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Jugaad: A New Growth Formula for Corporate America

January 25, 2010 by jugaad_innovation in blog page with 0 Comments

Frugal innovation is a hot topic today as post-downturn corporate America looks for ways to do more for less, while serving broader markets. This will require practicing the gutsy art of Jugaad. The Hindi term roughly translates as “overcoming harsh constraints by improvising an effective solution using limited resources”. We call it the art of creative improvisation — within a framework of deep knowledge and experience.

Practiced regularly in emerging markets such as India, Jugaad also catalyzed growth in the US during the industrial revolution. For instance, in 1831, a Virginia farmer named Cyrus McCormickaddressed the problem of scarce food supply when he invented a mechanical grain reaper. McCormick also went on to innovate in credit, service and sales practices that became key components of American big business across sectors. He used local agents to educate farmers about uses for the grain reaper as well as to assess farmers’ credit-worthiness. McCormick even got elected as a corresponding member of the French Academy of Sciences, “for having done more for the cause of agriculture than any other living man.” Creative farmers like McCormick have historically been America’s best implementers of Jugaad.

But if the Jugaad spirit seemed to have waned in America’s post-industrial economy, our research shows that it is alive and kicking in fast-growing emerging economies like India, China, Brazil, and South Africa.

Over the last five years, we have studied and interacted with scores of entrepreneurs in India and beyond who practice Jugaad to understand their mindset and innovation principles. We find thatJugaad-minded entrepreneurs turn adversity — such as widespread scarcity of natural and financial resources in India — into an opportunity to innovate and create more valuable products and services at less cost for more people. That’s the case, for instance, of Harish Hande, who founded SELCO in Bangalore, India in 1995.

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JUGAAD INNOVATION Western corporations can no longer just rely on the old formula that sustained innovation and growth for decades: a mix of top-down strategies, expensive R&D projects and rigid, highly structured innovation processes. Jugaad Innovation argues that the West must look to places like India, China, and Africa for a new, bottom-up approach to frugal and flexible innovation.

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