Placeholder Image

Subtitles section Play video

  • When you grow up in a developing country like India, as I did,

  • you instantly learn to get more value from limited resources

  • and find creative ways to reuse what you already have.

  • Take Mansukh Prajapati, a potter in India.

  • He has created a fridge made entirely of clay

  • that consumes no electricity.

  • He can keep fruits and vegetables fresh for many days.

  • That's a cool invention, literally.

  • In Africa, if you run out of your cell phone battery, don't panic.

  • You will find some resourceful entrepreneurs

  • who can recharge your cell phone using bicycles.

  • And since we are in South America,

  • let's go to Lima in Peru,

  • a region with high humidity

  • that receives only one inch of rainfall each year.

  • An engineering college in Lima designed a giant advertising billboard

  • that absorbs air humidity and converts it into purified water,

  • generating over 90 liters of water every day.

  • The Peruvians are amazing.

  • They can literally create water out of thin air.

  • For the past seven years,

  • I have met and studied hundreds of entrepreneurs

  • in India, China, Africa and South America, and they keep amazing me.

  • Many of them did not go to school.

  • They don't invent stuff in big R&D labs.

  • The street is the lab.

  • Why do they do that?

  • Because they don't have the kind of basic resources we take for granted,

  • like capital and energy,

  • and basic services like healthcare and education

  • are also scarce in those regions.

  • When external resources are scarce, you have to go within yourself

  • to tap the most abundant resource, human ingenuity,

  • and use that ingenuity to find clever ways to solve problems with limited resources.

  • In India, we call it Jugaad.

  • Jugaad is a Hindi word

  • that means an improvised fix, a clever solution born in adversity.

  • Jugaad solutions are not sophisticated or perfect,

  • but they create more value at lower cost.

  • For me, the entrepreneurs who will create Jugaad solutions

  • are like alchemists.

  • They can magically transform adversity into opportunity,

  • and turn something of less value into something of high value.

  • In other words, they mastered the art of doing more with less,

  • which is the essence of frugal innovation.

  • Frugal innovation is the ability to create more economic and social value

  • using fewer resources.

  • Frugal innovation is not about making do; it's about making things better.

  • Now I want to show you how, across emerging markets,

  • entrepreneurs and companies are adopting frugal innovation on a larger scale

  • to cost-effectively deliver healthcare and energy to billions of people

  • who may have little income but very high aspirations.

  • Let's first go to China,

  • where the country's largest I.T. service provider, Neusoft,

  • has developed a telemedicine solution

  • to help doctors in cities remotely treat old and poor patients

  • in Chinese villages.

  • This solution is based on simple-to-use medical devices

  • that less qualified health workers like nurses can use in rural clinics.

  • China desperately needs these frugal medical solutions

  • because by 2050 it will be home to over half a billion senior citizens.

  • Now let's go to Kenya,

  • a country where half the population uses M-Pesa, a mobile payment solution.

  • This is a great solution for the African continent

  • because 80 percent of Africans don't have a bank account,

  • but what is exciting is that M-Pesa is now becoming the source

  • of other disruptive business models in sectors like energy.

  • Take M-KOPA, the home solar solution that comes literally in a box

  • that has a solar rooftop panel, three LED lights,

  • a solar radio, and a cell phone charger.

  • The whole kit, though, costs 200 dollars, which is too expensive for most Kenyans,

  • and this is where mobile telephony can make the solution more affordable.

  • Today, you can buy this kit by making an initial deposit of just 35 dollars,

  • and then pay off the rest by making a daily micro-payment of 45 cents

  • using your mobile phone.

  • Once you've made 365 micro-payments, the system is unlocked,

  • and you own the product and you start receiving clean, free electricity.

  • This is an amazing solution for Kenya,

  • where 70 percent of people live off the grid.

  • This shows that with frugal innovation

  • what matters is that you take what is most abundant, mobile connectivity,

  • to deal with what is scarce, which is energy.

  • With frugal innovation, the global South is actually catching up

  • and in some cases even leap-frogging the North.

  • Instead of building expensive hospitals, China is using telemedicine

  • to cost-effectively treat millions of patients,

  • and Africa, instead of building banks and electricity grids,

  • is going straight to mobile payments and distributed clean energy.

  • Frugal innovation is diametrically opposed to the way we innovate in the North.

  • I live in Silicon Valley,

  • where we keep chasing the next big technology thing.

  • Think of the iPhone 5, 6, then 7, 8.

  • Companies in the West spend billions of dollars investing in R&D,

  • and use tons of natural resources to create ever more complex products,

  • to differentiate their brands from competition,

  • and they charge customers more money for new features.

  • So the conventional business model in the West is more for more.

  • But sadly, this more for more model is running out of gas, for three reasons:

  • First, a big portion of customers in the West

  • because of the diminishing purchasing power,

  • can no longer afford these expensive products.

  • Second, we are running out of natural water and oil.

  • In California, where I live, water scarcity is becoming a big problem.

  • And third, most importantly,

  • because of the growing income disparity

  • between the rich and the middle class in the West,

  • there is a big disconnect between existing products and services

  • and basic needs of customers.

  • Do you know that today,

  • there are over 70 million Americans today who are underbanked,

  • because existing banking services

  • are not designed to address their basic needs.

  • The prolonged economic crisis in the West is making people think

  • that they are about to lose the high standard of living

  • and face deprivation.

  • I believe that the only way we can sustain growth and prosperity in the West

  • is if we learn to do more with less.

  • The good news is, that's starting to happen.

  • Several Western companies are now adopting frugal innovation

  • to create affordable products for Western consumers.

  • Let me give you two examples.

  • When I first saw this building,

  • I told myself it's some kind of postmodern house.

