Jugaad Innovation: Are Western Economies Losing their Innovative Edge?

One of the premises of the “new global economy” was that routine, low-value-added processes would be dispersed to the developing world, while high-value R&D and innovation-related activities would stay put.  That model–considered the key to Western prosperity in a globalized economy–may be obsolete, potentially raising risks for the West.

According to Jaideep Prabhu, professor at the University of Cambridge’s Judge Business School, Western economies have made the innovation process entirely too complicated, and are losing their innovative edge to simpler approaches found in the developing world.

He says it’s a form of the old frontier mentality: “You live by your wits and what you have around you, and then you figure something out.”

Innovation in the developing world happens differently than in the pristine research and development labs of wealthy countries, Dr. Prabhu said in an interview. Scarcity forces people to be resourceful; chaotic, unpredictable conditions demand flexibility; and modern interconnectivity allows ideas to percolate from the bottom up.

The other principles of jugaad innovation include seeing opportunity in adversity, keeping solutions simple and focusing on the needs of marginal, underserved customers, not as objects of charity but as a market with big potential for growth. Jugaad innovators grab at frugal, off-the-shelf solutions, figuring out how to use existing technologies to fill unmet demands, rather than coming up with expensive new ideas and then searching for a way to use them. . . .

Benjamin Franklin, the writers say, was a classic jugaad innovator, coming up with simple but revolutionary ideas like the lightning rod, bifocal glasses and the Franklin stove, which used simple principles to produce more heat and less smoke than an open fireplace. With increasing prosperity, though, Americans lost their groove.

If this is true, we could be in a heap of trouble.  You can read the full story here.

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