Chapter Nine

Building Jugaad Nations:

The highest and best form of efficiency is the spontaneous cooperation of a free people

—Woodrow Wilson

The jugaad movement is rapidly gaining traction in the West. While some Western organizations are adopting jugaad to catalyze innovation and growth, jugaad is also increasingly being practiced by a broad spectrum of individuals and groups in the West. Led by creative citizens, Millennials, forward-thinking entrepreneurs, venture capitalists, and non-profit organizations, a whole jugaad innovation ecosystem is emerging—to help Western societies improvise frugal and flexible solutions to problems of complexity and scarcity.

Larger institutions in the United States and Europe—such as governments and universities—are actively supporting the emergence of such an ecosystem—and contributing to its sustainability. This emerging ecosystem not only creates an environment for grassroots entrepreneurs to thrive in but also helps Western corporations in their own attempts to practice jugaad innovation. Indeed, corporate leaders—seeking to adopt jugaad in their organizations—can learn from other jugaad innovators in Western economies. By joining this external grassroots movement, Western companies can accelerate their internal adoption of jugaad—and profit from it handsomely.

The Ingenuity Economy

The developed world, like the emerging world, is facing its own problems in areas such as health care, education, finance, and community development. Western governments, with their bloated budgets and bureaucracies—and faced with financial meltdown—are severely constrained in their efforts to solve these problems. In such a context, entrepreneurial citizens from all walks of life in the West are increasingly taking matters into their own hands. With a flexible and frugal mindset, these citizens are seeking to address the vexing problems their societies face rather than waiting for their governments to do so.

For example, across the United States ordinary American citizens are coming up with innovative solutions to deal with challenges in health care, energy, and education. These citizen innovators are the Ben Franklins and Cyrus McCormicks of the twenty-first century: they rely on pure American ingenuity to improvise simple yet practical solutions to the problems afflicting their communities. They innovate not in a fancy R&D lab but in their homes and on the streets, doing more with less. Examples of such citizen innovators in the West include the following:

• The Frugal Housebuilder: In the aftermath of Hurricane Katrina, Zach Rosenburg and Liz McCartney founded the St. Bernard Project in New Orleans to make homebuilding efficient, “unfettered by prior processes and structure, by reducing construction time by 30% and costs by up to 15%.”¹
• The Inclusive Doctor: Dr. Vivian Fonseca, a professor of medicine at Tulane University in New Orleans, helped develop an SMS-based diabetes control solution for elderly and low-income patients that is simple to use and cost-effective.²
• The Resilient Lawyer: After graduating from law school, Brooke Richie launched the Resilience Advocacy Project to train young kids from underprivileged communities in New York to give their peers free legal advice—allowing them to discover new economic opportunities that can help them break out of multigenerational poverty.
• The Passionate Educator: Lily Lapenna has created MyBnk, the UK's first independent, peer-led youth banking program approved by the national banking regulator. In doing so, Lapenna is developing the next generation of financially literate and entrepreneurial citizens. Such literacy will be crucial as the UK economy struggles to avoid another recession. In just five years, thanks to its partnership with dozens of schools and youth organizations, MyBnk has evolved from a pilot project to reach thirty-five thousand eleven- to twenty-five-year-olds in underprivileged neighborhoods of London. These tech-savvy youth learn about managing money and the basics of entrepreneurship through cellphone-based games.³

Millennials Launch the DIY Revolution in the West

The groundswell jugaad movement unfolding across the United States and Europe is receiving particular support—and active participation—from the Millennials, aka Generation Y. These North American and European youth, who have witnessed massive corporate layoffs and scandals, are cynical about large enterprises and no longer believe in job stability. They prefer to start their own companies and be their own bosses—thus becoming a do-it-yourself (DIY) generation. According to a survey conducted by The Affluence Collaborative, 40 percent of those in Generation Y plan to launch their own business, and 20 percent already have.⁴ But these budding Generation Y entrepreneurs are frugal and think and act flexibly, like the fictional MacGyver. They are big believers in doing more with less. Rather than running big R&D departments, the new DIY start-up generation makes extensive use of social media tools like Facebook in an open source model to cocreate new products and services with their friends around the globe.

Nobody embodies the frugal and flexible mindset of this “do-it-yourself” generation better than Gen Y'er Limor “Ladyada” Fried. An MIT-trained engineer, Fried is a pioneer of the open source hardware (OSHW) movement.⁵ Members of this movement—mostly geeky engineers—make the source code of the electronic products they design available for free on the Web: anyone can download the code and use it to build their own products using off-the-shelf components. Any improvements or additions to the code are shared with other members of the larger community who improve the modified code and share it again with other members—and so the cycle repeats itself. This collaborative method of creation allows the entire community to do more for less—that is, create more products at a low cost, and with a reduced timeline, because members don't have to build code from the ground up every time they start a new project—they can simply reuse code that is already freely available.

