Frugal engineering or frugal innovation, a term first coined by Carlos Ghosn can be a manner in which firms are able to gain competitive advantage, especially when it comes to operating in developing markets. Large multinationals such as General Electric with their portable EKG machine, Procter & Gamble with their water purifying sachets and Tata’s Nano have used this as a strategy in many of their developing markets and have achieved success in conquering these complex market spaces.
An example of the above mentioned can be seen in the car manufacturer, Tata who used this way of thinking when developing their Tata Nano for the lower income Indian market. Frugal engineering involves stripping a product of its non-essential items, and selling it in a developing market. Tata did run into some trouble in doing this, as the Nano at first did not meet the demands of the lower income consumer, and they continued to travel on their bicycles and motorbikes. The car was later marketed as the cheapest car on the market, “the car for the people,” after which it achieved massive success in its home country.
If companies employed this thinking in the manufacturing of all their products, it may lead to an increased level of sustainability as well as a significant decrease in operational costs. Frugal engineering will pave the way for sustainable development by leading to innovative yet sustainable business.