  • Actually, it's a small manufacturing plant set up by Grameen Danone,

  • a joint venture between Grameen Bank of Muhammad Yunus

  • and the food multinational Danone

  • to make high-quality yogurt in Bangladesh.

  • This factory is 10 percent the size of existing Danone factories

  • and cost much less to build.

  • I guess you can call it a low-fat factory.

  • Now this factory, unlike Western factories that are highly automated,

  • relies a lot on manual processes in order to generate jobs for local communities.

  • Danone was so inspired by this model

  • that combines economic efficiency and social sustainability,

  • they are planning to roll it out in other parts of the world as well.

  • Now, when you see this example,

  • you might be thinking, "Well, frugal innovation is low tech."

  • Actually, no.

  • Frugal innovation is also about making high tech

  • more affordable and more accessible to more people.

  • Let me give you an example.

  • In China, the R&D engineers of Siemens Healthcare

  • have designed a C.T. scanner that is easy enough to be used

  • by less qualified health workers, like nurses and technicians.

  • This device can scan more patients on a daily basis,

  • and yet consumes less energy,

  • which is great for hospitals, but it's also great for patients

  • because it reduces the cost of treatment by 30 percent

  • and radiation dosage by up to 60 percent.

  • This solution was initially designed for the Chinese market,

  • but now it's selling like hotcakes in the U.S. and Europe,

  • where hospitals are pressured to deliver quality care at lower cost.

  • But the frugal innovation revolution

  • in the West is actually led by creative entrepreneurs

  • who are coming up with amazing solutions

  • to address basic needs in the U.S. and Europe.

  • Let me quickly give you three examples of startups

  • that personally inspire me.

  • The first one happens to be launched by my neighbor in Silicon Valley.

  • It's called gThrive.

  • They make these wireless sensors designed like plastic rulers

  • that farmers can stick in different parts of the field

  • and start collecting detailed information like soil conditions.

  • This dynamic data allows farmers to optimize use of water energy

  • while improving quality of the products and the yields,

  • which is a great solution for California, which faces major water shortage.

  • It pays for itself within one year.

  • Second example is Be-Bound, also in Silicon Valley,

  • that enables you to connect to the Internet

  • even in no-bandwidth areas where there's no wi-fi or 3G or 4G.

  • How do they do that?

  • They simply use SMS, a basic technology, but that happens to be the most reliable

  • and most widely available around the world.

  • Three billion people today with cell phones can't access the Internet.

  • This solution can connect them to the Internet in a frugal way.

  • And in France, there is a startup calle Compte Nickel,

  • which is revolutionizing the banking sector.

  • It allows thousands of people to walk into a Mom and Pop store

  • and in just five minutes activate the service that gives them two products:

  • an international bank account number and an international debit card.

  • They charge a flat annual maintenance fee of just 20 Euros.

  • That means you can do all banking transactions --

  • send and receive money, pay with your debit card --

  • all with no additional charge.

  • This is what I call low-cost banking without the bank.

  • Amazingly, 75 percent of the customers using this service

  • are the middle-class French who can't afford high banking fees.

  • Now, I talked about frugal innovation, initially pioneered in the South,

  • now being adopted in the North.

  • Ultimately, we would like to see

  • developed countries and developing countries

  • come together and co-create frugal solutions

  • that benefit the entire humanity.

  • The exciting news is that's starting to happen.

  • Let's go to Nairobi to find that out.

  • Nairobi has horrendous traffic jams.

  • When I first saw them, I thought, "Holy cow."

  • Literally, because you have to dodge cows as well when you drive in Nairobi.

  • To ease the situation,

  • the engineers at the IBM lab in Kenya are piloting a solution called Megaffic,

  • which initially was designed by the Japanese engineers.

  • Unlike in the West, Megaffic doesn't rely on roadside sensors,

  • which are very expensive to install in Nairobi.

  • Instead they process images, traffic data,

  • collected from a small number of low-resolution webcams in Nairobi streets,

  • and then they use analytic software to predict congestion points,

  • and they can SMS drivers alternate routes to take.

  • Granted, Megaffic is not as sexy as self-driving cars,

  • but it promises to take Nairobi drivers from point A to point B

  • at least 20 percent faster.

  • And earlier this year, UCLA Health launched its Global Lab for Innovation,

  • which seeks to identify frugal healthcare solutions anywhere in the world

  • that will be at least 20 percent cheaper than existing solutions in the U.S.

  • and yet more effective.

  • It also tries to bring together innovators from North and South

  • to cocreate affordable healthcare solutions for all of humanity.

  • I gave tons of examples of frugal innovators from around the world,

  • but the question is, how do you go about adopting frugal innovation?

  • Well, I gleaned out three principles from frugal innovators around the world

  • that I want to share with you

  • that you can apply in your own organization

  • to do more with less.

  • The first principle is: Keep it simple.

  • Don't create solutions to impress customers.

  • Make them easy enough to use and widely accessible,

  • like the C.T. scanner we saw in China.

  • Second principle: Do not reinvent the wheel.

  • Try to leverage existing resources and assets that are widely available,

  • like using mobile telephony to offer clean energy

  • or Mom and Pop stores to offer banking services.

  • Third principle is: Think and act horizontally.

  • Companies tend to scale up vertically

  • by centralizing operations in big factories and warehouses,

  • but if you want to be agile and deal with immense customer diversity,

  • you need to scale out horizontally using a distributed supply chain

  • with smaller manufacturing and distribution units,

  • like Grameen Bank has shown.

  • The South pioneered frugal innovation out of sheer necessity.

  • The North is now learning to do more and better with less

  • as it faces resource constraints.

  • As an Indian-born French national who lives in the United States,