Fried's nickname “Ladyada” is a tribute to Lady Ada Lovelace, a nineteenth-century English countess with a gift for mathematics. Lovelace is widely regarded as the first computer programmer in the world, having written perhaps the first algorithm intended to be processed by a machine (Charles Babbage's Analytical Engine).⁶ Like Lovelace, Fried is a maverick. When Microsoft launched the Kinect, a motion-sensing input device for the Xbox 360 video game console, Fried organized a $2,000 challenge for open source Kinect drivers. When Microsoft reacted by deeming the challenge an unacceptable modification to their product, Fried responded by raising the prize to $3,000. Microsoft eventually relented and recognized that the Kinect drivers developed by the open source community were of high quality—and very likely far cheaper to develop than investing millions of dollars in R&D. Commenting on this bottom-up innovation, Wired magazine wrote: “When DIYers combine those cheap, powerful tools with the collaborative potential of the Internet, they can come up with the kinds of innovations that once sprang only from big-budget R&D labs.”⁷

Fried is a prototypical jugaad innovator. From her modest studio in Manhattan, Fried—who labels herself a “citizen engineer”—churns out high-impact gadgets whose source code is immediately made available on her personal web site, www.ladyada.net. Her noteworthy inventions include MintyMP3, a portable music player whose body is essentially an Altoids box (you get “fresh” music with it), and the MONOCHRON clock, a device that displays a “Retro Arcade Table Tennis for Two” (à la PONG, the popular 1970s video game) while telling the time.

Fried also operates an e-commerce site—adafruit.com—that sells the kits and parts for the projects featured on ladyada.net along with other cool open source electronic products. In August 2011, Adafruit.com hit the hundred-thousandth customer mark. Reacting to this milestone, Fried and her teammates wrote on the website: “We'd like to thank all our customers that got us here and we look forward to the next 100,000 chances to make the world a better and smarter place through electronics, engineering and sharing!”

In 2011, Fried received a dual honor: she was named among the Most Influential Women in Technology by Fast Company and was featured on the cover of Wired magazine.⁸ She was the first female engineer ever—and maybe the first ever jugaad innovator—to appear on the magazine's cover. Like many Gen Y'ers, Ladyada has a natural proclivity for jugaad innovation that enables her to improvise frugal and flexible solutions to even the most complex problems. Fried would have made the original Lady Ada proud.

Next-Gen Entrepreneurs Reshape Entire Industries

A new wave of flexible-minded jugaad innovators in the United States and Europe—many of them belonging to Generation Y—are turning the conventional practices of many industries upside down, and in the process creating affordable and sustainable products and services that are accessible to more people. Here are some of the ways that jugaad entrepreneurs in the West are reshaping entire industries.

Making Education Playful

Several Western entrepreneurs are trying to put the fun back into education by making coursework more engaging if not outright entertaining. These attempts are targeted mainly at Generation Z, a cohort that is more at ease playing with Nintendo and interacting on Facebook than learning through boring old textbooks.

For instance, the Khan Academy is making the intimidating subject of mathematics cool (and fun) for thousands of students worldwide. The “academy” is, in fact, a virtual campus founded by Sal Khan, an MIT-trained former hedge-fund analyst. In 2006, to assist his cousin in New Orleans with her math homework, Khan created and uploaded onto YouTube some rudimentary video tutorials on how to do algebra. His videos quickly went viral. Within days, they were downloaded by thousands of people—students, teachers, and parents—from all over the world. Emboldened by this success, Khan began posting more math tutorials on YouTube. Tens of thousands of users devoured them in no time. Eventually, Khan quit his comfortable financial analyst's job to dedicate all his time to the Khan Academy. His mission was to provide “a free world-class education to anyone anywhere.” Today, the Khan Academy offers more than 2,400 short lessons—ranging from ten to twenty minutes each—on a slew of topics ranging from algebra to venture capital. Anyone with a web browser can access them all—for free!⁹

Students from West Virginia to Uganda to Vietnam are downloading Khan's videos (all of which he has produced himself) in ten different languages. The huge success of these online tutorials is due to five factors:

In a nutshell, the Khan academy delivers more value at a lower cost for more students worldwide—something that the traditional education system has struggled to accomplish. It's not surprising that Bill Gates has called the Khan Academy “a glimpse of the future of education.”

Ntiedo Etuk is another entrepreneur who's making education fun and engaging for young people. Etuk founded DimensionU in New York to create web-based computer games that teach the fundamentals of mathematics, literature, and other essential subjects. The competitive nature of these games provides an incentive for students to play even after school hours. And so they do homework without even realizing that they are doing so!¹⁰

Delivering Quality Health Care to Millions

As of this writing, fifty million Americans lack medical insurance. The United States spends twice as much per person on health care annually as Japan, Canada or Germany and still ranks lower in health indicators. Sensing an opportunity, a growing number of jugaad entrepreneurs in private and public organizations are trying to deliver higher-quality health care to more people at a lower cost in the United States.

For instance, the Centers for Medicare and Medicaid Services—run until recently by Donald Berwick, a Harvard-educated physician—is helping make the bloated health care system leaner. Berwick enabled this by rewarding hospitals and doctors not for the number of procedures they do or the drugs or tests they recommend but for bringing about tangible improvements in patients' health. As he explained: “How much doctors and hospitals do has become more important than how well they do.” Berwick tried to change this state of affairs. Thanks to his initiatives, last year alone the Centers saved Medicare $36 million and earned physicians $29 million in bonuses and cost savings.

