TEDGlobal 2014
Navi Radjou: Creative problem-solving in the face of extreme limits
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Navi Radjou has spent years studying "jugaad," also known as frugal innovation. Pioneered by entrepreneurs in emerging markets who figured out how to get spectacular value from limited resources, the practice has now caught on globally. Peppering his talk with a wealth of examples of human ingenuity at work, Radjou also shares three principles for how we can all do more with less.
Navi Radjou - Innovation strategist
Drawing inspiration from frugal innovators in emerging markets, Navi Radjou helps businesses with limited resources discover unexpected ways to succeed. Full bio
Drawing inspiration from frugal innovators in emerging markets, Navi Radjou helps businesses with limited resources discover unexpected ways to succeed. Full bio
Double-click the English transcript below to play the video.
00:12
When you grow up in a developing country
like India, as I did,
like India, as I did,
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you instantly learn to get more value
from limited resources
from limited resources
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and find creative ways to reuse
what you already have.
what you already have.
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Take Mansukh Prajapati,
a potter in India.
a potter in India.
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He has created a fridge
made entirely of clay
made entirely of clay
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that consumes no electricity.
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He can keep fruits and vegetables
fresh for many days.
fresh for many days.
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That's a cool invention, literally.
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In Africa, if you run out of
your cell phone battery, don't panic.
your cell phone battery, don't panic.
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You will find some
resourceful entrepreneurs
resourceful entrepreneurs
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who can recharge your
cell phone using bicycles.
cell phone using bicycles.
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And since we are in South America,
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let's go to Lima in Peru,
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a region with high humidity
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that receives only one inch
of rainfall each year.
of rainfall each year.
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An engineering college in Lima
designed a giant advertising billboard
designed a giant advertising billboard
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that absorbs air humidity
and converts it into purified water,
and converts it into purified water,
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generating over 90 liters
of water every day.
of water every day.
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The Peruvians are amazing.
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They can literally create
water out of thin air.
water out of thin air.
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For the past seven years,
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I have met and studied
hundreds of entrepreneurs
hundreds of entrepreneurs
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in India, China, Africa and South America,
and they keep amazing me.
and they keep amazing me.
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Many of them did not go to school.
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They don't invent stuff in big R&D labs.
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The street is the lab.
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Why do they do that?
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Because they don't have the kind
of basic resources we take for granted,
of basic resources we take for granted,
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like capital and energy,
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and basic services
like healthcare and education
like healthcare and education
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are also scarce in those regions.
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When external resources are scarce,
you have to go within yourself
you have to go within yourself
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to tap the most abundant
resource, human ingenuity,
resource, human ingenuity,
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and use that ingenuity to find clever ways
to solve problems with limited resources.
to solve problems with limited resources.
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In India, we call it Jugaad.
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Jugaad is a Hindi word
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that means an improvised fix,
a clever solution born in adversity.
a clever solution born in adversity.
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Jugaad solutions are not
sophisticated or perfect,
sophisticated or perfect,
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but they create more value at lower cost.
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For me, the entrepreneurs
who will create Jugaad solutions
who will create Jugaad solutions
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are like alchemists.
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They can magically transform
adversity into opportunity,
adversity into opportunity,
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and turn something of less value
into something of high value.
into something of high value.
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In other words, they mastered the art
of doing more with less,
of doing more with less,
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which is the essence of frugal innovation.
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Frugal innovation is the ability
to create more economic and social value
to create more economic and social value
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using fewer resources.
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Frugal innovation is not about making do;
it's about making things better.
it's about making things better.
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Now I want to show you how,
across emerging markets,
across emerging markets,
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entrepreneurs and companies are adopting
frugal innovation on a larger scale
frugal innovation on a larger scale
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to cost-effectively deliver healthcare
and energy to billions of people
and energy to billions of people
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who may have little income
but very high aspirations.
but very high aspirations.
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Let's first go to China,
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where the country's largest
I.T. service provider, Neusoft,
I.T. service provider, Neusoft,
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has developed a telemedicine solution
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to help doctors in cities
remotely treat old and poor patients
remotely treat old and poor patients
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in Chinese villages.
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This solution is based on
simple-to-use medical devices
simple-to-use medical devices
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that less qualified health workers
like nurses can use in rural clinics.
like nurses can use in rural clinics.
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China desperately needs
these frugal medical solutions
these frugal medical solutions
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because by 2050 it will be home
to over half a billion senior citizens.
to over half a billion senior citizens.
