Jugaad: Innovation

Just finished reading a book called: "Jugaad Innovation: Think Frugal, be flexible, generate breakthrough growth" by Navi Radjou, Jaideep Prabhu and Simone Ahuja. I picked the book just after reading the word Jugaad, as it holds special meaning for me having grown up in Mumbai. The following are notes I took from the book. All ideas and thoughts are purely owned by the authors. As always, my notes are for me to read again and I recommend reading the book rather than thinking of my notes as a replacement to this good read.

From the foreword:

"My Mantras unfold like this: be purpose inspired; change comes from the edge; devote yourself to world-changing ideas; emotions lead to action; creativity overcomes scarcity; in tough times, you need to win ugly." - Kevin Roberts

"Having crazies with purpose on your side is great;having unguided crazies is not" - Kevin Roberts

Notes:

The book lays out the following principles for cost effective innovation practices -

1) Seek opportunity in adversity

2) Do more with less

3) Think and act flexibly

4) Keep it simple

5) Include the margin 

6) Follow your heart

Some quotes from the book:

• "It has done me good to be somewhat parched by the heat and drenched by rain of life" - Henry Wadsworth Longfellow
• "If I had one dollar to spend, I would invest in solving the biggest problem today - the economics of scarcity." - Jeffrey Immelt
• "One cannot alter a condition with the same mindset that created it in the first place" - Albert Einstien
• "I would not give a fig for the simplicity on this side of complexity, but i would give my life for the simplicity on the other side of complexity" - Oliver Wendell Holmes
• "We need a system of inclusive capitalism that would have a twin mission: making produts and also improving lives for those who don't fully benefit from market forces" - Bill Gates
• "Your time is limited, so don't waste it living someone else's life. Have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary" - Steve Jobs

Now, some of the noteworthy thoughtful sentences from the book:

• Jugaad: is quite simply, a unique way of thinking and acting in response to challenges; it is the gutsy art of spotting opportunities in the most adverse circumstances and resourcefully improvising solutions using simple means.
• The structured approach for innovation is too expensive and resource consuming
• Structured approach for innovation lacks flexibility. Factory processes are like a straitjacket: once you get in, you are stuck, and when things start to change, you can't move. Positively deviant behavior and ideas are what actually drive game-changing innovation.
• Structured approach for innovation is elitist and insular. Innovation is not invention, its the conversion of new idea into consumer delight and ultimately, into revenues and profits. If an idea or technology cannot be successfully commercialized, its not an innovation. In an interconnected world powered by social media, the intellectual property that one can buy isn't the only source of new ideas. Finding, sharing, and integrating globally dispersed knowledge among all levels of employees is just as important.

Principle One: Seek opportunity in adversity

• Instead of giving to the problem, jugaad innovators focus on finding a solution to it.
• These are some ways Jugaad innovators seek opportunity in adversity
• A hard environment nurtures resilience: When confronted with adversity, they don't retrench but embrace the difficulties and learn from the experience. Armed with resilience, perseverance, and a willingness to learn, jugaad innovators strive to respond to the harsh world they face and find opportunities for growth and expansion in it. In doing so, they are able to create a better world, not just for themselves but also for their communities.
• Reframing the half empty glass as half full: Jugaad innovators find opportunity in adversity in three ways: reframing challenges as opportunities for growth, making constraints work for them, and constantly adapting to a changing environment by improvising solutions to challenges they face along the way. Jugaad innovators don't find opportunity in spite of adversity; for them, adversity often is the opportunity. They perceive constraints not as a debilitating deterrent but as a creative stimulus. Indeed, their creative juices begin to flow when they are confronted with a seemingly insurmountable challenge. The second way jugaad innovators find opportunity in adversity is by making constraints work for them rather than against them. Third way the jugaad innovators seek opportunity in adversity is by being quick to act in response to the opportunities they see.

Why Structured Innovation processes fail to seek opportunity in adversity?