Berwick also helped improve the quality of health care by making it safer. For instance, one in seven Medicare patients is hurt during a hospital stay. “Too many Americans are being harmed by the care that is supposed to help them,” Berwick pointed out. Rather than imposing any solutions to make health delivery safer, Berwick encouraged hospitals to come up with jugaad innovations to keep patients safe. For instance, he lauded the cardiac intensive care unit at Children's Healthcare of Atlanta at Egleston for coming up with a deceptively low-tech jugaad innovation: a quiet zone where nurses can place medication orders without being interrupted, even during emergencies. The quiet zone was created after the hospital discovered that distracted staff members were making dangerous mistakes while ordering medicine. Berwick believes such simple and frugal innovations are what are needed to make health care safer, better, and affordable for more Americans.¹¹

Enabling Financial Inclusion

As we've mentioned, sixty million Americans are unbanked or underbanked, with poor access to traditional financial services. Banks have traditionally lacked the incentive to serve these financially excluded groups as they were deemed unprofitable. And the global economic recession has only made banks even more conservative. But even as Wall Street retreats further from Main Street, hordes of entrepreneurial start-ups are rising to the challenge by conjuring up inclusive—and profitable—business models to deliver financial services to underbanked Americans.

Says Ryan Gilbert, CEO of one such start-up: “The ‘too big to fail’ banks are today, simply put, ‘too scared to lend’ to worthy consumers, due to the higher costs associated with serving non-prime consumers. There is hope, however…”¹² Gilbert's start-up BillFloat represents precisely that hope. By providing lower-cost, short-term consumer credit for bill payments, since 2009 BillFloat has helped thousands of consumers across the country avoid exorbitant late fees, overdraft charges, service termination, and high-interest payday loans. The continued economic downturn, combined with banks contracting the amount of available credit, makes the need for services like BillFloat greater than ever for Middle America.

Plastyc is another start-up making financial services affordable and accessible to the masses. Leveraging the power of the Internet and social networks, Plastyc offers 24x7 access to FDIC-insured virtual bank accounts and prepaid Visa cards. Cardholders cannot overdraft on these cards, as they can spend only money they have added beforehand. As a result, there are no late fees and no risk of going into debt. Plastyc's virtual accounts can be accessed from anywhere via the Internet or cellphone. Its iBankUP portal and UPside prepaid cards offer better services (at lower prices) than brick-and-mortar bank checking accounts, with more ways to receive money and no risk of spending more than you actually have.

Most impressively, jugaad innovators in financial services are catalyzing a seismic shift in Western societies: they are inculcating frugal thinking and behavior among spendthrift Western consumers by making saving more rewarding and fun than spending. For instance, Plastyc's prepaid cards have built-in automated savings—backed by generous rewards and no maintenance fees—to encourage even people with tight budgets to save more.

Says Patrice Peyret, CEO of Plastyc: “Underbanked and low-income people have the hardest time saving money because they don't have much of it, they have limited access to traditional savings accounts, and interest rates are too low to generate meaningful rewards. Our goal is to turn savings into a habit by making it simple, automatic and rewarding.”¹³

For consumers who lack the motivation or ability to save alone and want to save with friends or partners toward a shared goal, PiggyMojo offers a web-based savings tool that uses text messages, social networks, and linked transfers from checking to savings accounts to enable a system of “impulse savings” rather than impulse spending. Here's how it works: First you set a goal for saving; for instance, a serious emergency fund or a more fun “Adopt a Pet.” Then you start saving toward that goal. Whenever you overcome the impulse to buy something—like, say, a $5 mocha latte—you text or tweet “I just saved $5” to friends and family, who then cheer you on. And when your friends and family save, you get a message too—thus creating momentum and a virtuous cycle. At the end of each week, you transfer the amount you “saved” that week from your checking to savings account. By giving you an incentive to save “in the moment” and reinforcing your decision with positive feedback from various sources, PiggyMojo makes saving satisfying and fun.¹⁴

Elevating Entertainment to High Art—Without Breaking the Bank

The so-called “creative” industries, like gaming and Hollywood, often churn out safe, relatively uninspiring sequels that consume huge budgets. In contrast, frugal artists are now making games and films that are truly creative and cost much less to develop.

Consider the case of Jason Rohrer, a game developer. Rohrer lives with his wife and three kids on a modest ranch in Las Cruces in the middle of the New Mexico desert where he creates ingenious, meaningful games with high experiential value that he gives away for free (or charges a modest fee for downloading). Rohrer and his family do not own a car; they ride bicycles. They have no insurance or mortgage; they do have a fridge, but they turn it off during the winter. This family of five has voluntarily capped its yearly expenses at $14,500—which represents the family's total annual budget. Rohrer's highly variable income—generated from modest sales of his software and donations—is a far cry from the six-digit salaries earned by top software developers in large gaming companies like Zynga.

Rohrer's frugality also extends to his professional life. His “studio” is actually a tiny office in his home where he relies on a few aging computers (including an eleven-year-old laptop that his sister gave him) to develop his mind-expanding games. “Frugality,” he told us, “is indeed a business decision for me. Whenever I'm in a corporate environment, I'm bowled over by the sheer amount of waste that is part of the everyday routine!”¹⁵

Rohrer's fans love his games because they feel “real”—not because of hyperrealistic graphics (which would typically cost a fortune to develop) but because their stories ring true and feel genuine. Rohrer infuses his games with his own life experiences, and this in turn gives his characters and storylines authenticity. His creations deal with complex sociocultural topics such as marriage, the desire to become an artist, or balancing personal aspirations with family commitments. Whereas in commercial games superhuman heroes mindlessly shoot down monsters, aliens, and criminals, Rohrer's thoughtful characters struggle to overcome their inner demons and cope with personal dilemmas.¹⁶

The sophistication of the stories in Rohrer's games stands in striking contrast to the frugal simplicity of their user interface: the interface is typically minimalist, even slightly “retro,” with no whiz-bang special effects like 3D. His games are rendered in low-resolution graphics—the same ones found in arcade-style games—with characters that look like pixelated gnomes. The frugal look and feel of Rohrer's games hasn't stopped them from rapidly achieving cult status among users worldwide. In 2007, within months of its free online release, Passage—Rohrer's first major game that tackled mortality as its main theme—went viral and achieved a cultlike status among top game developers. The game was even lionized by the Wall Street Journal and Esquire, which both hailed Rohrer as the pioneer of an entirely new genre of gaming that was closer to “high art” than entertainment.

