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Fighting Economic Sharks is a Matter of 'Jugaad'

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Navi Radjou, co-author of Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth wears three hats. The first one is made in India, the country that gave the world the most powerful number called zero. The second hat comes from France, which gave to the world the concept of renaissance. The third one which he now prefers to wear links him to America, the modern world's El Dorado.

To be born in India is to be born with the 'jugaad gene'. In Hindu mythology, come to think of it when Lord Ganesha beat his elder brother Lord Karthike, the commander of the divine army, in the race across the universe, he gave to India the spiritual philosophy, which recognizes the 'mother' as the real universe. We can also call it 'spiritual jugaad'.

There can be no better example of the power of political 'jugaad' than Mahatma Gandhi's non-violent movement for India's freedom from British rule. Subhash Chandra Bose (another Indian freedom fighter) tried to achieve the same goal by following the Western model of armed combat and failed. Gandhi did not need money to raise his army of freedom fighters, Bose did.

In the social sphere of the third world the joint family was the 'jugaad' to keep expenses down. Markets exploit, families don't. In moments of financial crisis Indian men turned to their grandmothers, mothers and wives for an "economic bailout". Indian women intuitively knew the importance of running the household within the earning capacity of the breadwinner and saving for the proverbial rainy day. That is, perhaps, the reason why when the rest of the world suffered the consequences of the 2008 economic meltdown India got away with minor injuries.

The meltdown aroused the 'jugaad' gene in Navi who decided to share with corporate America and the rest of the western economies the financial wisdom contained in this atom. Navi is trying to split this atom for the financial world to reap the benefits of frugality. I tracked him down and he explained this to me in more detail in an exclusive interview.

I now offer you an insight into the economic philosophy of 'jugaad' through the horse's mouth.

Me: How did this idea (Jugaad Innovation) actually come?

Navi: In 2008, as Western economies plunged into recession, my co-authors (Jaideep Prabhu and Simone Ahuja) and I came to a lucid conclusion: the traditional innovation model, built around big R&D budgets and structured processes, which sustained the growth of Western companies -- and Western economies in general -- throughout the 20th century was broken. That "bigger is better" R&D paradigm that long dominated the West was crumbling and had to be fortified with a new innovation model that is frugal, flexible, and inclusive.

Me: How did you go about achieving this objective?

Navi: We decided to look for that new model in emerging markets like India and China.

Me: Why emerging markets?

Navi: Because we had noticed that (throughout the 2000s) that emerging economies had grown at double-digit rate despite the sheer complexity and resource scarcity that characterise their societies. We intuited that if entrepreneurial companies in India, China, Brazil, and Africa are able to grow fast in such adverse and resource-limited environment, then they must be using some "secret formula".

Me: Did you find that formula?

Navi: Alas, after spending several years meeting and interacting with dozens of entrepreneurs in EM we realised that these innovators didn't rely on any special "technique" -- rather they all share a unique mind-set. It's a resilient mind-set that enables them to turn adversity into opportunity and do more with less in resource-constrained settings. That frugal and flexible mind-set is what (for the lack of a better word) we labelled as "jugaad". Jugaad is a Hindi word that means an "innovative fix; an improvised solution born from ingenuity and cleverness".

Jugaad denotes the ability to improvise a solution in an unpredictable setting and demonstrate resourcefulness when resources are scarce. We found that jugaadis not restricted to India: there are similar terms to convey the spirit of jugaad in other emerging markets -- like the word "jeitinho" in Brazil or "jua kali" in Kenya. We came to conclude that Western companies would greatly benefit from adopting the jugaad mind-set so they could learn to create affordable and sustainable solutions in an increasingly complex, unpredictable, and resource-scarce economic environment. So we wrote the book Jugaad Innovation as a way to show how Western companies can inculcate the jugaad mind-set in their organisations and learn to become nimble andfrugal.

Me: In the West, people talk more about minimalism. Would people in West prefer jugaad as a business concept or minimalism as a thought? Or, What Connection do you see between the two?