• The processes fail to notice or ignore adversity until its too late.
• They try to tackle adversity head-on, rather than seeking to leverage it.
• They address new problems with old frames of reference.
• They think small (six sigma) when facing big challenges.

How can structured processes be changed to capitalize on adversity and use jugaad innovation as complimentary tool to the existing processes?

• Recognize that glass if always half-full: The key to doing so is being able to reframe challenges as opportunities and use constraints as a spur to innovate
• Realize extreme conditions are fertile soil for extreme innovation.
• Build psychological capital to boost confident resilience: The true value of a company is no longer its tangible assets or even its technological processes: it lies in its human capital and underlying psychological capital - neither of which is open to imitation. Anyone can buy technology or obtain money from financial markets but we cannot buy motivation, engagement, confidence, resiliency, hope, optimism.
• Approach big challenges with a growth mindset: This is critical because when leader face adversity with a fixed mindset, their minds are clouded by fear or pride, they tend to innovate incrementally, and their efforts yield limited results. A growth mindset instead helps leader approach even big challenges with optimism and curiosity - enabling them to generate breakthrough innovation that delivers more sustainable results in the long term. Specifically, those with a growth mindset are willing to let go of old business models and embrace new ones to maintain long-term success.
• Tap the power of networks to tackle big market threats: Rather than deal with adversity by relying exclusively on internal resources, corporate leaders can benefit from working with customers, parters, and even competitors to cocreate innovative solutions.

When you listen to customers, you merely engage with customers, you merely react to needs; when you empathize with customers, you anticipate their needs; but when you truly love your customers, you surprise them by introducing them to products they couldn't even fathom.

Principle Two: Do More with Less

• Scarcity is the mother of invention: To even a casual observer, the most string thing about jugaad innovators in emerging markets is their frugal mindset. These entrepreneurs and managers - whether they come from Argentina, Brazil, China, India, Kenya, Mexico, or the Philippines - are constantly looking for new ways to do more with less and deliver greater value to customers at a lower cost. What makes this mindset so fundamental to jugaad innovators, and why are they so good at getting "more for less"? Such a mindset is a rational response to pervasive scarcity in their environment. For jugaad innovators being frugal is not a luxury - its the key to survival.

Being resourceful in a resource scarce environment:

• Jugaad innovators are able to get more from less by applying frugality to every activity they perform at every step along the value chain. They are frugal in how they design products, how they build them, how they deliver them, and how they perform after-sales maintenance. Their frugality shows up not only in their parsimonious use of capital and natural resources but also in how they maximize their limited time and energy: rather that doing everything themselves, they rely extensively on partners to perform various operations, thus saving time and energy. The following approaches employed by jugaad innovators to gain more from less:
• They 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 both to come up with new solutions and to commercialize them in markets.
• They remain asset light: A second strategy that jugaad innovators use to get more from less is to leverage the capital assets of others to scale up their business model. Thus, instead of owning of owning physical assets, they rent or share them. This approach not only makes their cost structures lean but also allows them to quickly scale operations up or down to meet shifts in demand without investing in additional sales.
• They leverage existing networks for distribution: A third "more with less" strategy that jugaad innovators use is focused on solving the "last mile" problem - that is, the difficulty of reaching far-flung customers in an economical way. Rather than investing in expensive logistics networks, jugaad entrepreneurs leverage existing networks to cost effectively deliver their products and services to people in hard to reach markets. In particular, they reply on grassroots partners in local communities to reach more customers and personalize their offerings for them. These grassroots distribution partners are often micro-entreprenueurs themselves. By building on already developed and trusted social networks in emerging markets, jugaad innovators can compensate for the poor state of the physical infrastructure there. More important, by enrolling grassroots entrepreneurs as their channel partners, jugaad innovators drive their own financial sustainability while also creating new economic opportunities in local communities.