Clint Hocking, creative director at Ubisoft, the world's fourth-largest game developer, is a big fan of Rohrer's. Hocking has publicly criticized his industry for failing to innovate the way indie developers like Rohrer do—developers who are making “games that matter.” Says Hocking: “These games have used what is innate to games—their interactivity—to make a statement about the human condition. And we in the industry seem not to be able to do that.”¹⁷

Thoughtful jugaad-minded individuals like Jason Rohrer live frugally while creating high-art games that are rich in meaning: they deliver better experiential value at less cost for more users. This grassroots movement toward DIY and doing more with less is catching on beyond individuals in the West and is being backed by an unlikely party: governments.

Western Governments Are Joining the Jugaad Bandwagon

In several Western nations, governments that used to promote big-ticket R&D projects and top-down innovation policies are recognizing the limits of these growth strategies—especially in a recessionary climate. As a result, visionary American and European policy makers are investing in—and supporting—bottom-up innovation programs. These programs are specifically designed to empower and harness the ingenuity of jugaad innovators at the community level to address pressing socioeconomic issues.

In the United States, the Obama administration has launched several initiatives to stimulate community-led innovation. Perhaps the most significant of these is the White House Office of Social Innovation and Civic Participation (SICP), which was set up by President Obama in early 2009 with an explicit mission to enable social inclusion and spur bottom-up innovations by grassroots entrepreneurs in health care, education, and energy. President Obama noted, “The best solutions don't come from the top-down, not from Washington; they come from the bottom-up in each and every one of our communities.”¹⁸ SICP acts as a catalyst to enable such community-driven solutions.

For instance, SICP collaborates with federal agencies to develop incentive-based tools—such as innovation funds, prizes, and other social capital market structures—to channel resources toward community solutions that have already achieved demonstrable success, with the goal of helping scale them up. In addition, SICP also acts as an innovation broker by facilitating the cross-fertilization of proven best practices across communities. Finally, SICP helps shape new public-private partnership models that will pave the way for the government to creatively engage the private sector in cocreating innovative solutions that address shared problems at the community level.

For instance, SICP coordinates the Social Innovation Fund—a public-private partnership model launched with $50 million seed capital from the U.S. Congress. The fund identifies and supports the most promising, results-oriented community programs led by grassroots jugaad innovators that can be replicated in other communities facing similar challenges.¹⁹ It focuses on high-priority areas for the country's socioeconomic development: education, health care, youth development, and economic opportunity. The fund also partners with foundations and corporations that commit matching resources, funding, and technical assistance. One of the fund's inaugural awardees is Venture Philanthropy Partners (VPP), founded by Mario Marino with a vision of applying a venture approach to philanthropy. VPP leads the youthCONNECT initiative—a pioneering network that brings together government, private philanthropy, and non-profit organizations to dramatically improve socioeconomic opportunities available to low-income youth (age fourteen to twenty-four) in the Washington, DC region.

Sonal Shah, the first director of the SICP, explained to us:

Efforts by the U.S. federal government, such as the SICP, are being matched by projects undertaken by state and local governments. For instance, policy makers in economically depressed cities are boosting incentives to attract and retain jugaad innovators who can help reinvigorate ailing local economies. The Merrimack Valley in Massachusetts—one of the most economically depressed regions in the United States—has partnered with the Deshpande Foundation to launch the Merrimack Valley Sandbox, hosted by the University of Massachusetts in Lowell. The Sandbox brings together local colleges, non-profit organizations, and corporations to boost entrepreneurship among students and professionals and to cultivate local leadership through mentoring and seed funding programs. These jugaad entrepreneurs and leaders work with local authorities to identify and develop highly relevant solutions that bring benefit to their communities. Gururaj “Desh” Deshpande, the serial technology entrepreneur who heads the Deshpande Foundation, says: “For innovation to have impact, it needs relevance. Innovation plus relevance equals impact. Innovation is getting trapped at MIT and in intellectual circles. [But] not everybody needs to try to be MIT or Harvard. They can define a new role of developing relevance and doing things that are good for local business.”²¹

Across the Atlantic, the British government is also keen to encourage jugaad innovators. In mid-2010, we were invited to Number 10 Downing Street to meet Rohan Silva, a senior policy advisor to Prime Minister David Cameron. Silva had read our Harvard Business Review blog on jugaad and wanted our perspective on how the British government could “do more with less”—a theme dominating UK politics as Cameron attempts to replace “Big Government” with “Big Society” and empower communities and citizens in the process.²² Silva explained that Cameron wants to see more jugaad entrepreneurs flourish in the UK, and that he wants to encourage bottom-up solutions for making health care, energy, and education affordable and accessible to all.

The reasons behind this are obvious. In the UK, public sector borrowing rose to £175 billion (US$274 billion) or 12.4 percent of GDP in 2009—a peacetime record and the highest level of borrowing of all developed economies.²³ This dire situation has forced the UK government to launch several initiatives—particularly in areas such as health care and education—that seek to deliver more value for citizens at less cost and “include the margin.” For instance, the “Free Schools” initiative empowers grassroots groups of parents and local citizens to start their own schools, which make decisions on staffing and curriculum design independently of local authorities. These schools will receive public funds based on how many students enroll, with those from poor families attracting a premium. The attempt here is to make public money go further and to shake up the state system while also being more inclusive.

