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Facing unimaginable constraints and adversity, many businesses have uncovered the value of resource scarcity as a source of emancipation, not deprivation. An enthusiasm for extracting the highest-possible value from existing assets – anything from collective knowledge to technology investments – liberates the entire workforce to deliver exceptional solutions. And more often, their efforts positively impact not only their employees and customers, but also the society at large.

This form of innovation is called “frugal innovation.” People usually do not associate “frugal” with “innovation.” I know I didn’t, at first, until renowned strategist and author Navi Radjou explained the topic in these terms during the Webcast, “Frugal Innovation For SAP Customers: Improve the Return on Your SAP Investment - A Webinar Event”:

Frugal innovation is diametrically opposed to the way companies typically innovate. It is about creating more economic and social value using fewer resources – not just making do, but making things better.

While this mindset has been around for over a decade, it’s resurfacing in more boardrooms. Events caused by the pandemic – from dramatic shifts in demand to an uncertain economy that may include a two-year recession – are creating an urgency to adapt and pivot to a “new normal” with smart, fast, and cost-effective solutions.

Breaking down the Pharaoh complex

In these times of disruptive uncertainty, many companies struggle with a Pharaoh complex. They offered sophisticated products and services that were in high demand before the pandemic. But as the market shifted to other “basic” categories, these high-end offerings were rendered irrelevant to the needs of frugal customers.

While many executives expect that the market will return to pre-pandemic levels within a few months, the reality may be much different, as the International Monetary Fund warns that businesses will likely wait until 2022.

“As the world enters into a prolonged recession, companies need to overcome this Pharaoh complex and have the humility to join cost-conscious customers where they are,” advised Radjou. “If the customer cannot come to the product or service, the product or service has to come to the customer.”

We are already seeing this dynamic play out across a variety of industries right now. On-site events such as vendor conferences, conferences, workshops, and even consulting services are now conducted with remote collaboration technology such as Zoom and Microsoft Teams. The same is happening in healthcare as more patients are consulted each day than ever before through telemedicine, as well as in education where students interact with teachers and learn lessons in their living rooms. There’s even a healthy rivalry among scientists worldwide as they develop more affordable and accessible tests for COVID-19, ranging from a $6 paper strip to a $1 kit.

Realizing how these service models bring new opportunities for enhanced engagement, reduced costs, and added value, companies will understandably extend those advantages by scaling products and services. “Moving forward, every organization is going to have less. But they need to be careful not to consider their employees as lesser beings,” shared Radjou. “When a limitation is placed on resources, businesses remove the limitation on creativity.”

Simplifying the urgency to survive with ingenuity

With a strategy to survive adversity and find opportunity in change, businesses are navigating through unprecedented uncertainty. There's no record of similar events to draw lessons from nor deep-pocketed accounts to fund large-scale innovation projects.

When facing such a lack of resources, whether it's capital, people, or equipment, people inevitably have two choices: complain and give up or rise above the scarcity with the zeal to use what they have. They could mean using inner resources like ingenuity, empathy, and resilience; intellectual capital and knowledge-based assets; and social capabilities such as social networks. Or they could be existing technologies.

"You might say, wait a second, I don't have this one thing. But maybe I have other resources that I haven't identified, let alone, leveraged yet," concluded Radjou. "Whatever they may be, your resources can inspire a reason to celebrate the business's unique value while leveraging what you already have.”

For SAP customers, that resource could be already be in their existing digital landscape. Keep an eye out for future blogs in which I will dive deeper into the concept of frugal innovation and SAP from a number of different perspectives. In my next blog, I will explore how you need to think as User Experience as an opportunity for frugal innovation, you can deliver frugal solutions that can make a world of difference to your enterprise.

In the meantime, you can get more insights from Navi Radjou by listening to the on-demand Webcast, “Frugal Innovation For SAP Customers: Improve the Return on Your SAP Investment - A Webinar Event” sponsored by SAP partner ConvergentIS.

Navi Radjou

A New York-based innovation and leadership thinker who advises senior executives worldwide on breakthrough growth strategies,  Navi Radjou won the prestigious Thinkers50 Innovation Award in 2013 – given to a management thinker who is reshaping the way we think about and practice innovation. He delivered a talk at TEDGlobal 2014 on frugal innovation with over 1.8 million views.

Navi co-authored Frugal Innovation: How To Do Better With Less, published by The Economist in 2015, as well as the global bestseller Jugaad Innovation with over 250,000 copies sold worldwide. In September 2020, he will release a new book on how individuals and organizations can reinvent themselves purposefully to thrive in the post-COVID-19 world. He is a sought-after keynote speaker and widely quoted in international media.

Paul Kurchina

As an SAP ecosystem accelerator and an evangelist at Americas' SAP Users' Group (ASUG), Paul Kurchina has spent over 25 years improving business operations with SAP and other industry technologies as a customer, analyst, and consultant. He is a connector, analyst, and community catalyst dedicated to SAP and the SAP ecosystem.