and testing of innovative ideas for viability.

Four-Step Innovation Process

A four-step innovation process is a simple tool that businesses can use to drive consistent innovation. The four-step innovation process was created by David Weiss and Claude Legrand as a means of encouraging sustainable innovation within an organization. The process helps businesses solve complex problems with creative ideas instead of relying on low-impact, quick-fix solutions.

History of Innovation

Innovation in the modern sense is about coming up with solutions to defined or not defined problems that can create a new world. Breakthrough innovations might try to solve in a whole new way, well-defined problems. Business innovation might start by finding solutions to well-defined problems by continuously improving on them.

Read also: Business Strategy, Examples, Case Studies, And Tools

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