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Now let's go to Kenya,
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a country where half the population
uses M-Pesa, a mobile payment solution.
uses M-Pesa, a mobile payment solution.
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This is a great solution
for the African continent
for the African continent
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because 80 percent of Africans
don't have a bank account,
don't have a bank account,
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but what is exciting is that M-Pesa
is now becoming the source
is now becoming the source
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of other disruptive business models
in sectors like energy.
in sectors like energy.
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Take M-KOPA, the home solar solution
that comes literally in a box
that comes literally in a box
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that has a solar rooftop panel,
three LED lights,
three LED lights,
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a solar radio, and a cell phone charger.
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The whole kit, though, costs 200 dollars,
which is too expensive for most Kenyans,
which is too expensive for most Kenyans,
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and this is where mobile telephony
can make the solution more affordable.
can make the solution more affordable.
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Today, you can buy this kit by making
an initial deposit of just 35 dollars,
an initial deposit of just 35 dollars,
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and then pay off the rest by making
a daily micro-payment of 45 cents
a daily micro-payment of 45 cents
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using your mobile phone.
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Once you've made 365 micro-payments,
the system is unlocked,
the system is unlocked,
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and you own the product and you start
receiving clean, free electricity.
receiving clean, free electricity.
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This is an amazing solution for Kenya,
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where 70 percent of people
live off the grid.
live off the grid.
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This shows that with frugal innovation
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what matters is that you take what is
most abundant, mobile connectivity,
most abundant, mobile connectivity,
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to deal with what is scarce,
which is energy.
which is energy.
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With frugal innovation,
the global South is actually catching up
the global South is actually catching up
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and in some cases
even leap-frogging the North.
even leap-frogging the North.
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Instead of building expensive hospitals,
China is using telemedicine
China is using telemedicine
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to cost-effectively treat
millions of patients,
millions of patients,
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and Africa, instead of building
banks and electricity grids,
banks and electricity grids,
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is going straight to mobile payments
and distributed clean energy.
and distributed clean energy.
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Frugal innovation is diametrically opposed
to the way we innovate in the North.
to the way we innovate in the North.
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I live in Silicon Valley,
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where we keep chasing
the next big technology thing.
the next big technology thing.
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Think of the iPhone 5, 6, then 7, 8.
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Companies in the West spend
billions of dollars investing in R&D,
billions of dollars investing in R&D,
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and use tons of natural resources
to create ever more complex products,
to create ever more complex products,
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to differentiate their brands
from competition,
from competition,
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and they charge customers
more money for new features.
more money for new features.
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So the conventional business model
in the West is more for more.
in the West is more for more.
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But sadly, this more for more model
is running out of gas, for three reasons:
is running out of gas, for three reasons:
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First, a big portion
of customers in the West
of customers in the West
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because of the diminishing
purchasing power,
purchasing power,
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can no longer afford
these expensive products.
these expensive products.
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Second, we are running out of
natural water and oil.
natural water and oil.
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In California, where I live,
water scarcity is becoming a big problem.
water scarcity is becoming a big problem.
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And third, most importantly,
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because of the growing income disparity
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between the rich
and the middle class in the West,
and the middle class in the West,
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there is a big disconnect
between existing products and services
between existing products and services
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and basic needs of customers.
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Do you know that today,
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there are over 70 million Americans
today who are underbanked,
today who are underbanked,
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because existing banking services
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are not designed to address
their basic needs.
their basic needs.
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The prolonged economic crisis
in the West is making people think
in the West is making people think
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that they are about to lose
the high standard of living
the high standard of living
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and face deprivation.
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I believe that the only way we can sustain
growth and prosperity in the West
growth and prosperity in the West
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is if we learn to do more with less.
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The good news is,
that's starting to happen.
that's starting to happen.
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Several Western companies
are now adopting frugal innovation
are now adopting frugal innovation
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to create affordable products
for Western consumers.
for Western consumers.
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Let me give you two examples.
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When I first saw this building,
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I told myself it's some
kind of postmodern house.
kind of postmodern house.
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Actually, it's a small manufacturing plant
set up by Grameen Danone,
set up by Grameen Danone,
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a joint venture between
Grameen Bank of Muhammad Yunus
Grameen Bank of Muhammad Yunus
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and the food multinational Danone
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to make high-quality yogurt in Bangladesh.
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This factory is 10 percent the size
of existing Danone factories
of existing Danone factories
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and cost much less to build.
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I guess you can call it a low-fat factory.