Not to be outdone by the British, the French government is also encouraging more citizens to become jugaad innovators and catalyze growth. With unemployment stuck at 10 percent, the French government is expanding efforts to liberalize France's highly regulated economy and make life easier for entrepreneurs (after all, the word entrepreneur is French). Thus on January 1, 2009, the French government launched the “auto-entrepreneur” initiative to allow professionals to register their small businesses online in just a few minutes and benefit from a simplified and generous tax structure, thus bypassing France's labyrinthine bureaucracy and convoluted tax system. Since its launch, more than seven hundred thousand French citizens have become jugaad innovators by signing up for the auto-entrepreneur program.²⁴

France is already familiar with Système D, the French expression for jugaad-like improvised innovation. The D in Système D is short for débrouillard, which refers to a flexible, quick-thinking, and resourceful person who is able to extract himself from any predicament.²⁵ Système D is a tribute to those French entrepreneurs who rely on their ingenuity and resourcefulness to build their new businesses in spite of France's notorious bureaucracy. Now, with the auto-entrepreneur initiative sanctioned by no less than the French government itself, the country is poised to see jugaad innovation spread more broadly in the coming decade.

Such government-led initiatives to catalyze growth by enabling jugaad are receiving generous support from philanthropists and funding bodies. For instance, the New Economy Initiative for Southeast Michigan (NEI) is a unique philanthropic initiative launched in 2008 by the Ford Foundation and others. NEI partners have together committed $100 million to be spent over an eight-year period to accelerate the transformation—driven by nimble jugaad entrepreneurs—of the industrial economy of metropolitan Detroit (home to America's once-mighty carmakers) into an innovation-based economy. NEI is also supported by the Kauffman Foundation, one of America's largest foundations devoted to entrepreneurship development. In a similar vein, Venture for America (VFA)—launched in 2012—offers $100,000 each to graduates of top universities to launch their start-ups in the inner cities of Louisiana and Tennessee and contribute to local economic development. Finally, “crowd-funding” sites like Kickstarter.com enable grassroots entrepreneurs across the United States to raise funds from the general public online within days or weeks.

Jugaad has the potential to represent the truest and most creative expression of a democracy: one in which innovation is led by the people, for the people, and with the people. One could call this Democracy 2.0, a form of government in which interconnectivity and diversity are leveraged to build resilient, equitable, and sustainable societies that can meet all the challenges of complexity. A growing number of visionary policy makers in the United States and Europe are encouraging Democracy 2.0 to flourish by setting up the right incentive systems and grassroots institutions to promote jugaad innovation and growth.

Training Future Jugaad Innovators

Leading American and European universities are also playing their part in creating jugaad nations. They are doing so through programs that imbue the next generation of engineers and managers with a jugaad mindset and its associated principles. Specifically, these programs are creating future leaders who can think and act flexibly, do more with less, keep things simple, and include the margin. By internalizing the principles of jugaad, these future leaders will be able to design and deliver affordable and sustainable solutions that are relevant not only for developing nations but also for developed economies in the West. These academic programs are training Western youth to think and act like jugaad innovators.

Stanford University's “Entrepreneurial Design for Extreme Affordability”

At Stanford University, one of the most popular courses at the business school teaches aspiring entrepreneurs how to raise capital for their start-ups. But a growing number of MBAs are now also enrolling in “Entrepreneurial Design for Extreme Affordability,” a course on frugal innovation taught by Professor James Patell and his colleagues David Beach and Stuart Coulson.

As noted by Paul Polak, author of Out of Poverty, 90 percent of the world's products and services are designed for 10 percent of the world's population—to meet the desires, rather than actual needs, of the richest people on earth.²⁶ Professor Patell's course aims to correct this imbalance. Over a six-month period, students from across disciplines—engineering, business, medicine, public policy, even law—work intensively in teams to design, prototype, and commercialize products that cost a fraction of those available in the U.S. market—and address the real needs of 90 percent of the world's population. Rather than reinventing the wheel, students are encouraged to use inexpensive, readily available, eco-friendly materials when developing their products. For instance, one team used local, recyclable parts to make infusion pumps for resource-constrained hospitals in Bangladesh at one-thirtieth of their current cost in the West. Not only is the pump inexpensive, it is also of a quality required for FDA approval. Jane Chen, Linus Liang, Naganand Murty, and Rahul Panicker—introduced in Chapter Three—are alumni of Professor Patell's program and cofounders of Embrace, which has developed low-cost infant warmers for use in both emerging markets like India and developed economies like the United States.

Professor Patell explained to us how these frugal design techniques lend themselves to application in the United States itself. For instance, one of his student teams is using sustainable architectural practices to build affordable solar greenhouses for the White Mountain Apache Tribe in Eastern Arizona. All the materials that go into these structures are 100-percent locally sourced, making them cheaper to build. Native American youth then use these greenhouses to grow fruits and vegetables using traditional agricultural practices. Thus, the greenhouses not only revitalize the local economy, they also help preserve local cultural history. Professor Patell proudly says, “Whatever my students make may seem cheap, but we ensure it is classy, useful, sustainable, and of high quality.”²⁷ In sum, the approach delivers a lot more with a lot less (see JugaadInnovation.com for video interviews with Professor Patell, his students who participated in the White Mountain Apache Tribe project, and Jane Chen, CEO of Embrace).

