Companies today face a business environment which presents numerous challenges. Resource constraint, which is a norm in emerging markets, is becoming a reality even in the advanced economies. Everywhere, market conditions are turning hostile because of information boom and the rise of social media. In these circumstances, it is a truism that innovation will perhaps be the key yardstick that will demarcate the winners and the ones that will be run to the ground. The key question here is – what kind of innovation is required for companies to give them a healthy edge over their rivals and embed that kind of innovation into their organisation?
Throughout the 20th century, western firms built large Research and Development (R&D) labs that employed hundreds of top scientists and engineers. They were required to do only one task exclusively, and that was of ‘innovating’. A gigantic sum of money was pumped into the researches. Only a chosen few were invited into the R&D premises and given the resources and permission to innovate. The assumption was that to dominate markets, innovation was required which, in turn, was a result of two things: top-of-the-line technology and ownership of the best intellectual property.
However true that assumption might have been in an earlier industrial era, it is far less valid now. The structured approach to innovation has become too rigid, insular and expensive. It consumes a lot of resources and produces little of much significance. If this dysfunctional condition continues much longer, it risks crippling firms, even as the global economy emerges from tough times and seeks to grow.
It is clear that firms around the world need an alternative engine for innovation – one that is frugal, flexible and allows them to innovate in a faster, better and cheaper manner.
All this can be found in an ancient Indian technique known as ‘jugaad‘. Jugaad is a colloquial Hindi word that roughly translates as ‘an innovative fix, an improvised solution born from ingenuity and cleverness’. Simply put, jugaad is a unique way of thinking and acting in response to a challenge.
Jugaad is practised by almost all Indians in their daily lives to make the most of what they have. Kitchens are replete with empty soft drinks bottles which are reused as containers for water, spices or lentils. This technique is also used in inventing new utilitarian tools using everyday objects, like a makeshift truck cobbled together with a diesel engine slapped onto a cart. The entrepreneurial spirit of jugaad is not limited to India. It is widely practised in other emerging economies such as China and Brazil, where entrepreneurs are looking for growth in these difficult circumstances.
Jugaad is not about sophistication or seeking perfection through over-engineered products, but rather about developing a good, simple solution which gets the job done. The ‘jugaad‘ solutions address the needs, rather than the desires of the masses, and represent business models that are inclusive and sustainable, thereby allowing a company to do well.
It is a common belief in western firms that their innovation system, like any industrial system, will generate more output if fed more. As a result, the structured innovation-engine is capital intensive. For instance in 2010, the world’s top 1000 companies spent a whopping $550,000,000,000 on innovation, but what did they get in return? Not much! With so much money invested for a limited output, companies are now beginning to implement the jugaad model in their departments. And it will not be long before this model reaps high success!