Jugaad Innovation

Have you ever wondered why there are not too many India multinational companies? Even the few who acquired this status in the recent years, companies within Tata, Aditya Birla and Mahindra & Mahindra groups, have done that through oversees acquisitions.

One reason for this is the fact that Indian companies don’t have the knowhow of the products which will appeal to the developed counties.

Innovation has been traditionally happening in the developed countries and later followed downhill to the emerging markets. This is not surprising, since rich customers in the emerging market countries usually seek ‘modern’ or ‘latest’ products and can actually afford them. Developing countries, which are usually in catch-up mode, end up importing them. So MNCs mostly innovate in US, Europe or in Japan/Korea and then employ a process, ‘localization’- altering the product to suite the local country and to the purse of the local customers. Indian companies have been busy in fighting these products and are thus left with little time/money to take these MNCs in global companies.

This is how the technology transfer concept came in, for example Indian automobile industry got the technical knowledge in the past and developed the local products, with little export portfolio. Maruti-Suzuki, Bajaj-Kawasaki, Hero-Honda etc.

But this is very fast changing. MNCs are increasingly seeing merit in innovating in emerging markets rather than just exporting products to them. They are not doing this just to capture market share in low cost countries but more importantly, to tap new, unexpected values which are overlooked in developed markets. The traditional view that a rich man will not buy poor man’s product is changing fast and have given birth to a new concept of ‘reverse innovation’- developing products for emerging markets and then taking them to developed countries where they are seen as value proposition and wholeheartedly accepted. Procter and Gamble, PepsiCo, GE etc are few companies who have been doing this reverse innovation.

In addition to this reverse innovation, emerging markets are used to do something we call in India as Jugaad innovation.

Jugaad innovation is a science and art of improvise the solutions, that are born out of ingenuity of doing more with less, which are commonly practiced in emerging markets. In a way, a structured, well defined innovation process looks completely different compared to Jugaad innovation, which aims at making things work.

In addition to this, services industry has done some innovation, through redefining new business models, which aims at improvising the total cost of ownership of services to customers. That is another way of innovation, though it can’t be called as a product.