Santa Clara University's Frugal Innovation Labs

At the heart of Silicon Valley, the School of Engineering and the Center for Science, Technology, and Society at Santa Clara University are jointly training—through the newly formed Frugal Innovation Labs—a new generation of engineers who won't be rushing to Facebook or Google for jobs after they graduate. Rather, these students are acquiring new competencies in engineering and management to help them design simple, affordable, and accessible solutions—based on technologies like mobile computing—that address the socioeconomic needs of underdeveloped communities in areas such as clean energy, clean water, and public health. The students are taught how to innovate under severe constraints—by doing more with less. They are also trained in how to boost the “appropriateness” of their frugal solutions by taking into account the specific needs of underserved communities as well as their unique sociocultural context.

For instance, one student team worked closely with Healthpoint Services India to improve delivery of clean water in rural communities. Healthpoint Services owns and operates a network of medical clinics—known as E Health Points (EHPs)—and clean water access points known as Waterpoints. EHPs provide families in Indian villages with basic health services—delivered via telemedicine. Although most Waterpoints are attached to EHPs, some are freestanding stations located away from EHPs in places where they are more accessible to users. The commercial sale of clean water through Waterpoints generates a steady revenue stream that helps subsidize the health services delivered in the clinics. Unfortunately, Waterpoints are currently operated manually by local operators—who may not always be attentive or honest while managing these stations. The student team from Santa Clara University is helping address this problem by designing and implementing a telemetry solution that can totally automate water distribution at Waterpoints—enabling Healthpoint Services, in the process, to rapidly scale up the number of EHPs as well as Waterpoint units across rural India.²⁸

Radha Basu, who heads the Frugal Innovation Labs at Santa Clara University, points out that these affordable solutions developed by her students can be deployed not only in emerging markets but also in developed nations like the United States that are increasingly confronted with the problems of scarcity. “For most Western firms, upwards of 50 percent of growth in the next decade will come from emerging markets. Yet none of the [more traditional] technologies developed here in Silicon Valley are appropriate to the needs of emerging market consumers,” notes Basu. “Western firms need to acquire new core competencies—that we are teaching here—to not only design high-quality and low-cost products but also develop appropriate business models and partnership strategies to make and distribute these frugal products to the masses in emerging markets. By developing these new competencies, Western firms can not only be successful in emerging markets, but even in developed economies like the United States, which are confronted with scarcity due to the deepening economic recession.”²⁹

University of Cambridge's Inclusive Design Program

In the UK, the Engineering Design Centre at the University of Cambridge's Department of Engineering is going one step further than its counterparts across the Atlantic. Rather than merely training undergraduates to design products that are accessible to and usable by marginalized Western consumers (such as the elderly), the Centre, in partnership with the faculty of education at Cambridge, has piloted its programs for even eleven- to fourteen-year-old students in a number of schools.

Ian Hosking, a senior research associate at the Centre, explains:

Called Designing Our Tomorrow (DOT), this innovative program has developed resources for teachers to teach an inclusive approach to design. This includes using elements from the Inclusive Design Toolkit (www.inclusivedesigntoolkit.com) that undergraduates in universities—as well as designers in companies—can use to develop products and services that address the needs of marginal consumers in an aging population. DOT therefore prepares school children not only for a university education but also for when they enter the workforce.

Moreover, DOT doesn't stop at education in the classroom. The output from one of the pilot schools was of such a high standard that Hosking's team arranged for the students to present their work—the design of cutlery solutions for the elderly—to a major UK retailer. Hosking says: “When I saw what the kids were doing, I was blown away. Their understanding of the issues related to aging was quite impressive. I wanted them to present their work to this retailer, not just because it would be a good experience for them but also because their ideas had genuine commercial potential for the retailer as well. This is something that we want to extend in the future to enhance the relevance of what they are being taught.”³¹

The potential of DOT is spreading, with interest from other countries, and the team is currently piloting the resources in one of these countries that is considering a national rollout.

Design for America

Design for America (DFA) is a network of student-led studios—spanning U.S. universities like Columbia, Stanford, Northwestern, and the University of Oregon at Eugene—that is using interdisciplinary design to revitalize U.S. cities. DFA's goal is to form a “new generation of ‘creative activists’ equipped with the mindset and skills to create social impact in local communities across the United States.”³² Fifty DFA studios are expected to pop up across the United States in the next five years to address big challenges in education, health care, and the environment.

Yuri Malina, the twenty-one-year-old cofounder of DFA, told us:

DFA members work on “super-local” projects—meaning that all projects undertaken are located in neighborhoods accessible within the radius of a fifteen-minute bike ride from their studio. For instance, in his first project, Malina worked with a local hospital in Chicago to design a portable “roll-on” hand-sanitizer for busy physicians and nurses so they can clean their hands on the go. This is a highly practical innovation, given that, according to the Centers for Disease Control and Prevention, approximately two million people in the United States get a hospital-acquired infection (HAI) each year. Of those, roughly a hundred thousand die prematurely from this infection.³⁴

Many of the engineers and designers graduating from the academic programs just described are likely to become the social entrepreneurs of tomorrow. These graduates are likely to use their frugal engineering skills to address the basic needs of underserved communities—by fixing unreliable electricity and transportation networks, making health care delivery more inclusive, and setting up sustainable water and sanitation systems. But a growing number of these graduates are also likely to join Fortune 500 companies and help ignite the jugaad spirit in these organizations as they seek to enable bottom-up innovation to address needs in global markets, the increasing scarcity of resources in the West, and growing global complexity more generally. Either way, these next-generation jugaad innovators will not operate in isolation. Given their great fondness for and deftness with social networking media, these innovators are sure to link up with like-minded innovators elsewhere, including in the emerging world—thus accelerating the rise of a global community of jugaad innovators.