Navi: I think 'minimalism' and' jugaad' go hand in hand. Minimalism is a lifestyle choice made by a growing number of Americans who are "downshifting" their hectic, complex lifestyle and choosing to lead a simple but more meaningful life. Studies show that 15 to 28 per cent of Americans have already voluntarily adopted simplified lifestyles. Unfortunately existing products and services sold in the West are too complex and expensive to cater to this growing market of "minimalist" consumers. That's where jugaad can come in handy. When leveraged cleverly -- using a jugaad approach -- technologies like mobile devices can actually help "simplify" people's lives.

For instance, CellScope is a digital healthcare startup that converts your existing smartphone into at-home diagnosis device. So a mother can use plug CellScope's optical attachment to her smartphone and use it as a otoscope to check if her daughter has an ear infection -- without leaving her home, which is a time-consuming process as we all know. For me CellScope's solution is a great example of jugaad thinking: it helps saves time (and money) for people looking to simplify their lifestyle. Remember that in a Western context, what is really scarce is not money as much as time.

Me: You talk about corporate America and mainstream business. How Jugaad will find a place in mainstream business when we talk about average American consumers, money, investment and other such parameters?

Navi: Corporate America has no choice but to embrace the flexible and frugal principles of jugaad in order to succeed in a difficult economic environment characterised by three big constraints: 1) greater volatility/unpredictability, 2) resource scarcity, 3) a growing number of cost-conscious and eco-conscious consumers seeking affordable and environmentally-friendly products. As I said earlier, the old R&D model simply can't help corporate America successfully deal with these three constraints.

The recent healthcare reform is going to force US medical device makers and pharma companies to totally reinvent their "bigger is better" R&D model in order to cost-effectively serve the needs of the 50 million Americans who currently are uninsured and need to be covered. I wrote more on this subject (how jugaad can save US healthcare system) in my column in CNN.com.

Me: How different is Jugaad from DIY? I think it's very similar. When there is DIY in America, why do they need a third world concept of 'Jugaad'?

Navi: DIY and Jugaad share the same spirit of ingenuity and improvised creativity. But DIY has traditionally been practiced in the fringes of Western societies -- primarily led by amateurs -- and tends to be perceived as a hobby. But now we are seeing that with the success of the MakerFaires in San Mateo (California) and New York and the democratisation of 3D printers, the DIY phenomenon is going mainstream and becoming serious "business". On the other hand, jugaad has long been the only dominant approach to innovation in emerging markets and it has been practiced on a much larger scale by billions of people in India, China, Brazil, and Africa. In particular, I do believe that American firms can learn much from emerging markets how to bring the DIY spirit inside their large organisations.

Also, I see many emerging market entrepreneurs practicing jugaad not for fun or as a hobby (as with DIY), but rather as a matter of life-of-death in extreme conditions: hence, I believe that by infusing the DIY movement with that kind of extreme frugality and resilience that characterise jugaad we could conjure up amazing grassroots solutions in America that can address major socio-economic issues we face today in the US in a bottom-up fashion. Here is a panel discussion I led on this topic at Commonwealth Club recently: http://commonwealthclub.org/events/2013-03-01/how-frugal-innovation-reviving-us-economy

Me: What challenges would you have to reckon with when you spread your word about this innovation in the West?

Navi: I see the biggest challenge is convincing senior executives in large Western corporations to empower their employees so they can improvise solutions as they see fit -- rather than expecting their superiors to tell them what to do. Ultimately jugaad is about catalysing "bottom up" innovation by unleashing and harnessing the ingenuity of all employees.

The good news is that enlightened leaders in forward-thinking organisations across sectors in the West -- such as 3M, Unilever, Siemens, Renault-Nissan, Mayo Clinic, and FEMA -- are empowering their employees to think and act as nimble 'jugaad' innovators. My hope is that in the coming years more Western organisations will emulate them and follow their lead in adopting the frugal, flexible, and inclusive principles of 'jugaad'.

I hope this interview with Navi helped clear the confusion about what jugaad is all about and how does it work. I will leave you with an apocryphal story that captures the spirit of 'jugaad'.

A Soviet astronaut complained to his American counterpart about the amount of money they had to spend on developing a pen that could write in zero gravity. The American Cosmonaut said that they never faced any such problem because they used the good old inexpensive pencil for writing in space. That is true 'jugaad' - literally a zero sum initiative.