Jugaad : How frugal engineering shaped Indian entrepreneurial landscape
BY VEDIKA MANTRI / DECEMBER 23, 2023
How centuries of innovative solutions have transformed India's entrepreneurial scene, turning challenges into opportunities with clever resourcefulness.
oday India's landscape is marked by perpetual resource scarcity and constraints, where the concept of ‘jugaad’ has emerged as a quintessential approach for innovation and problem-solving. Jugaad can be understood as the art of making the most out of limited resources, often involving innovative improvisations and workarounds to overcome challenges. The mindset for innovation, rooted in creativity and practicality, not only shapes the business strategies of enterprises but also forms an integral part of the cultural fabric that defines India's entrepreneurial spirit.
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The origins of jugaad run much deeper, tracing back to communities that historically relied on ingenious resourcefulness to navigate challenges. These communities turned adversity into an advantage, from repairing tools with unconventional materials to devising resource-efficient farming techniques that maximise yields. For instance, if a plough blade or a hoe breaks in the field, farmers could creatively weld or attach a piece of scrap metal to repair the tool instead of immediately replacing it. Thereby, jugaad reflects a survival strategy that highlights India's exceptional ability to harness scarcity for ingenuity.
Jugaad reflects a survival strategy that highlights India's exceptional ability to harness scarcity for ingenuity.
The impact of jugaad transcends its cultural and historical roots, spilling over into India's economy. The very essence of jugaad is interwoven with India's informal economy, a realm where micro-entrepreneurship thrives. Recent research by the International Labour Organization (ILO) underscores the informal economy's dominance, accounting for almost 75% of non-agricultural employment in India. This dynamic sector owes its vigour to the principles of jugaad, with its resourceful innovations serving as cornerstones for generating livelihoods and fueling economic activity.
Additionally, Small and Medium-sized Enterprises (SMEs) are beneficiaries of the jugaad ethos, which empowers them to thrive amid the constraints of India's economic landscape. A survey by the Confederation of Indian Industry (CII) emphasises the significance of SMEs, responsible for nearly 45% of India's total manufacturing output and around 40% of its exports. Through embracing the principles of jugaad, these SMEs weather challenges with resilience and adaptability, fostering their contribution to the nation's economic backbone.
The evolution of jugaad thinking reflects in the contemporary business sphere through the concept of ‘frugal innovation’. Notable examples such as, the Chotukool refrigerator developed by Godrej, a user-centric innovation that addresses the needs of rural and low-income consumers in India or the Husk Power Systems innovation that converts rice husks, an agricultural waste product, into electricity for rural communities. By utilising locally available resources, the company provides clean and affordable energy to off-grid areas, contributing to rural development and economic growth, exemplifying how companies aim to develop cost-effective solutions tailored to the needs of price-sensitive consumers.
Pictured: Illustration by unknown via Pinterest
These innovations showcase the very essence of jugaad. Moreover, India's burgeoning start-up ecosystem serves as a testament to the sustained influence of jugaad. The National Association of Software and Service Companies (NASSCOM) ranks India as the world's third-largest start-up ecosystem. These ventures redefine industries through innovation, often founded on resource-efficient strategies.
To quantify the impact of jugaad-driven innovation, data-driven insights come at the top. The Indian Private Equity and Venture Capital Association (IVCA) data reveals a consistent upward trajectory in investments in technology start-ups. For instance, notable start-ups like Ola and Byju's have garnered substantial investments from both domestic and international investors. Ola, a ride-hailing platform, revolutionised India's transportation industry, attracting investments from SoftBank and Tencent, among others. Byju's, an edtech company, has become a global leader in digital education, raising funds from prominent investors like Sequoia Capital and Tencent.
These examples highlight how investors recognise the value of innovative solutions driven by jugaad thinking. Jugaad thinking influences how investors support tech start-ups. It is like a secret weapon for these companies because it helps them be smart with money, adapt quickly, and come up with new and useful ideas. Investors like putting money into these companies because they are not just good at solving problems; they are also good at growing in the long run. When start-ups use jugaad thinking to create solutions that change how things work, like Ola changing transportation or Byju's changing education, investors notice and invest a lot. Additionally,when these solutions also help solve important issues, it matches what investors are looking for, making jugaad-driven start-ups even more appealing. Hence, investors see jugaad thinking as more than just a way to fix problems, it is a way for start-ups to be successful and make a real impact in India's tech world.
Furthermore, the Economic Survey of India sheds light on the role of the informal sector, nurtured by the principles of jugaad, in employment generation. Amul, a prime example of how jugaad thinking has fueled employment in rural India. Amul's cooperative model, founded on the idea of empowering dairy farmers, has generated countless jobs and sustained livelihoods across the country. This cooperative structure, rooted in local empowerment, exemplifies the principles of jugaad by efficiently utilising available resources to create economic opportunities. This sector significantly contributes to job creation, particularly in rural areas where traditional industries employ jugaad strategies to sustain livelihoods.
Pictured: Illustration by unknown via pinterest
The Economic Survey of India sheds light on the role of the informal sector, nurtured by the principles of jugaad, in employment generation.
Moreover, the influence of jugaad transcends geographical boundaries, gaining recognition from international companies and innovation experts. The Economist Intelligence Unit's Global Microscope Report identifies India as a nation conducive to fostering financial inclusion, with much of this credit attributed to the innovative approaches rooted in jugaad. This cultural ethos has also cultivated creativity and collaboration. Aravind Eye Care System's innovative model for providing affordable and efficient eye care has garnered global recognition. Its approach to addressing eye health challenges through efficient processes, patient-centric care, and low-cost solutions has inspired similar initiatives worldwide.
Despite the manifold successes of jugaad thinking, it is vital to recognise instances where the application of this philosophy faced setbacks. One such notable example is the Indian automaker Tata Motors' venture with the Tata Nano. While intended as the ‘People's Car,’ designed for affordability, it encountered quality and safety issues that affected its market reception. The Tata Nano project serves as a cautionary tale, underscoring that even in the realm of jugaad-inspired innovation, a holistic perspective is essential. It prompts us to appreciate the need for balanced innovation, one that combines resourcefulness with quality, safety, and long-term viability.
Jugaad thinking is a potent tool, but it must be wielded with precision. The potential pitfalls of quick fixes, the compromising of quality, and the need for sustainable solutions must not be overlooked. In tandem with celebrating resourceful innovation, we must also champion responsible and well-informed decision-making that encompasses the principles of quality, safety, and sustainability.
Jugaad thinking is a potent tool, but it must be wielded with precision.
Pictured: Illustration by unknown via pinterest
In conclusion, jugaad innovation embodies India's remarkable journey of harnessing scarcity as a catalyst for ingenious solutions. Its evolution from historical practices to contemporary economic strategies underscores its enduring relevance. The above data, statistics, and examples highlight how jugaad fosters economic ingenuity across various sectors. Yet, it is the balance between resourcefulness and responsibility that will truly pave the way for India's continued economic progress.
Keywords
International labour organisation, informal economy, micro-entrepreneurship, resourceful innovations, Small and Medium-sized Enterprises, Confederation of Indian Industry, ‘frugal innovation, jugaad-driven innovation
References
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Use Jugaad to Innovate Faster, Cheaper, Better
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