FEATURES/Defining Debates Of 2011 | Jun 1, 2011 | 59834 views

Vijay Govindarajan: Jugaad - A Model for Innovation

It is a word that has travelled from India’s hinterlands to the management lexicon. Meet Jugaad, the innovative workaround to complex problems. The problem arises when people start looking at it as a permanent solution

When Godrej and Boyce talked to villagers, they found a couple of interesting things. First, villagers don’t want ice. American customers needed a freezer, as they use frozen food; they keep their food for a long time. Poor people in India don’t eat frozen food. They cook everyday. They want to store leftovers for maybe two meals, one day.  

Once Godrej and Boyce got this insight, they started looking for solutions. They found computers used a certain chip for cooling. Such chips are used in millions of computers so the price was very low. So, Godrej and Boyce used that in their refrigerator. It doesn’t operate with a compressor, but it operates with good insulation — cools it down to ambient temperature, using a chip. This is what constraint-based innovation is about.

It’s not just in India. These innovations are happening in other emerging markets as well. They may use a different word, but the concept is no different. So, you call it ‘frugal engineering’, ‘rural innovation’, Jugaad — I call it reverse innovation.

Another key to Jugaad is a beyond-reach kind of target. What a target like a $2,000 car, or a $300 home does is that it creates a tremendous level of excitement, motivation, energy, inspiration and imagination. When you set such a target, you increase the effort level in the organisation.

If you want to take a refrigerator that costs $1,000 and make it for $75, you can’t just take the compressor and improve its efficiency. If you want to take a $10,000 ECG machine and make it into a $500 machine, you can’t just tweak some parts. You have to think about doing something radical. If you cut corners, you are not going to solve customers’ problems. You are going to make money only when customers buy the product. If you build crappy products, the customer is not going to buy it. Poor people understand value. I have not seen poor people wait in line and buy a black-and-white TV. You can’t give yesterday’s product or yesterday’s technology. They want quality products at different price points.

Collaboration: A New Way to Solve Problems

I did my charted accountancy in India. And from my uncle’s house in Chennai, where I was staying, I had to walk to a bus stop every day for three years. On the way, there was a slum. I was always bothered by the conditions in which the people lived. Because they did not have a proper house, if there were rains, people got wet, and the children in particular, fell sick. There was no proper sanitation, so there was disease.

So, we [V.G. and Christian Sarkar, a marketing consultant] created a blog entry asking, “why can’t we create a $300 house?” We created a lot of noise. It got a lot of attention, and then we created a Web site, Five hundred people have signed up on the Web site — architects, engineers. We have created a global design challenge, the winning entry will get a $25,000 prize.

Now I know nothing about building a house. So, we have created a collaborative, open innovation platform on which a lot of people are jumping in and contributing. I feel, five years from now we will find a solution to it. I am trying to write a book on the $300 house. My feeling is that at some stage a company will say this is a great opportunity.

In fact, I would say all social problems can be solved this way. No single person or entity can solve these problems — be it health, education, energy or transportation — by themselves. What we need is a hybrid value chain.

This article appeared in the Forbes India magazine issue of 03 June, 2011
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Comments (6)
Professor M.S.Rao Aug 1, 2012
Absolutely awesome insights!
Som Jul 1, 2011
What Mr Govindrajan is saying is not new. Indian companies innovated with the Jugaad model cos they did not have resources. There are plenty of heartaches in low paid employees, overworked staff and several negatives that are a parallel reality of the Indian business community. Mr Govindrajan cites a $300 house. Such a house is definitely a possibility is the house was simply as easy as a $75 refrigerator. Unfortunately, as Mark Twain said..."Buy Land , they are not making them anymore" ...a house is built on a land, regulated by the state and profited by a large inert line of bureaucrats, a $300 house is a possibility in a society that is fair..that is definitely not India where still 300 odd families run the entire show.
Sanjay Barnwal Jun 15, 2011
Excellent way of thinking. I think Tata Nano also had similar concept which completely shattered belief of companies like GM and Toyota that cheap cars with great design and efficiencies can't be made. Hopefully you achieve your goal soon.
Anuja Tapadiya Jun 10, 2011
Dear sir,
I have completed my MBA recently. And since then i always wanted to start something of my own. I am very much aware about the concept of innovation but i have never been explained in such a simple manner. And after reading your article its become easy to actually think about some innovative product and start working on it.
i wish you all the very best for your new innovative product and i really hope that it turns out to be the best project for the poor people.
Megan Arend Jun 2, 2011
It seems that Mr. Govindrajan has really gotten to the root of innovation and creativity in business. Innovation relies not just on setting goals, but more so on finding solutions to make these goals realistic--eliminating obstacles that hinder organizations from reaching such objectives. So often organizations have an idea--a game plan--but they have no clue to how to make that game plan tangible. What Govindrajan explains, and what my company, The Opp Lab advocates, is that you must start by understanding the problem, the obstacles to an objective, before you may actually begin to achieve the objective itself. A creative and inspiring solution leads to a creative and inspired team motivated to realize that solution. Such inspiration is the key to creating the culture of opportunity that is critical to social change.
Satheesh Krishnamurthy Jun 1, 2011
Dear Mr Vijay Govindrajan, as a chennaite I feel very happy and all the best for your $300 house. These kind of reverse innovation is required for agriculture as well where people deserting their fields and leaving for metros this should be stopped especially in third world coutntries where agriculture is major industry, am sure may be you can come out with some platform for this also in future.
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