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Now this factory, unlike Western factories
that are highly automated,
that are highly automated,
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relies a lot on manual processes in order
to generate jobs for local communities.
to generate jobs for local communities.
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Danone was so inspired by this model
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that combines economic efficiency
and social sustainability,
and social sustainability,
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they are planning to roll it out
in other parts of the world as well.
in other parts of the world as well.
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Now, when you see this example,
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you might be thinking, "Well,
frugal innovation is low tech."
frugal innovation is low tech."
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Actually, no.
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Frugal innovation is also
about making high tech
about making high tech
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more affordable and more
accessible to more people.
accessible to more people.
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Let me give you an example.
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In China, the R&D engineers
of Siemens Healthcare
of Siemens Healthcare
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have designed a C.T. scanner
that is easy enough to be used
that is easy enough to be used
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by less qualified health workers,
like nurses and technicians.
like nurses and technicians.
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This device can scan
more patients on a daily basis,
more patients on a daily basis,
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and yet consumes less energy,
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which is great for hospitals,
but it's also great for patients
but it's also great for patients
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because it reduces the cost
of treatment by 30 percent
of treatment by 30 percent
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and radiation dosage by up to 60 percent.
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This solution was initially designed
for the Chinese market,
for the Chinese market,
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but now it's selling like hotcakes
in the U.S. and Europe,
in the U.S. and Europe,
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where hospitals are pressured
to deliver quality care at lower cost.
to deliver quality care at lower cost.
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But the frugal innovation revolution
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in the West is actually led
by creative entrepreneurs
by creative entrepreneurs
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who are coming up with amazing solutions
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to address basic needs
in the U.S. and Europe.
in the U.S. and Europe.
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Let me quickly give you
three examples of startups
three examples of startups
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that personally inspire me.
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The first one happens to be launched
by my neighbor in Silicon Valley.
by my neighbor in Silicon Valley.
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It's called gThrive.
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They make these wireless sensors
designed like plastic rulers
designed like plastic rulers
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that farmers can stick
in different parts of the field
in different parts of the field
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and start collecting detailed
information like soil conditions.
information like soil conditions.
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This dynamic data allows farmers
to optimize use of water energy
to optimize use of water energy
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while improving quality
of the products and the yields,
of the products and the yields,
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which is a great solution for California,
which faces major water shortage.
which faces major water shortage.
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It pays for itself within one year.
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Second example is Be-Bound,
also in Silicon Valley,
also in Silicon Valley,
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that enables you
to connect to the Internet
to connect to the Internet
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even in no-bandwidth areas
where there's no wi-fi or 3G or 4G.
where there's no wi-fi or 3G or 4G.
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How do they do that?
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They simply use SMS, a basic technology,
but that happens to be the most reliable
but that happens to be the most reliable
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and most widely available
around the world.
around the world.
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Three billion people today with
cell phones can't access the Internet.
cell phones can't access the Internet.
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This solution can connect them
to the Internet in a frugal way.
to the Internet in a frugal way.
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And in France, there is
a startup calle Compte Nickel,
a startup calle Compte Nickel,
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which is revolutionizing
the banking sector.
the banking sector.
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It allows thousands of people
to walk into a Mom and Pop store
to walk into a Mom and Pop store
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and in just five minutes activate
the service that gives them two products:
the service that gives them two products:
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an international bank account number
and an international debit card.
and an international debit card.
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They charge a flat annual
maintenance fee of just 20 Euros.
maintenance fee of just 20 Euros.
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That means you can do
all banking transactions --
all banking transactions --
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send and receive money,
pay with your debit card --
pay with your debit card --
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all with no additional charge.
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This is what I call low-cost banking
without the bank.
without the bank.
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Amazingly, 75 percent
of the customers using this service
of the customers using this service
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are the middle-class French
who can't afford high banking fees.
who can't afford high banking fees.
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Now, I talked about frugal innovation,
initially pioneered in the South,
initially pioneered in the South,
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now being adopted in the North.
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Ultimately, we would like to see
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developed countries
and developing countries
and developing countries
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come together and co-create
frugal solutions
frugal solutions
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that benefit the entire humanity.
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The exciting news is
that's starting to happen.
that's starting to happen.
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Let's go to Nairobi to find that out.
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Nairobi has horrendous traffic jams.
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When I first saw them,
I thought, "Holy cow."
I thought, "Holy cow."
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Literally, because you have to dodge cows
as well when you drive in Nairobi.
as well when you drive in Nairobi.