Helping customers get more value: Unlike their counterparts in the west, they do not typically focus on wowing customers with products that have cool features or the latest technologies. Instead, they pursue functionally minimalist solutions that offer superior value to customers - often transforming their lives in the process. Simply put, they help their customers get more value for less cost by offering them quality products and services at highly affordable prices. Also, rather than considering these questions in the abstract in R&D lab, jugaad innovators spend time in the field, observing and interacting with potential customers to identify their latent needs and requirements. Only then do they zero in on the essential features of a solution that most relevant to their unique customers.

How western companies can find abundance in scarcity:

• Tie senior management's compensation to frugal performance: One way to do that is by linking senior executives compensation to performance metrics aimed at driving frugality for betterment of people, planet and profit.
• Senior management must challenge R&D to do more with less: This will happen only when engineers and scientists are offered challenging projects that give the incentive to do more with less. The guidelines should be of more with less for creating modern, reliable and affordable products and services.
• Marketing executives should create separate brands for their affordable offerings.
• Create incentive systems for salespeople to sell affordable products: companies can address this issue by reorganizing their sales forcer along brand lines, with different salespeople responsible for low-end and high-end segments.
• Design affordable solutions from ground up.
• Engage eco-aware consumers in the sustainability dialogue: Frequently, participants in the user communities are young frugal, and environmentally conscious. They aren't just looking for a deal; they're searching and willing to champion products that fit into personal value system. These consumer communities can help build brands they favor, or cause the demise of brands they disapprove of.
• Partner Extensively: Partnering with key external players offers a powerful way for companies to get more out of their limited R&D dollars. Partners can cost-effectively bring companies better ideas than they already have, help companies develop existing ideas more efficiently, or enable them to commercialize these ideas more extensively and at lower cost.

Principle Three: Think and Act Flexibly

• Jugaad innovators adapt to survive: The sheer diversity, volatility, and unpredictability of comic life in emerging markets demands flexibility on the part of jugaad innovators. It demands that they think outside of the box, experiment and improvise: they must either adapt or die. In many ways, this diversity, volatility, and unpredictability also enables flexible thinking and action on the part of jugaad innovators.

Some of the ways jugaad innovators act flexibly are:

• Jugaad innovators think the unthinkable: There is mind boggling diversity in emerging economies. The heterogeneity of populations in these markets demands unconventional, non linear thinking. Jugaad innovators therefore dare to challenge many ingrained beliefs and turn conventional wisdom on its head.
• Jugaad innovators don't plan - they improvise: Emerging markets are characterized by high volatility. Eominic circumstances are constantly changing. Growth rates are often in double digits, and the competitive landscape is often shifting. New laws and regulations are constantly being put into place, and policy is constantly evolving. So jugaad innovators need to experiment as they go along and be willing to try multiple options, rather than adopting one approach at the start and sticking to it thereafter. Jugaad innovators do not attempt to work everything out in advance or rely on a business plan to determine the mid-to long term roadmap for their new ventures. Instead, they improvise their next course of action as circumstances change, and they do so from within a framework of deep knowledge and passion. Given their propensity for improvisation, jugaad innovators don't reply on forecasting tools like scenario planning, as many western companies do, to assess future risks. They believe in Murphy's law - anything that can go wrong will go wrong - so whats the point of anticipating every single obstacle that might appear down the road?
• Jugaad innovators experiment with multiple ways to reach a goal: Jugaad innovators may have a single minded vision of where they want to get to, but they must be willing to try different paths to get there. Specifically, they must be willing to keep experimenting in order to attain their goals - and they must be flexible enough to quickly switch from one path to another along the way.
• Jugaad innovators act with speed and agility: By demonstrating agility, jugaad innovators can deal with unanticipated challenges faster and seize unexpected opportunities - such as changing customer needs - more swiftly than their competitors.

