"More and more from less and less." It could have been a statement from my grandmother Ingrid, who grew up in Depression-era Sweden, and was always concerned not to waste anything. Ingrid always made sure that there was enough, but not more. She lived by the Swedish motto of 'lagom', which is old Norse for "just right", and which originated in the context of food and drink. "Lag-om" literally means "team-around" and anecdotally refers to the process of sharing beer around a table in the days of the Vikings, when you had to ensure that the horn from which the drink was consumed wouldn't run out before it had made its way around the whole table.
Thus, in the spirit of '"lagom", Ingrid was known for making multiple dishes from every conceivable part of the animal, and ensuring there would be just enough for everybody. She is lovingly remembered for preparing the parts we in the Western world today would chuck away as offal, and for this she had a special word - "delicacy". A great reframe and not so far removed from the present discourse on "more and more from less and less". In fact, just like the concept of Jugaad in India which this blog will investigate, the concept of "lagom" has become a part of Swedish culture, and something that generationally gets passed on in Swedish behaviours. My grandmother was frugal, but definitely not cheap, and today, management thinkers would think of her as representing Jugaad behaviours - the ability to get "more and more out of less and less", one of the central reasons why Western corporations are looking to India for innovation. Jugaad connotes frugal innovation and is a key contribution of India to the management obsession with innovation. Hence, I am reminded of my grandmother Ingrid's frugal "lagom" attitudes as I am strolling between the high tech buildings at the Infosys campus in Bangalore, India.
At IIMB, I learnt that Jugaad is about making money in the tiny cracks of business. In some ways, the concept reminds me of the proverbial 'vibe' described in the Australian classic, The Castle, where a conveyancer is describing the spirit of the law contained within the Australian constitution, without being able to point to a specific paragraph. There is a certain 'vibeness' to Jugaad, depending on where and whom you look to for a precise definition. Here is a range of perspectives on Jugaad which hopefully paints a picture of its tight-loose spirit.
Given the size of this 1.2bn people economy, high volume, low margin makes sense, yet while rationally this proposition seems straight forward, the practical implications for Western companies are not always so.
The term - Jugaad - is colloquially used in rural India for a traditional vehicle that is created by carpenters by fitting a diesel engine onto a cart. Culturally, Jugaad is used to describe a situation when someone has used a creative idea to get through business, legal, or logistical issues. Originally, Jugaad is a Hindi word that loosely translates as "the gutsy art of overcoming harsh constraints by improvising an effective solution using limited resources". Such contstraints may have to do with lack of capitalisation, low access to markets, problematic supply chains, and the cost of resources. According to Nick Wailes, the spirit of Jugaad can be summarised as "more and more from less and less", and it is with reference to this definitional smorgasbord above, that I am going to investigate the concept, and how it has impacted on my business thinking.
From my perspective there are two primary reasons. The first one is that understanding this concept is critical to entering a lucrative growth market. The second is that the process is seen as one that is essential to the process of innovation.
The Fast Moving Consumer Goods and Beauty industries are good cases in point on the impact of Jugaad for a Western brand that is seeking to go to market in India. Without understanding the constraints and usage patterns of fast moving consumer goods like shampoos and conditioners of the Indian consumer, a brand might have gone to market thinking it could sell its normal Western quantities (300mls) packaged in expensive, high-end plastic bottles.
In fact, many brands went into the Indian market thinking they could do exactly that, only to find that Indians were averse to the high investment / high risk decision to use a Western brand for their hygiene and beauty needs. Lured by the demographic and economic indicators propagating a growing middle class of Indians with higher disposable incomes, fast moving consumer goods brands needed to anthropologically observe the constraints which faced the Indian consumer.
