Currently, products are resource intensive, over engineered and becoming obsolete faster than ever. With commodity prices sky rocketing, increased resource scarcity and a growing population inefficient business models will inevitably collapse. Despite this investors are hungry for more growth, sparking off anti globalization protests around the world. A remedy to these problems is to do more with less. This is why the idea of Frugal Innovation is both fascinating and important to analyze.
Frugal innovation is not a new concept it bursts into business and government agenda during times of economic or social turmoil such as financial crises and war. The Economist recently described it as taking the “needs of poor consumers as a starting point and then works backwards”. Because of the constraints they face, Frugal Innovation in emerging economies is particularly interesting to analyze. Problems with distribution streams, pollution, unpredictable income streams, meddling and uncooperative governments, poverty and piracy mean that these countries have to think more creatively about their products and business models. Despite these problems, academics like Stuart Hart believe that the base of the economic pyramid breeds disruptive technologies, since successful business models forged here can translate well to western markets (not the same case for the former).
In a recent interview, Alan Wooldridge of the Economist stated that frugal innovation would have an important role to play in the healthcare industry. He commented that a lot of problems in the west, especially in the US are related to the fact that healthcare is far more expensive than it needs to be. In another recent interview with the Economist, Vijay Govindarayan, professor at the Dartmouth Business School echoed this view, he stated that 60 million people in the US are without healthcare or are underinsured. He also observed that the new healthcare reform in the US is anchored on the principals of low cost, access and quality. These are mirrored by India and China, so developments in frugal innovation here can have huge implications for the healthcare development in the US.
Frugal Innovation in the healthcare industry is set to explode onto future agenda for governments, businesses and social entrepreneurs and I believe it has the ability to revolutionise the healthcare industry, globally!