Frugal and Social Innovation

• Responsible innovation includes frugal and social innovation
• Green innovation is a key dimension to keep in mind

Types of Innovation

• Innovation presents as change compared to tradition
• Includes green vs dirty
• Frugal Vs technological and expensive
• Social innovation
• Information technology is not always required to trigger innovation and adoption

Frugal Innovation

• Frugal Innovation concerns responsible innovation, diffusion, and impact on society and the transition
• Requires a resource-scarce solution designed and implemented despite financial, technological, material, or other constraints
• Final outcome is significantly cheaper than competitive offerings and good enough to meet basic customer needs
• Other names for frugal innovation include Jagaad, stop-gap, improvised, Gandhian, Reverse, and Bottom-of-Pyramid (BOP) innovation
• Frugal innovation examples: Citroen 2CV, Kango cooking pots in Zimbabwe, Sargablock in Mexico
• Further examples are Nano Ganesh in India, General Electric portable ultrasound, Mitticool refrigerator

Key Features of Frugal Innovation

• Affordability is key, making it accessible to less affluent consumers
• Functionality means it is fit for purpose
• Removing surplus features that raise the price and contribute nothing to functionality ensures product is easy to maintain
• Quality: A focus on a robust, reliable and effective product, allowing DIY repairs
• Reverse innovation refers to goods developed as inexpensive models and repackaged as low-cost innovative goods for Western markets
• Reverse innovation originates in emerging markets before diffusing to developed countries
• Battery-operated medical instruments in countries with limited infrastructure are also considered examples of reverse innovation
• Frugal and reverse innovations are an opportunity for Western firms during a crisis like COVID

Implications of Frugal innovation

• No additional features to gain premium price
• Not cheaper version derived from sophisticated products
• Requires decentralized development and localization of New Product
• Invented in a resource-constrained environment
• Frugal innovation can be observed in resource constrained environments and developing countries
• Also locations with low income consumers or rural areas with lack of basic services

Social Innovation

• Social innovation Activities motivated by meeting a social need, diffused by organizations with social purposes
• Examples are Big Issue, Credit unions, Community Land Trusts, Childline, Wikipedia, and Grameen Bank
• Key elements of social innovation are satisfying a need, innovation of the solution, change of social structures/relationships and increase in society's capacity to act
• It addresses an unmet social need with something new and novel

Origins and Drivers of Social Innovation

• Individuals: Heroic, energetic, impatient individuals who identify a social need and have vision
• Movements: Groundswell of opinion and collective view of potential social improvements

Examples of Individuals and Social Innovation

• Octavia Hill co-founded the National Trust to preserve and provide access to historic buildings
• George Peabody created housing for London's laboring classes
• Andrew Carnegie constructed free libraries across the UK, and John Bird founded 'Big Issue'

Spaces of Social Innovation

• Social Innovation include the state, the market, the household, and the grant economy
• The State provides support for early stages of technological innovations
• The market serves as the principal space for supporting and financing technological innovations
• Grant Economy is a significant source of funding for social innovations, such as voluntary/not-for-profit
• Households provide support for social innovations

Innovation Diffusion

• Diffusion is translating innovations into social and economic benefits
• Diffusion is the process by which innovations spread within and across economies

Accelerating Imitation

• Accelerating imitation (supply side) can occur through buying a technology (licenses), reverse engineering or using R&D
• Accelerating adoption (demand side) involves adoption by an agent

Adoption of Innovation

• Adoption of innovation can be individual such as purchasing a cell phone
• Adoption of innovation can be collective such as new pedagogical system
• Adoption of innovation can be authoritative such as adopting ERP systems in a firm

Decision Process of Adoption

• Rogers (1995) suggests that the process of adoption is a communication process.
• Receivers learn about the innovation, evaluate it, and make a decision to adopt or not

Diffusion as Communication

• Diffusion involves communicating a new idea through a source, a message, and a receiver
• Diffusion as a communication process must manage prescriptors, communicate, and target

Accelerating Diffusion

• The source is the innovator trying to persuade adoption
• Source characteristics accelerate diffusion through homophily, credibility such as doctors promoting new drugs and opinion leadership
• The message is the perception of innovation characteristics
• Five key characteristics to be managed to influence perception are relative advantage, compatibility, complexity, observability, and trialability
• Receiver: potential/ targeting innovation adopters
• Need to understand different segments of potential adopters

Five Types of Adopters

• Innovators (socially marginal)
• Early adopters (after evaluations)
• Early majority (follow opinion leaders)
• Late majority (wait until majority adopted)
• Laggards

Role of Intellectual Property Rights

• The role of IPR in diffusion is ambiguous
• Intellectual Property Rights trigger diffusion through licenses or licenses can be given for free
• Intellectual Property Rights limit innovation and diffusion by increasing the price of innovation, not triggering radical innovation or hampering imitation during years