The Rise of a Global Community of Jugaad Innovators

As American innovators connect with jugaad innovators in other parts of the world, especially in emerging markets, this process is helping to cross-pollinate creative ideas across regions. In time, this global community of jugaad innovators could combine, say, American and Indian ingenuity to frugally and sustainably address the major challenges facing humanity. In this section we highlight just a few of the many organizations and initiatives now at work in creating such a globally integrated network of jugaad innovators.

Ashoka and Skoll Foundation

Both of these non-profit organizations actively support thousands of jugaad entrepreneurs worldwide by giving them funding and training to address major socioeconomic challenges. Having spent millions developing the capabilities of these individual entrepreneurs, Ashoka and Skoll Foundation are now keen to promote collaboration among these entrepreneurs by integrating them into virtual communities. To that effect, these organizations have actively invested in social networking platforms—such as Ashoka's AshokaHub and Skoll Foundation's Social Edge—to cross-fertilize ideas and best practices among jugaad entrepreneurs across five continents.

Endeavor

This non-profit organization has developed an unrivalled global network of seasoned business leaders who provide mentorship and strategic advice to high-impact jugaad entrepreneurs around the world—especially in emerging economies. Linda Rottenberg founded Endeavor fourteen years ago, after an Argentinian taxi cab driver with a Ph.D. in physics asked her: “How can I possibly start my own company when I don't even have a garage?”³⁵

The Stanford-India Biodesign Program

This initiative brings together physicians, engineers, and designers from the United States and India to cocreate affordable, user-friendly medical devices that can be deployed not only in India, where hundreds of millions of citizens lack access to basic health care, but also in the United States, where fifty million Americans lack medical insurance. Recently, a team of physicians, engineers, and designers at Stanford collaborated with their counterparts at the Indian Institute of Technology and the All India Institute of Medical Sciences in New Delhi to conceptualize and develop a low-cost bone drill—a device that, in less a minute, delivers life-saving fluids directly into the bone marrow of victims of accidents whose veins have collapsed. The device costs a mere $20 compared to $300 for the equivalent devices available in the United States.³⁶

New York City's Next Idea Innovation Competition

Actively promoted by New York City's Mayor Michael Bloomberg, Next Idea is an annual competition that invites teams of students from leading business and engineering schools in Europe, Asia, and Latin America to develop business plans for bold jugaad projects that will be executed in New York City and bring major socioeconomic benefits to the city. The NYC Next Idea 2009–2010 edition was won by an entrepreneurial team from the Indian Institute of Technology, Madras (IIT-M), that has devised a new system to allow utility companies and energy producers to store and distribute energy safely and efficiently through remote sites across New York's five boroughs—thus helping avoid a repeat of the 2003 blackout that crippled the city.

The New York City Next Idea competition, as well as the other initiatives just mentioned—Ashoka, Skoll, Endeavor, Stanford-India Biodesign—all aim to connect jugaad innovators in the United States with their counterparts in other countries, cross-fertilizing promising ideas across geographical boundaries to address common socioeconomic issues. One person who is highly enthusiastic about this effort is Alec Ross, senior advisor for innovation to Secretary of State Hillary Clinton. A former entrepreneur, Ross is Secretary Clinton's “tech guru.” With more than 370,000 followers on Twitter, Ross is leading the U.S. State Department's efforts to find practical technical solutions for some of the globe's most vexing problems in health care, poverty, human rights, and ethnic conflict.

Speaking to us, Ross said: “Everyone is talking about the shift of power from West to East. But the real shift of power happening now is from big institutions to small institutions. Hierarchical power structures and top-down innovation models are being replaced by networked power structures and bottom-up innovation approaches. To thrive in the new multipolar world, America must relinquish its insular view of innovation and start brokering and facilitating global networks of grassroots innovators who can cocreate solutions to global problems we all share.”³⁷

How Companies Can Profit from the Groundswell Jugaad Movement

This emerging grassroots jugaad ecosystem—made up of activist citizens, socially minded entrepreneurs, forward-thinking governments, universities, and innovation-funding bodies—can help corporations accelerate their own adoption of jugaad. Here are some ways companies can contribute to the groundswell jugaad movement—and profit from it.

Support Grassroots Jugaad Innovators to Revitalize Local Economies

Western CEOs who complain about the anemic economic growth in North America and Europe don't realize that they have the power to spur demand for their goods and services by supporting grassroots innovators who are striving to revitalize local economies. To do so, Western companies should partner with government bodies like the White House's SICP and non-profit organizations to harness the creative power of grassroots jugaad innovators in catalyzing community development. For instance, Charles Schwab Bank has partnered with the Center for Financial Services Innovation (CFSI) to launch the Bay Area Financial Capability Innovators Development Lab.³⁸ This initiative offers peer-learning and review opportunities to grassroots jugaad entrepreneurs in the Bay Area who are using innovative approaches to make financial services available to the sixty million unbanked and underbanked Americans. Similarly, Microsoft and Google are funding Code for America—a nonpolitical organization that offers fellowships to web professionals to develop applications that can help financially stretched city governments in the United States become more open and efficient in responding to citizens' needs. Code for America will replicate successful web applications across multiple U.S. cities as a way to improve governance and socioeconomic development nationwide.