Local brands of shampoo and conditioners had been operating effectively in the market place for years, tuned into the essential consumer insight that Indians tended to pick up a few essential small ticket items, including shampoo and conditioner, from their local street vendors. The price point of a 25ml "trial pack" would be somewhere between 1-2 Rupees, and the small packs would be shared in the family in the spirit of "more and more from less and less" throughout the week. The "trial packs" would also ensure that the Indian consumer had access to a variety of brands, which undermines the Western brands' desire for brand loyalty. In the West, we think of trial packs as the items we discard during an overseas flight, but in India this is big business.
Only with this insight into consumer behaviour driven by constraints and lack of resources, could brands like Procter & Gamble, Schwarzkopf and Wella effectively enter the market.
While this view smacks of Western-centricity, in its view of emerging markets as downstream consumer markets that should want Western products by virtue of their development, it is having a real impact on innovation processes and product outcomes in the West. The most notable example, from the western management literature perspective of Jugaad is the production of Tata's US $ 1000 Nano car, which is held up as an example of what can happen when you design a work-around based on high volume / low margin opportunities. The story of the Nano is that Ratan Tata, the CEO of the company, decided that a car should be designed with the end-users' economic constraints in mind, and that it needed to be able to compete on price with the primary mode of transport - the moped / motorcycle.
While the car hasn't quite reached the price point of US $ 1000 - at US $ 2000 - it's not far away. This customer-centricity demanded new types of materials and processes from the entire supply chain, and a new type of partnership with suppliers. Interestingly, the innovations that occurred within the constraints of the US $ 1000 price-tag are now filtering back up the value chain. For example, one of the parts providers to the Nano, Bosch, are now using processes and materials they learnt about in the Nano project, in its supply to car manufacturers like Mercedes Benz. This is what is referred to as reverse innovation. Given the West's obsession with efficiencies and innovation, this type of innovation thinking may well prove productive in the way innovation might be cemented as a process in the future.
It begins with the end in mind, and doesn't impose a product on the consumer which the organisation wants the consumer to have, but rather begins with a mapping of the needs and constraints of the consumer in mind. It's also truly aspirational and bold in its vision within the context of the automotive industry, which you cannot blame for true paradigmatic shifts in innovations in the last few decades. Ratan Tata had conceived a game-changer, and it will be interesting to follow how this customer-centricity, not just in words, but in action, translates into disruptions across the entire industry. I see evidence of this type of thinking closer to home as well. Car-sharing networks are ecosystems which are also disrupting the entire industry, because they recognise that people may not even want to own a car, they just need access to a car to get them from point A to point B. It is a good example of a work-around in that it bypasses the socially engrained idea of ownership, and focusses instead on a particular customer segment's needs - convenient part-time access to transport. While there is no evidence that India is the home of car sharing, the rural, pastoral and community spirit of companies like GoGet and Zipcar, enabled by new technologies could fall under the banner of "more and more from less and less", given that for every car share car, 7.5 cars are removed from the roads.
While "lagom" isn't necessarily the same as Jugaad, the sense of frugality she displayed is part of a timeless wisdom which may not be geolocation specific, but part of a spirit - a vibe - that we ought to use resources to their maximum, that sometimes we can make do with "good enough" products, and that work-arounds can become powerful innovations that serve a need, and which just like offal, make their way up the value chain, and inspire innovations in other fields, and morph into new uses.
Food for thought - excuse the pun. Getting "more and more from less and less" shouldn't be seen as a greedie tag-line - instead it should be used aspirationally to reflect on which processes we can challenge, what vendor agreements we need to look at again, and to challenge our norms around comfort, luxury and premium branding. It may be that more people can be served more efficiently, if we took another look at Jugaad at work in India, and how this rural concept has become a force for good in the cultural seams of organisations and their processes. Jugaad challenges our ideas, our prejudices, and our own preconceived notions of how to make money, in what ways to serve our clients, and by its nature creates a cognitive dissonance, which may be extremely useful in teaching us as Western executives how to think outside the box, and how to realise new market opportunities with a greater level of empathy for the end-customer.