CMI’s management book of the year fully deserves its billing, writes Piers Cain
Maybe 2015 was the year that those of us living in western industrialized countries came to realize that we might not be on the winning side. We see long-term stagnation in Europe and the relative decline of the US – although, despite its rivals catching up, it still sits as the number one economic superpower. For many people, the promise of technology is turning sour. Pundits are seriously talking about many white-collar jobs being eliminated by robots in the next couple of decades. Standards of living, too, are declining for many.
In other words something big is going on. Things are changing radically but we don’t really have a handle on what is going on beneath the bonnet, especially at the level of individual businesses. This book lifts the lid and gives a clue as to why.
The authors, Navi Radjou and Jaideep Prabhu, winners of the CMI Management Book of the Year, bring a perspective that spans India (where they were born), Silicon Valley, and Europe, while both are associated with Judge Business School, University of Cambridge. Altogether, it’s a truly global outlook.
What do we mean by ‘frugal innovation’? According to Wikipedia: “Frugal innovation or frugal engineering is the process of reducing the complexity and cost of a good and its production. Usually this refers to removing nonessential features from a durable good, such as a car or phone, in order to sell it in developing countries. Designing products for such countries may also call for an increase in durability and, when selling the products, reliance on unconventional distribution channels.”
This definition might suggest that frugal innovation is about small innovative experiments or a strategy advocated by worthy, but not terribly worldly, NGOs. In fact, it is being embraced by global giants such as Unilever, Renault, Aetna, SNCF and Saatchi & Saatchi.
This book explains what is changing in the business world and how very disparate trends are coming together to transform how business is being done and to provide a framework for thinking about it. The authors claim that six interconnected strategies are key to success:
Engage and iterate – research and development must be transformed to focus on the customer both at the front end of the innovation process (greater engagement with the customer) and the back end (continually improving the product).
Flex your assets – in other words create a frugal supply chain thus saving money, resources and time.
Create sustainable solutions – Make sustainability a strategic objective using new approaches such as cradle to grave and collaborative consumption. Shape customer behaviour to support a more sustainable approach to consumption.
Co-create with ‘prosumers’ – customers who are so motivated and empowered that they become involved in the creation of frugal products and services, straddling the traditional boundary between supply and demand.
Make innovative friends – by collaborating with diverse external partners such as suppliers, universities, venture capitalists and startups.
As with any good book it provokes new questions – the authors provide insights for those at the top of the organization determining strategy and business culture, and also to some degree insights for those at the entry level. But what about those in the middle who have to make these new strategies work? What technical skills, attitudes and abilities will be needed at the middle management level? What do we need to do to equip them to survive and thrive in the future?
The changes in business that the authors describe are going to have a big impact on everyone’s working life. This book is a useful springboard for thinking about what has already changed and what it will mean for us all. Recommended.