Innovate by using ‘frugal engineering’ — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Innovate by using ‘frugal engineering’

Get PDF file

by on
in Best-Practices Leadership,Leaders & Managers

To create a refrigerator for rural residents in India, Godrej Appliances started by observing people in their huts. People were going to the grocery every day, not buying in bulk. Blackouts were a regular occurrence. Families moved frequently.

The company responded with a product called ChotuKool, a small fridge that looks like a portable cooler. It keeps food cold with a cooling chip and fan system, similar to the way a computer avoids overheating.

The approach is called “frugal engineering,” coined by Carlos Ghosn, chairman and CEO of the Renault-Nissan Alliance, to describe the way Indian engineers innovate under resource constraints.

Renault-Nissan has embraced frugal engineering to become a top producer of electric and low-cost cars. How any firm can do more with less:

1. Create “good enough” products vs. overengineered products. Example: Renault launched a small, no-frills car in 2004, called Logan. It’s priced at $10,000 but is reliable and energy efficient, and just right for recession-weary Europeans.

2. Introduce artificial constraints to global R&D teams to lead them toward frugal engineering. Example: Ghosn once asked three different R&D teams—from Japan, France and India—to engineer a solution to a technical problem. Each team produced quality answers, but the Indian engineers’ solution cost one-fifth of what the others’ did.

3. Cultivate a frugal mindset. This can be hard for resource-rich executives. Example: When tasking executive Gerard Detourbet to develop a “global small car,” Ghosn sent the executive to India.

Says Ghosn, “We don’t go to emerging markets to just bring back a product, but to learn something—like new processes or a whole new mindset.”

— Adapted from “The Importance of Frugal Engineering”; Vikas Sehgal, Kevin Dehoff and Ganesh Panneer; Strategy+Business; and “Frugal Innovation: Lessons from Carlos Ghosn, CEO, Renault-Nissan”; Navi Radjou, Jaideep Prabhu, and Simone Ahuja; Harvard Business Review blog.

Leave a Comment

Previous post:

Next post: