Jugaad: A Better Alternative to the Western Innovation Model?

Banner_54Money can’t buy the ingenuity manifested in jugaad—nor can you legislate or ‘manage’ jugaad innovation. Jugaad happens organically: it’s an ‘emergent’ phenomenon, not a planned activity. Jugaad embodies—to cite Woodrow Wilson, President of the US from 1913 to 1921—‘the highest and best form of efficiency (that) is the spontaneous cooperation of free people’. In sum, jugaad represents a bottom-up innovation model that India excels in.

Yet, when we interact with Indian CEOs, they rarely talk about jugaad. Instead, they inquire about what ‘innovation strategies’ they need to adopt to accelerate their company’s growth. They express concern about India’s low investment levels in research and development (R&D) compared with arch-rival China (India today invests less than 1 percent of its gross domestic product, or GDP, on R&D whereas China intends to step up its R&D to GDP ratio from 1.76 in 2010 to 2.5 by 2020). There is no doubt that Indian companies need to boost their R&D spending and embrace sound innovation strategies if they are to achieve their potential in the coming ‘decade of innovation’. But even as they carry out these top-down R&D initiatives, Indian CEOs should not overlook a key strength of the existing Indian ecosystem: its entrepreneurs’ ability to use jugaad to create products and services in an organic, bottom-up fashion using limited resources.

Rather than dismissing jugaad as the ‘poor man’s approach to innovating’, Indian CEOs should recognize that jugaad is a highly effective business tool that can be formalized and help companies innovate faster, better, and cheaper in today’s hypercompetitive and volatile environment. Consequently, they should nurture this free-spirited jugaad mindset within their organization—by unleashing and harnessing grassroots, employee- or consumer-led creativity. This is especially vital in large organizations that are process-driven or operate in regulated sectors. over-emphasizing processes and compliance could lead to a risk-averse culture that can restrain innovation. That’s why, as we show later in this book, forward-thinking CEOs of leading Indian firms such as YES BANK, Future Group, Suzlon, Tata Motors and the heads of Indian subsidiaries of GE, Siemens, Philips, and Pepsico are striving to cultivate a jugaad mindset among their workforce—without sacrificing the efficiencies obtained through structured processes. These visionary leaders are attempting to achieve the right balance between top-down R&D strategies while supporting bottom-up jugaad innovation. In doing so, they are seeking to avoid the mistakes of Western CEOs who are now paying a hefty price for swinging too much in the direction of a top-down, structured R&D model.

To understand the pitfalls of structured innovation and the lessons these hold for Indian corporations, it is useful to explore how Western economies evolved from a context in which frugal and flexible innovation flourished to one in which such an approach was eclipsed by an expensive and structured approach that has now begun to show its limits.

Indeed, jugaad was once a big part of Western innovation too. It was the flexible mindset of jugaad-style innovators that catalyzed growth in Western economies like the US during the Industrial Revolution in the 19th century. Among the many early American jugaad innovators, the best known may well be Benjamin Franklin, one of America’s founding fathers, who was born in Boston, Massachusetts, in 1706. Franklin experienced scarcity and learned about the virtue of frugality firsthand, growing up in a large Puritan family of nine brothers and seven sisters.11 When he was just ten-years-old, Franklin left school and started working in his father’s candle and soap shop to help support his family. Early on, Franklin developed a knack for using limited resources to devise ingenious and frugal solutions to tackle everyday problems faced by his contemporaries. Franklin’s legendary ingenuity was fueled by his genuine empathy for his fellow citizens. One of his most practical inventions was the Franklin stove.12 During the 18th century, homes in the US were primarily heated by inefficient fireplaces that spewed smoke as much of the heat they generated escaped up the chimney. They were also hazardous, as their sparks could trigger fires that quickly devoured wood-built homes.

Franklin’s jugaad innovation to tackle this problem was a new type of stove with a simple hooded enclosure in the front and an air box in the rear. The new stove and its reconfiguration of the flues enabled a more efficient fire, one that consumed 75 percent less wood and generated twice as much heat.13 The Franklin stove delivered ‘more with less’. An early advocate of open source technology, Franklin turned down the patent offered for his original design, stating that altruism, rather than profit, was his driving motive for developing the efficient stove. He wanted all Americans to benefit from his invention. In fact, Franklin patented none of his jugaad inventions. In his autobiography, he wrote that ‘as we enjoy great advantages from the inventions of others, we should be glad of an opportunity to serve others by any invention of ours; and this we should do freely and generously’.14 As a serial jugaad entrepreneur, his approach to innovation was always inclusive: his ingenious but simple inventions—including the lightning rod, bifocals, and a carriage odometer—enhanced lives throughout the colonies.

America’s founding fathers, as well its creative farmers, industrial pioneers, and scientific explorers in the 19th and early 20th centuries—from Ben Franklin to Cyrus McCormick to the Wright brothers—were historic practitioners of jugaad in the West. These ingenious entrepreneurs spurred the Industrial Revolution in Western nations, building a strong foundation of economic leadership that lasted for decades. In the twentieth century, however, especially after World War II, Western nations gradually lost touch with this jugaad spirit as they matured into post-industrial economies and became attached to a systematized, predictable way of life and work. Improvised ingenuity—the essence of jugaad—took a back seat to a more formally structured approach to innovation. As North American and European economies expanded, Western corporations began to institutionalize their innovation capabilities, creating dedicated R&D departments and standardizing the business processes needed to take their ideas to market. They focused on managing innovation, just as they managed any other business activity. This industrialization of the creative process led to a structured approach to innovation with the following key characteristics: big budgets, standardized business processes, and controlled access to knowledge.

But this structured innovation approach, which helped Western firms become highly successful in the second half of the 20th century, has three clear limitations in the fast pace and volatility of the 21st century: it is too expensive and resource consuming, it lacks flexibility, and it is elitist and insular.

About the book:

Jugaad is a word often heard in general conversation in India. Whether to find ingenious solutions to problems or turn adversity into opportunity—Indians swear by it. In this seminal book, Navi Radjou, Jaideep Prabhu, and Simone Ahuja challenge the very way a traditional organization thinks and acts. Leading companies such as Facebook, Future Group, GE, Google, PepsiCo, Philips, Renault-Nissan, Siemens, Suzlon, Tata Group, and YES BANK, among others, are already practising jugaad to generate original ideas and pioneer growth. In the midst of rising global competition and swelling R&D budgets, Jugaad Innovation presents ways to innovate, be flexible, and do more with less. Peppered with examples of innovative entrepreneurs in emerging markets such as Africa, India, China, and Brazil, Jugaad Innovation illuminates paths to engender breakthrough growth in a complex and resource-scarce world.

Jugaad Innovation has sold more than 50,000 copies and is still topping the bestseller charts. You can buy a copy here:  http://bit.ly/18F7CbX

The Penguin India Blog

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