The Frugal Way to Grow

Frugal innovation is associated with resource-constrained and low-income emerging economies such as those of Africa, India, and China, but we have recently seen the rise of frugal innovation efforts in developed nations including the U.S. and in Europe. These are not primarily cost-cutting measures, a response to financial constraint or a tepid economy. Rather, across the developed world, companies are beginning to use frugal innovation as a growth strategy. They are introducing a larger lineup of new products and services, often with greater economic and social value, at a much lower cost and using fewer natural and financial resources. Their goal is not to create cheap offerings. They want to create more effective offerings that draw people in with their simplicity, while also cutting down on the use of various resources.

It turns out that the four key attributes of frugal innovation — affordability, simplicity, quality, and sustainability — are exactly the qualities that customers in mature markets want most. This makes frugal innovation a viable growth strategy for companies expanding in those markets, not just in emerging economies.

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Pioneering companies in mature economies are learning from emerging market companies a new way to expand their businesses. The four key attributes of frugal innovation are exactly what customers in mature markets want most.

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