Being resourceful in a Resource-Scarce Environment

Jugaad innovators are able to get more from less by applying frugality in every activity they perform at every step along the value chain. Their frugality shows up not only when they utilize the natural resources and limited finance, but also when they save time and energy by relaying on their partners to do the work rather than trying to do everything by themselves. Some of the frugal approaches employed by Jugaad innovators to gain more from less are listed and explained below.

Reuse and Recombine
Rather than creating something entirely new from scratch, Jugaad innovators are more likely to reuse or seek new combinations of existing technologies or resources. Zhongxing Medical, a Chinese medical device maker, borrowed Digital Direct X-ray equipment from its parent company Beijing Aerospace. It was use in everyday application like chest X-rays.

Similarly Jugaad innovators in African countries are leveraging existing cellphone networks to devise frugal business models that make services like healthcare and banking affordable to more people. In Kenya the banking penetration was just 10% while the mobile penetration was 50%. Taking advantage of this and without investing in any new infrastructure, local telecom provider Safaricom (40% owned by Vodafone) introduced the M-PESA. People could send, save, and transfer money using simple commands through SMSs. M-PESA was the inspiration for Yes Bank’s Yes Money.

Remain Asset Light
Second strategy the Jugaad Innovators use to get more from less is to leverage from the capital assets of others to scale up their business model. This is precisely what Gustavo Grobocopatel did in Argentina. Given that Jugaad Innovators are usually running with limited finances, it makes sense for them to remain asset light with less fixed assets. They rely heavily on partners and outsourcing.

In 2000, when Airtel was launched it followed a similar approach by outsourcing IT infrastructure to IBM and network infrastructure to Ericsson and Nokia Siemens Network (NSN). Today Airtel has 17 crore subscribers and it’s the world first ‘asset-free’ telecom service provider.

Leverage Existing Networks for Distribution
Third more for less strategy that Jugaad innovators use is on solving the last mile problem, that is, how to reach the consumer in an economical way. In particularly, they rely on grassroots partners in local areas to reach more consumers and personalize their interactions. For example, Colgate Palmolive scales up their logistics by hiring local men mounted on bicycles to distribute oral health care products in remote villages.

Similarly, in MicroVentures in Philippines leveraged an existing ad-hoc logistics network made of 8 lakhs sari sari (local mom-and-pop stores) to make it a retail chain. It transformed the independently owned sari sari stores into members of a standardized and branded network as the Hapinoy Programme. Since 2007, over then thousand sari-sari mini stores have joined Hapinoy Programme to become The Hapinoy Community Store.