Using open innovation to encourage frugal innovation

In this post, Victor Gimenez, an Associate of the London April 2018 cohort, analyses the historic flow of innovation, the characteristics of frugal innovation and how the work carried forward by Nesta, his first placement, has helped support frugal innovators in developing countries.

Innovation comes in many shapes and colours. From the latest products based on technological innovations (AI, big data, blockchain, CAVs…) to new production processes or disruptive business models (sharing economy, crowdfunding platforms, etc).

Traditionally these innovations have been conceptualised and developed by companies and governments in developed economies, with the aim to meet the needs of their societies taking into account the economic and knowledge resources available in their contexts. These innovations would later be exported to developing countries.

But this flow of innovation has been gradually shifting, starting in the 50s with the globalisation process, when multinational companies started offshoring their production to lower-cost markets. At this stage, the innovations were still ideated and designed in the developed world for high purchasing-power markets, but production was shifted to developing countries.

During the next decades, companies started to seek opportunities to increase their sales in the resource-constrained, but high-volume markets of developing countries. To access these markets the products were stripped away, taking out non-essential high-cost components and functionalities in order to reduce their cost. These products were still designed by and for the developed economies, they were just slightly adapted to reduce their costs in order to be able to penetrate the higher income sectors of the developing markets with “good enough” solutions.

Frugal innovation, on the contrary, implies a paradigm change.
This type of innovation is ideated and designed in and for the developing countries, taking into consideration the characteristics of the local markets. Frugal innovators harness their knowledge of the local context and the needs of their community to design solutions from scratch adapted to them. They take into account the resource constraints — financial, material and knowledge-based — and design solutions with a much higher success probability.

Usually frugal innovation solutions share four main basic principles: they are lean, simple, clean and social.

Lean, as they seek maximum efficiency; simple, as they only include the functionalities that really add value to the end user; clean, as they are designed to last; and social, as they are created by and for the community, adding value through empowerment.

Nesta and the Challenge Prize Centre, through its International Development and Communities area, have been supporting frugal innovators for several years, using challenge-based open innovation methods.

Data-driven farming
From February to September 2017, Nesta’s Challenge Prize Centre ran the Data-Driven Farming Prize (DDFP) launched by Feed the Future, the U.S. Government’s initiative to combat global hunger and poverty.

This competition supported the facilitation and development of data-driven innovations to improve Nepal’s agricultural productivity. Innovators created solutions for Nepali farmers to utilise data and information knowledgeably, effectively, and efficiently so their productivity would improve. Even though the competition was open to innovators all around the world, 71% of the applications came from developing countries in Asia and Africa and six of the 13 finalists were Nepali. These finalists were awarded with US$2,500 to develop their prototypes and business plans. The limited budget and the set of criteria defined to choose the winning solutions — that prioritised sustainability and impact — fostered the creation of frugal solutions adapted to the Nepali context and the purchasing power of the local farmers. After the final evaluation, and once proven the viability and frugality of the innovations, two winners from Nepal were awarded with a total of US$150,000 to help them scale and commercialise their solutions.

Fall Armyworm Tech Prize
The Challenge Prize Centre is also currently running another competition with an important frugal innovation component. The Fall Armyworm Tech Prize, launched in March 2018 also by Feed the Future, aims to tackle the threat that the fall armyworm (FAW) poses to food security in sub-Saharan Africa.

Originally from the Americas, FAW outbreaks first occurred in West Africa in early 2016 and are now on the precipice of devastating food supplies across the continent, exacerbating global poverty and hunger. The challenge is seeking digital tools and approaches that provide timely, context-specific information that enables smallholder farmers and those who support them to identify, treat and track incidence of FAW in Africa. Out of the 225 applications received from across the world, 81% were from the African continent. The 20 finalists include innovators from Ghana, Uganda, Nigeria, South Africa and Kenya. In a similar process as the one followed by the DDFP, each of these finalists will receive US$2,000 to support the development of their prototype, which will be tested by sub-Saharan African smallholder farmers before the winning solution is selected.

Incentivising frugal innovation
Even though Challenge Prizes aren’t frugal per se — they usually require important funding for innovators support and running the process — they can be a great tool to incentivise frugal innovation. The benefits from challenge prizes reach beyond the financial support to finalists and winners. As reported by the many innovators the Challenge Prize Centre has supported along the years, as important as the money itself is the rise in profile, the access to the network of stakeholders working in the same area, the community of innovators that is created around the process and the access to market that it provides. Challenge prizes offer the opportunity to unknown or low-profile innovators to access these benefits in the same conditions as anyone else.

By supporting frugal innovators, the Challenge Prize Centre ensures that the resources made available by the challenge prizes we run are dedicated to supporting innovations designed by and for the communities suffering from the problems we are trying to address. They leverage the local knowledge and capabilities, empower local innovators and maximise the probability of success of the solutions they back.

This is an edited version of the post originally published in the Nesta blog.