Learn to improvise:

• Break rules and shift values when necessary: Even conventional beliefs and values have a shelf life: there is nothing eternally wise about them. Breakthrough innovation occurs when commonly held beliefs and values are challenged, not reinforced.
• Don't let inflexible investors and customers dictate your innovation agenda: Because external stakeholders often tend to be conservative or lack the perspective to appreciate vision of foresight, it is probably best not to seek their validation for bold new products and services.
• Create time and space for employees to improvise and experiment: Companies can hardly expect employees to thin flexibly while they maintain their regular routine and operate in their usual work environment. To be able to think and act flexibly employees need dedicated time and an inspiring sale to experiment new ideas.
• Get outside your comfort zone to gain new perspective: To truly think flexibly, managers need to be taken out of their comfort zones and exposed to new situations that challenge them differently.
• Partner with flexible thinkers: Sometimes the best way to develop a new mindset is to seek inspiration from outside your company. Thus one way to nurture flexibility is to partner with other companies that are already flexible and agile.
• Experiment with multiple business models:  Often companies become to attached to a successful business model and find it nearly impossible to let go of it, let alone to explore alternative options. But competition can spring from unexpected corners and disrupt your business model overnight. Flexible thinkers keep all options open and experiment with multiple business models simultaneously.
• Fail cheap, fail fast, fail often:  A corollary of the willingness of jugaad innovators to continually experiment is their willingness to fail cheap, fail fast, fail often.

Principle Four: Keep it Simple

Practical benefits of simplicity: Simple products offer three advantages to jugaad innovators

• They are cheaper to make and therefore more affordable
• They are easier to install and maintain
• They can satisfy wider audience

Jugaad innovators follow Albert Einstien's exhortation to "make everything as simple as possible, but not simpler" In other words, jugaad innovators don't necessarily try to simplify the nature of the problem the customer is facing. Doing so runs the risk of producing simplistic solutions, ones that may appear simple in the short term but prove ineffective in the long run. 

How to simplify you products and your organization

• Redesign entire organization around simplicity:  A customer may love the ease of use of a firms products but hate the convoluted sales process she has to go through to but the product. Companies must therefore simplify every interaction with their customers throughout the product lifecycle - from the initial purchase to the actual use and even to the products disposal by streamlining not only their R&D and manufacturing but also their sales and customer service processes.
• Distill customer needs to their bare essence and design simple products around them:  Simplicity advocates insist that "user centric design" boosts the ease of use of products and services.
• Design simple offerings from the ground up:  Rather than stripping down existing high end products that is, defeaturing them - companies need to design and build products from the ground up so they trull embody the spirit of simplicity.
• Embrace the universal design philosophy to boost the usability of offerings:  Universal design is a philosophy that celebrates humanity's diversity and exhorts companies to design products that are usable by as many people as possible.
• Get engineers and industrial designers to work together:  Companies must recognize that incorporating simplicity upfront during the product conceptualization phase is several times most cost fictive than doing it as an afterthought in later stages of development process.
• Simplify product architectures and reuse platforms across products:  R&D engineers are like craftsmen: they often like to create their own technologies or components from scratch, even if comparable technologies or components are readily available in the market. But this "reinvent the wheel" approach often leads to long product development cycles and results in expensive, overengineerd products.
• Make it simple, not simplistic:  Simplicity if often the most powerful antidote to complexity. But simple does not necessarily mean simplistic - realistically, complexity can be neither ignore nor avoided. Rather, innovators must embrace the complexity of a problem and then find a simple way through or around it.

