Is Your Business Making Something That People Want? (Part 1 of 2)

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Reposting from the Jykes International Blog http://www.jykes.fi/fi/kansainvaelistymaeaen-blogi/2213-is-your-business-making-something-that-people-want

Paul Graham, co-founder of the Y-Combinator seed accelerator, notes on his website about the phrase that became their motto: Make something people want.

I would bet that almost every business out there says that this is what they are doing. Now I would ask them: really? Sometimes irrespective of how good a product is, when the execution of their strategy falters then maybe what they are selling is not purchased. But also the business is not able to make sales because they have priced their product or service way above the purchasing power of their customer. This is the case especially when Nordic companies are going to the developing countries and trying to sell their products and services.

So, regarding the statement “Make something people want” I would say that it means the product or service should have three characteristics to make them a winner along with good marketing:

Affordability
Functionality
Reliability

What Is Frugal Innovation?

Carlos Ghosn, Chairman and CEO of the Renault-Nissan Alliance, coined the term “frugal engineering” in 2006. He was impressed by Indian engineers’ ability to innovate cost-effectively and quickly under severe resource constraints.
Frugal Innovation is a concept that urges businesses to respond to limitations in resources; whether financial, material or institutional, and turn these constraints into innovative ideas and practical solutions.

For example: A product or service that came out as a result of Frugal Innovation principles should be priced at a 50-70% lower cost than the current alternative and should have at least 70-80% of the functionality with up to 90-100% reliability.

Why Do We Need Frugal Innovation?

The UK Innovation organisation, NESTA, gives a great summary of why we need Frugal Innovation in Europe:

  • Lackluster growth and deleveraging (simultaneous reduction of debt levels in multiple sectors, including private sectors and the government sector) in developed economies will increase demands for frugal products and services and frugal innovation processes.
  • Environmental constraints around climate, energy, water and other resources will increase demands for more frugal models of production and consumption.
  • New technology platforms are drastically reducing the cost of some forms of innovation, which is creating huge new opportunities for frugal innovators.
  • Caring for rapidly ageing societies will require completely new approaches to health and social care, including the radical rethinking of business models and value chains that is apparent in some examples of successful frugal innovation.
  • Today’s fastest growing markets are in developing and emerging economies where demand for frugal products and services is high.

    • The Time to Frugal Innovate is not now, but yesterday.

    What I mean by this will be continued in the next post in Part 2