This post is by Ian Thornton, deputy director at the UK Collaborative on Development Sciences. He is former research associate at Nesta, where he researched and wrote Our frugal future: lessons from India’s innovation system with Kirsten Bound.
India is developing a specialism in ‘frugal’ innovation, with entrepreneurs responding to limitations in resources (whether financial, material or institutional) and turning them into an advantage. This innovation is not being driven directly by environmental concerns. “India, so far, has done this out of compulsion. The combination of scarcity and aspiration was the trigger”, says Ramesh Mashelkar, one of India’s most eminent scientists and a board member of the Tata Group.
But, although frugal innovation and green innovation aren’t the same thing, many of the tools and techniques used to reduce cost and increase access also have positive environmental benefits.
Lower prices, wider access…and environmental benefits
There are eye-catching examples of new products, services and business models that are high quality, yet dramatically reduced in price. Think of the Tata Nano, a family car that meets global safety and emissions standards, but starts at $2,000. Or the Vortex ATM which is two thirds cheaper than conventional ATMs and has the lowest power consumption in the world, up to 90 per cent less than alternatives. What’s more, it can run on solar power and has sophisticated inbuilt fingerprint scanning which overcomes the literacy barrier to accessing the formal banking system.
Here are three approaches being used by India’s frugal innovators which also offer lessons and routes for green innovators elsewhere:
A deep understanding of user needs can help cut out anything unnecessary and, therefore, reduce a product’s environmental footprint. GE developed a remarkable ECG machine in their Bangalore lab: reducing the size of a 15lb machine to 3lb, making it portable, cutting retail price from $10,000 to $1,500, and reducing running costs to the patient. To do this, they stripped out everything not entirely necessary and used off-the-shelf parts where possible: the printer is a modified version of the one used for bus tickets all over India.
2. Systems thinking
Harish Hande has brought solar power to over 150,000 poor households by devising a viable pay-as-you-go model. Customers either buy or rent solar lights with the help of a loan. By partnering with banks and local entrepreneurs to create this ecosystem, Hande’s company, SELCO, is providing clean, electric light well below the cost of kerosene (the normal lighting fuel for millions of Indians) to people earning barely $50-100 a month, and all without a rupee in subsidy. His genius is to think about energy as a people-centred system, rather than as a problem to be fixed by new technology.
3. Cross subsidy
Many Indian frugal innovations use cross subsidy, where wealthier individuals pay for more the same core service, and the profit is used to support those that can’t pay, or can’t pay much. Aravind eyecare, providing cataract operations for hundreds of thousands of Indians a year, 1298 Ambulances, providing Mumbai’s best emergency response service, and Narayana Hrudayalaya, providing world class cardiac care, all use this technique. Though perhaps this explicit approach would not be politically acceptable here in the UK.
A different mindset, not different technology
While UK entrepreneurs can adapt and adopt these tools and others, I believe frugal innovation is ultimately about a mindset. A mindset that doesn’t just see the challenges we face as problems to be solved by better technology, itself yielded through more investment. But instead a mindset that focuses on doing more with less, and using creativity to achieve the same quality of products and services with fewer inputs.