Principle Five: Include the margin

• Inclusion: A moral imperative that makes business sense: There is an upside, however, to this widespread scarcity: millions of excluded citizens equals millions of potential customers. For entrepreneurs willing to rise to the challenge, the choice to include the margin promises many potentially lucrative opportunities to build entirely new businesses. Exclusion cannot be addressed with one-size-fits-all approach - wherein, for example, a single product or service serves the majority of the population - an approach that is often favored by large corporations. Instead, inclusivity requires an approach to innovation that is sensitive to individual differences and local circumstances. The intellectual and creative challenge of serving the diverse needs of a large number of people in an economical way is a great spur to jugaad innovators. Deepening interconnectivity in emerging markets both amplifies the sense of exclusion and offers interesting ways to reduce it. This ability to see what the world has to offer drives them to aspire for better and more things.
• Co-Creating Value with the Margin:  Jugaad innovators know how to employ for-profit business models to bring about social change. Jugaad innovators work with these traits to successfully reach the excluded in the following ways:
• Approaching marginal groups as whole new markets:  Jugaad innovators don't merely treat marginal groups as one more segment on which to dump their existing products. Instead, they approach marginal groups as whole new markets that need to be server with entirely new business models.
• Helping everyone climb up Maslow's hierarchy of needs:  Jugaad entrepreneurs recognize that even low-income consumers have high aspirations and are eager to climb up Maslow's hierarchy of needs. Jugaad innovators do not, therefore, short-change low-income consumers on quality: they know that although these consumers are lowe earners, they are high yearners. As such, jugaad innovators strive to offer marginal segments products of value that are nonetheless affordable.
• Cicreating value with customers and partners throughout the value chain:  Jugaad innovators don't view customers as merely passive users of their products and services. Recognizing the diversity of customer needs, they invent new solutions from the ground up by working closely with marginal groups to identify their unique needs. They then engage local communicates and partners to set up a grassroots value chain to locally build, deliver and support their solutions - making these solutions in turn affordable, accessible, and sustainable.
• Scaling up personalized solutions with technology:  Jugaad innovators cleverly employ technology - especially mobile computing - to reduce the cost of delivering services to marginal segments.

• How to make big margins by including the margin:
• Carry out social inclusion with a business mindset:  Non profit CSR programs that serve marginal groups are redundant if your company is also string to meet the needs of the same groups using a for-profit business model - just as jugaad innovators in emerging markets are doing. To avoid such corporate cultural schizophrenia, Western corporate leaders need to pull the plug on their CSR efforts and get serious about social inclusion by making it a strategic business imperative for all their departments and senior managers.
• Cater to the expanding low income western consumer base: The economic downturn is set to keep the financial squeeze on middle-class Americans and Europeans for some years to come. This hollowing-out of the middle class means that western companies that traditionally served this mainstream market will need to radically shift their innovation strategies - or lose out to low-cost rivals. Rather than spending R&D on premium products with high end features, these companies will need to create value for money products that are accessible to the growing low income consumer base in the US and Europe.
• Create an inclusive work culture: Companies must strive to foster and open and inclusive culture anchored by a participative management style. This helps to foster a creative and motivated workforce, on that can tap into different domains of expertise in devising new products and services and that feels empowered and encouraged to do so.
• Recognize that marginal segments are not marginal minds: By labeling marginal customers and employees "too poor" or "too old", companies lose an opportunity to tap into the rich knowledge and wisdom these marginal groups might contribute to the organization.
• Use technology to lower the cost of inclusion:  Just like jugaad innovators in emerging markets do, rather than invest in expensive brick and mortar delivery infrastructure, western companies need to harness the power of social media, cloud computing, and mobile telephony to cost-effectively deliver their products and services to marginal consumers.
• Partner with non-profit organizations:  A new generation of non-profit ventures is willing to work with businesses to cocreate for profit business models that improve the lives of marginal citizens while also generating a profit.
• Secure C-level buy-in to drive systemic business model changes:  Given that inclusivity requires fundamental and systemic changes in how companies operate, top managements commitment is vital to enabling and sustaining such business model transformation within companies.
• Adopt and adapt proven best practices from emerging markets: As we described earlier in this chapter, emerging markets - because of scarcity, diversity and interconnectivity - are increasingly a breeding ground for solutions that include the margin.
• Embrace inclusive design principles:  It is easier to factor in inclusivity up front, during the design phase of innovation, rather than to try and retrofit or reengineer existing products and services to appeal to marginalized segments of the market after the fact.

Principle Six: Follow your heart

Jugaad innovators in emerging markets rely more on their intuition than on analysis to successfully navigate and highly complex, uncertain, and unpredictable environment. They use their gut intelligence and innate empathy for customer needs to innovate breakthroughs that defy conventional wisdom. Their undying passion acts as the fuel that sustains their efforts to make a difference in the lives of communities they serve.

