Frugal innovation – the secret to scaling sustainably

April 2, 2015

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In the changing landscape of development, long standing boundaries between non-profit and for profit models are merging while social enterprises are emerging. Even the most generous aid models are not enough to provide basic services to the 1.2 billion poor people living in middle income countries. In this context, the third Frugal Innovation Forum hosted by the BRAC Social Innovation Lab explored how we can serve millions in a sustainable manner. Under the theme ‘pushing the boundaries of development’, several speakers from the development sector, multinational corporations and social enterprises expressed that we need frugal innovations that can create more impact with less resources and institutions that can scale sustainably.

In the changing landscape of development, long standing boundaries between non-profit and for profit models are merging while social enterprises are emerging. Even the most generous aid models are not enough to provide basic services to the 1.2 billion poor people living in middle income countries. In this context, the third Frugal Innovation Forum hosted by the BRAC Social Innovation Lab explored how we can serve millions in a sustainable manner. Under the theme ‘pushing the boundaries of development’, several speakers from the development sector, multinational corporations and social enterprises expressed that we need frugal innovations that can create more impact with less resources and institutions that can scale sustainably.

Sometimes an ingenious product or service innovation alone is not enough to create impact at scale. It requires systemic solutions, including improvement in access, distribution and financing models. Jaideep Prabhu, the foremost frugal innovation expert, shared a quote from Harish Hande, Selco to point out the complex financial realities of the poor. A fruit cart vendor in India told Harish that “300 rupees a month is too much but 10 rupees a day is not.” It would be wrong to assume that the poor cannot pay anything. However, both the service and the payment mechanism need to suit their lifestyle.

Nowadays corporations are considering the bottom of the pyramid population as an untapped market opportunity and are taking great care in modifying their products and services for them. Ramil Burden, vice president of Africa and developing countries at GlaxoSmithKline remarked, “I don’t see a world where there is a dichotomy (between short term financial pressures and long term stakeholder value generation) anymore. It may have existed ten years ago but not now.” This leaves us wondering, if consumer goods like shampoo can be found in cheaper sachets and soft drinks can reach village stores in remoteareas, what about finance mechanisms for micro-entrepreneurs and other development interventions? Is there scope for new partnerships that combines the best of both worlds?

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As many countries transition to middle-income status and donor funds start shrinking, financial sustainability is increasingly a concern for many development organisations. The conversation is gradually shifting from securing donor funding to exploring financially sustainable models. Many speakers at the forum shared innovative ways of doing so. For example, providing eye care services to the poor for approximately USD 10-35, Aravind Eye Care System, has ensured that the primary services they offer are sustainable. Patient care and the construction of new hospitals are funded by fees from paying patients. Thualsiraj Ravilla, executive director of Aravind, had this to say about sustainable development at the Frugal Innovation Forum: “We started looking at costs from the patients’ perspective and then tried to see where we can bring the total cost down.”

With the changing face of development and Bangladesh transitioning from a developing country to a middle-income country amongst many others, it is time for the development sector to start thinking about scaling sustainably and frugal innovation certainly deserves more attention. As Jaideep Prabhu said, “Frugal innovation is not just about doing more with less, but about doing better with less.”

 

Farazeh Mahboob is an intern with the social innovation lab. Anjali Sarker is an officer with the social innovation lab.