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Very few American companies start with unlimited resources and the ability to effortlessly launch innovative new products and services into the marketplace. On the contrary, most businesses—especially small or diverse firms—have to consistently stretch their dollars and make a little go a long way. In a society where cash is king, and capitalism is the kingdom, it often seems that only corporations with deep pockets and vast resources to fund research and development can explore innovative ideas and actually bring them to life.

In terms of “innovation,” what companies come to mind? Giants like Apple, which seem to revolutionize mobile technology on a continual basis; or conglomerates like Google that seek to develop more and more products to expand access to information top the list.

frugal innovation example

Charging a cell phone using energy harvested from pedaling a bicycle demonstrates Frugal Innovation technology and creativity.

The good news is that you don’t have to be a Fortune or Forbes company to play on the big stage. In other parts of the world, the concept of Frugal Innovation has taken hold and is allowing small entrepreneurs to take the lead in cultivating innovative new ideas and products that are increasing value while lowering costs. For instance in the African country of Tanzania, innovative entrepreneurs have figured out a way to charge cell phone batteries using the energy from pedaling a bicycle. In Peru, a college student has designed an advertising billboard that converts air humidity to purified water in an area that receives less than one inch of rainfall each year. And in India, a resourceful potter has begun to make refrigerators out of clay, which can keep fruits and vegetable fresh for several days. What these innovators have in common is that they were able to use the limited resources available to address a need in the marketplace. That concept is called Frugal Innovation.

Innovation strategist and author Navi Radjou defines frugal innovation as “the ability to use human ingenuity to find clever ways to solve problems with limited resources.” An even simpler way to define frugal innovation is the ability to create more value with fewer resources. This requires staying aware of what needs are currently unmet for your customers or potential customers, and identifying the resources at your disposal that can help address those needs. What needs do your customers, clients, or communities have today that can be addressed through existing resources?

To help you think about this question Radjou suggests three steps you can take to adopt frugal innovation into your company or organization:

  1. Keep it simple – Don’t strive to impress others with your technical know-how or education; rather, seek to develop easy to use products and services that will be widely accessible to the greatest number of people.
  2. Do not reinvent the wheel - Frugal innovation requires the use of low-cost resources and assets that are already available. Developing innovative products based on completely new technologies or components typically will not be accessible to the average person.
  3. Think and act horizontally- Frugal innovation is focused on scaling out, not up. This requires developing a differentiated supply chain (like the transportation service Uber). Now anyone who has a vehicle can earn money transporting customers instead of needing to become a licensed taxi driver to access this opportunity.

Innovation of any type is never an easy process, but Frugal Innovation can help you remove the misconception that innovation requires massive resources and a dedicated staff. Small and diverse companies have always found a way to do more with less, but are now encouraged to think of ways to create more economic and social value using existing resources already available in abundant supply. If you are fortunate, being frugal can make you rich and successful.