Innovation stands for new idea of process or product to get the job done better. There could be many connotations of innovation, including those related to cultural and social aspects. Often, the primary goal of innovation is to create new wealth and most importantly jobs. Human creativity is a natural and infinitely renewable resource.
Leveraging this resource to come up with smart, cheap solutions to people's problems in getting the job done better is crucial for continued progression of development. In India, a concept of innovation known as 'frugal innovation' -- meaning an improvised fix, a clever solution born in adversity -- is being promoted. Frugal innovation can be low-tech, like clay fridge; but it can also be about using high-tech like solar powered automated banking machine to make services more affordable and accessible to more customers. Sustainability of innovation through market forces is a key issue to scale up the demonstrated potential. Focusing on the goal and selecting appropriate strategy is thus crucial.
There appears to be five major broad innovation strategies. The USA-led Western countries have perfected linear innovation path. Investment is made for basic scientific discoveries. Some of those discoveries are used to invent new technologies and/or improve existing ones further. These technologies are used in creating completely new products and industries. Defence strategy and foreign policy are the underpinnings for the success of this innovation pathway of the USA and NATO (North Atlantic Treaty Organization) member countries.
On the other hand, Japan has been pursuing technology fusion strategy. This strategy focuses on fusion of primary technologies (mostly developed by the Western countries) to develop next level intermediate technologies and to innovate new products around them (like Sony's digital imaging, or Canon's printing products) to pursue incremental innovation. At high maturity level, such strategy progresses towards even new scientific discoveries. For example, a Japanese company while pursuing continued development of light-emitting diode technology ended up discovering scientific principles, which was rewarded with Nobel prize. Korea has been pursuing process innovation leading to product innovation. The practice of this strategy over the last 60 years has uplifted Korea from extreme poverty to become an OECD (Organisation for Economic Cooperation and Development) member country.
China's re-innovation strategy to capture the market of successful products has already started to unfold -- re-innovation of the smartphone is an example. To proceed with this strategy, China has raised research and development (R&D) funding from around $30 billion in 2002 to almost $400 billion in 2017, reaching 2.0 per cent of gross domestic product (GDP) as opposed to less than 0.1 per cent of many developing countries like Bangladesh. To capitalise this strategy, China has also been developing strong patent protection with accelerated patent filing reaching above 1 million.
Although India attempted to pursue the linear model of innovation in the 60s and 70s, India's current focus appears to be on frugal innovation. Often India's frugal innovation comes up with a stripped-down version of existing products (like Tata Nano or manually operated washing machines).
India has been gaining the recognition of promoting frugal innovation, particularly through activities of the National Innovation Foundation of India. Tata's Nano could be cited as an example of frugal innovation. NANO, which is a brainchild of Ratan Tata, raised hope of a lot of middle-class families to own a car. Tata Nano, the most hyped Indian car ever, has been branded as an iconic innovation. Even former US President Obama showered praises for Nano. But, Nano has failed to live up to this hype.
Launched in 2009, Nano sales between 2010-11 and 2012-13 constituted 23-24 per cent of Tata Motors' total sales. But Nano sales declined dramatically after peaking to 74,527 in 2011-12. The numbers came down by more than 70 per cent in two years to 21,129 in 2013-14. It is being reported by the media that having lost more than Rs 10 billion, Tata may soon phase out Nano.
Tata's Nano did not have any unique technology core opening the opportunity of offering higher quality at lower cost than what an existing state-of-the-art car was offering. About this stripped-down version, expectations were increasing among customers regarding the product features and its efficiency. Once Tata attempted to start addressing those issues by adding demanded features, such as air conditioning, the cost started escalating.
There is no denying that irrespective of the greatness of an idea, the initial entry of the product in the market is usually in a primitive form. This primitive version creates very little willingness among customers to pay for it. Often, subsidy is required to support penetration of this primitive product in the market. The challenge is to increase the quality and reduce the cost of the product by taking the advantage of underlying technology cores and additional ideas. But Tata's Nano did not have any unique technology core to offer. As a result, increasing the quality was resulting in higher cost, thus pushing the price up. As a result, Tata's Nano has been failing to replicate the path of other innovation success stories like digital camera.
Another example of India's frugal innovation is a stripped-down version of washing machine--operated by pedaling as opposed to electrical power. Once electric grid connection is made available to more than 90 per cent households, how can it compete with the washing machines costing just $60? Where is the underlying technology core in creating substitution effect? Moreover, the cost of labour in operating this pedaling washing machine should also be taken into consideration. A Nano refrigerator called ChotuKool is another example. To serve the bottom of the pyramid, Godrej is promoting Nano refrigerator--top loading cool box with 43-litre capacity running on battery (priced at Rs. 3,250). This refrigerator is targeted for those customers who do not have access to electrical grid connection. Instead of compressor-based mechanical cooling, this refrigerator uses battery-powered solid state thermoelectric cooling. In 1950s, major companies like General Electric started commercialising refrigerators around this technology. But the technology faced major barriers in offering higher quality at lower cost.
Another example is Mitticool. Based on the principle of evaporation, Mitticool preserves food and vegetables at a few degrees lower than the room temperature. The product is priced at Rs. 5500/ (ex-factory price + packaging)--excluding transportation costs, taxes etc. However, once households get access to grid power, will they prefer this type of improvised product to conventional ones costing just $100? Do these products have the potential to cause disruption to existing industrial products?
In the absence of unique technology core, the stripped-down version of existing products, often termed as frugal innovation, faces insurmountable barriers to expand market footprint at profit. Such reality raises the question about sustainability of the often-touted frugal innovation concept in this globally connected competitive scenario.
M Rokonuzzaman Ph.D is academic, researcher and activist on technology, innovation and policy. [email protected]