Use Social Power to Innovate Faster, Better, and Cheaper

The groundswell jugaad movement is facilitated by social media tools such as Facebook and Twitter. These tools enable activist citizens—especially Millennials—to instantly organize into large online communities that bring about major change at warp speed (such as toppling governments in the Middle East or exposing corporations that indulge in inappropriate business practices). Most Western companies feel threatened by the social power of these virtual communities of jugaad innovators. But as David Kirkpatrick, author of The Facebook Effect, puts it: “Social power can help keep your company vital. Newly armed customer and employee activists can become the source of creativity, innovation, and new ideas to take your company forward.”³⁹

Ford is one company that is harnessing social power to great benefit by integrating social media into every aspect of how it designs, builds, and markets its products. “Digital suffrage is upon us,” observes Venkatash Prasad, who leads Ford's product social networking efforts. “Everyone has a right to a byte of the action, and we have embraced this might of the byte within Ford, through the use of internal and external social networks.”⁴⁰ For instance, ahead of the launch of its Fiesta subcompact car in 2010, Ford invited one hundred active bloggers—many of whom were Millennials—to test-drive the car and regularly post videos and unfiltered impressions on YouTube, Twitter, and their individual blogs. Ford's jugaad innovation in marketing—dubbed “Fiesta Movement”—paid off: it generated seven million YouTube views and forty million Tweets (mostly favorable). The grassroots media campaign generated great awareness among young car buyers for Fiesta; it also helped Ford shed its stodgy image and reposition itself as a “cool” automaker. The Fiesta has since become of one of Ford's best-selling cars ever: within ten months of its launch, the Fiesta had conquered one-fifth of the subcompact car segment in the United States. Scott Monty, Ford's head of social media, explains, “Ford doesn't have a social media strategy—it's a business strategy supported by social media.”⁴¹

Recruit Jugaad Innovators from American and European Campuses

Western companies seeking to strengthen their jugaad innovation skills—such as doing more with less and including the margin—can find those valuable skills in the next generation of American and European graduates from programs such as Stanford's Entrepreneurial Design for Extreme Affordability and the University of Cambridge's Inclusive Design program. Western companies should hire these flexible-minded students to create frugal and sustainable solutions aimed at serving the growing number of thrifty and eco-conscious Western consumers. For instance, large HMOs could engage students in the Design for America network to devise innovative solutions for making health care safer and more affordable to underserved communities in inner cities in the United States.

Harness Ingenuity Across Borders with Global Innovation Networks

The global economy is growing ever more connected, thanks to social media tools like Facebook—enabling talented jugaad innovators in both Western and emerging markets to cocreate breakthrough solutions that no single region can develop on its own. The Stanford-India Biodesign Program described earlier exemplifies such a synergistic and polycentric innovation model.⁴² Companies must integrate themselves into these global networks of jugaad innovators to take advantage of the unique skills, ideas, and opportunities available across multiple regions. For example, Xerox and Procter & Gamble each orchestrate global innovation networks that integrate the creativity of jugaad entrepreneurs in Asia with the talent of their R&D teams in Europe and the United States to cocreate high-quality and affordable products and services for global markets.⁴³

By integrating themselves into the grassroots innovation ecosystem in their societies and by partnering with the various stakeholders in this ecosystem, Western companies can accelerate the adoption of jugaad in their own organizations. By joining such ecosystems, Western companies will add more momentum to—and greatly benefit from—the groundswell jugaad movement under way in the West.

A Prosperous World of Jugaad

The West is increasingly confronted with scarcity and unpredictability. As cash-strapped governments become increasingly unable to deal with these challenges on their own, ordinary citizens, forward-thinking entrepreneurs, venture capitalists, and non-profit organizations are stepping into the breach. These grassroots jugaad innovators are using their flexible thinking to improvise frugal solutions to vexing socioeconomic problems in health care, education, financial services, and community development. However, as described in this chapter, governments are not standing idly by. From the United States to the UK and France, central and local governments are busy initiating programs to support and accelerate the grassroots jugaad movement. Universities too are joining in these efforts. Keenly aware of the problems of scarcity and volatility afflicting Western economies, several higher education institutions in the United States and Europe are training a new breed of engineers and managers to design next-generation products and services that can deal with scarcity in a frugal and sustainable manner.

All this might lead one to conclude that jugaad is finally coming to the West from elsewhere. But a longer view suggests that jugaad never actually left the West. If anything, the grassroots innovation movement we describe is emblematic of the West's return to its jugaad roots. America was, is, and indeed may always be the land of jugaad innovators—resilient individuals who employ flexible thinking to develop ingenious solutions with limited resources. What may have changed, if anything, is that in an increasingly interconnected world, Western jugaad innovators now no longer work on their own. Rather, through rich partnerships and by using social media platforms such as Facebook and Twitter, they are connecting with jugaad innovators elsewhere to solve our common problems.

This is all good news for Western corporations; now they can and should speed up their internal adoption of jugaad by connecting with the grassroots innovation movement unfolding across Western nations. By integrating their own organizations into local as well as global networks of jugaad innovators, Western companies can become resilient organizations that think frugally, act flexibly, and generate breakthrough growth. The sooner they do so, the better—not only for them but also for a world in a battle against scarcity of time and resources. For the challenges this brave new world poses, jugaad innovation offers a powerful solution.