• Your heart knows what your mind doesn't:  The heart is the seat of passion, intuition and empathy. Jugaad innovators in emerging markets possess these qualities in abundance. The challenge is twofold: how to develop these qualities in the first place and then how to nurture them. We have found that several key aspects of the complex environment in which jugaad innovators operate make them particularly passionate, intuitive and empathetic. Whatever they may be, these extreme conditions arouse the empathy of jugaad entrepreneurs, who feel they must do something to improve the often harsh conditions around them. Thus jugaad innovators don't just sit around after witnessing others pain; rather, they convert their compassion into passion by seeking solution to alleviate the pain. Another reason why jugaad innovators follow their hearts - more than their brains - is that they are forced to think on their feet all the time. Its hard - even counterproductive - to logically analyze a highly complex situation and make rational decisions when things are changing constantly. Emerging markets are fast paced and volatile. Confronted daily with do-or-die situations, jugaad innovators have learned to make decisions on the fly, using their well honed intuition rather than relying solely on analysis and logic. The harsh conditions in emerging markets kindle jugaad innovators creative empathy and passion, and the unpredictability of the local environments forces them to make rapid fire decisions based on intuition than rational analysis.
• Why do industrial era business practices keep hearts locked out:
• R&D: Isolated and disconnected from real world customers:  R&D engineers who operate in isolated labs do not spend time immersed in the world of customers and thus cannot empathize with them.
• Firms often seek refuge in numbers and shun innovation:  The business world abhors surprises and craves predictability: forecasts, plans, and budgets are all meant to "control" the future and confer a sense of stability - leaving no room for intuitive improvisation.
• Marketing executives don't emotionally connect with customers:  Age of now it is all about the mastery of emotional communications; not manipulation, but of having relationships. In the age of now its all about the single question consumers ave of you: 'How will you improve my life?' Answering this is to deliver priceless value.
• Outdated human resource management doesn't engage next generation employees:  Companies continue to rely primarily on financial incentives to motivate their employees rather than giving them the space and time to pursue their passion in a constructive manner.

• How western firms can follow their hearts?
• Send senior management to "empathy development boot camps":  Empathy is like a muscle; it can be developed in senior executives by exposing them to diverse perspectives.
• Ignore market researchers and investors to innovate radically:  C-Level executives need moral courage to follow their hearts and this often entails ignoring market researchers and investors when it comes to disruptive innovation. Specifically, to avoid getting caught in an inflexible web of structure and demands for data, senior executives shouldn't rely solely on the approval from external stakeholders when launching truly disruptive products and services.
• Embrace customer centric design principles:  R&D engineers and scientists need to get out of their labs and immerse themselves in the environment that surrounds their customers, to truly understand their needs: this is the basis of customer-centric design.
• Engage your customers in a heart to heart conversation:  Researchers in fields from nueroscience to psychology, behavioral economics to marketing, all agree that emotions are as powerful a driver of consumer behavior as rationality and calculations. In many cases emotions may even be the only driver of consumer behavior. In others, they may be more dominant. In still others, the emotions may play a complementary and reinforcing role to that of reason. All this has profound implications for CMOs and marketers more generally. In a world where brands have achieved parity on features, price, distribution and even design, engaging customers' emotions becomes a crucial way for marketers to differentiate their offerings from those of others.
• Create "Center of passion" across your organization:  Firms must empower employees to publicly share and discuss ideas they are passionate about - however controversial and disruptive these ideas may be. And to bring those ideas to life, they must help build communities of customers and partners around them.

All of the above are good principles and the authors did not suggest that companies should completely shift to jugaad innovation but compliment the innovation process with Jugaad thought process. Places where jugaad will work for sure are:

• Markets with rapid changes
• Markets with resource scarcity
• Markets with frugal and diverse customers
• Markets with industry immaturity
• Markets with exploding interconnectivity