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To ease the situation,
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the engineers at the IBM lab in Kenya
are piloting a solution called Megaffic,
are piloting a solution called Megaffic,
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which initially was designed
by the Japanese engineers.
by the Japanese engineers.
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Unlike in the West, Megaffic
doesn't rely on roadside sensors,
doesn't rely on roadside sensors,
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which are very expensive
to install in Nairobi.
to install in Nairobi.
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Instead they process images, traffic data,
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collected from a small number of
low-resolution webcams in Nairobi streets,
low-resolution webcams in Nairobi streets,
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and then they use analytic software
to predict congestion points,
to predict congestion points,
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and they can SMS drivers
alternate routes to take.
alternate routes to take.
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Granted, Megaffic is not
as sexy as self-driving cars,
as sexy as self-driving cars,
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but it promises to take Nairobi drivers
from point A to point B
from point A to point B
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at least 20 percent faster.
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And earlier this year, UCLA Health
launched its Global Lab for Innovation,
launched its Global Lab for Innovation,
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which seeks to identify frugal healthcare
solutions anywhere in the world
solutions anywhere in the world
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that will be at least 20 percent cheaper
than existing solutions in the U.S.
than existing solutions in the U.S.
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and yet more effective.
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It also tries to bring together
innovators from North and South
innovators from North and South
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to cocreate affordable healthcare
solutions for all of humanity.
solutions for all of humanity.
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I gave tons of examples of frugal
innovators from around the world,
innovators from around the world,
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but the question is, how do you go about
adopting frugal innovation?
adopting frugal innovation?
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Well, I gleaned out three principles
from frugal innovators around the world
from frugal innovators around the world
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that I want to share with you
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that you can apply
in your own organization
in your own organization
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to do more with less.
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The first principle is: Keep it simple.
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Don't create solutions
to impress customers.
to impress customers.
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Make them easy enough to use
and widely accessible,
and widely accessible,
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like the C.T. scanner we saw in China.
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Second principle:
Do not reinvent the wheel.
Do not reinvent the wheel.
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Try to leverage existing resources
and assets that are widely available,
and assets that are widely available,
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like using mobile telephony
to offer clean energy
to offer clean energy
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or Mom and Pop stores
to offer banking services.
to offer banking services.
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Third principle is:
Think and act horizontally.
Think and act horizontally.
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Companies tend to scale up vertically
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by centralizing operations
in big factories and warehouses,
in big factories and warehouses,
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but if you want to be agile and deal
with immense customer diversity,
with immense customer diversity,
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you need to scale out horizontally
using a distributed supply chain
using a distributed supply chain
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with smaller manufacturing
and distribution units,
and distribution units,
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like Grameen Bank has shown.
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The South pioneered frugal innovation
out of sheer necessity.
out of sheer necessity.
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The North is now learning to do
more and better with less
more and better with less
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as it faces resource constraints.
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As an Indian-born French national
who lives in the United States,
who lives in the United States,
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my hope is that we transcend
this artificial North-South divide
this artificial North-South divide
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so that we can harness
the collective ingenuity
the collective ingenuity
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of innovators from around the world
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to cocreate frugal solutions
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that will improve the quality of life
of everyone in the world,
of everyone in the world,
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while preserving our precious planet.
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Thank you very much.
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(Applause)
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ABOUT THE SPEAKER
Navi Radjou - Innovation strategistDrawing inspiration from frugal innovators in emerging markets, Navi Radjou helps businesses with limited resources discover unexpected ways to succeed.
Why you should listen
In the best-selling book Jugaad Innovation, Navi Radjou and his co-authors borrow the Hindi word for improvised solutions to illustrate how organizations can hurdle stubborn challenges with quick thinking, innovative planning and entrepreneurial agility to deliver greater value to clients and consumers worldwide.
Radjou believes that “frugal innovation,” inspired by companies in emerging markets such as India and China, is gradually being adopted in Western economies, and that it "promises to become a unifying element in North-South cooperation in an increasingly interconnected globally economy".
A fellow at Judge Business School at the University of Cambridge, Radjou is a member of the World Economic Forum's Global Agenda Council on Design Innovation and a columnist at the Harvard Business Review.
More profile about the speakerRadjou believes that “frugal innovation,” inspired by companies in emerging markets such as India and China, is gradually being adopted in Western economies, and that it "promises to become a unifying element in North-South cooperation in an increasingly interconnected globally economy".
A fellow at Judge Business School at the University of Cambridge, Radjou is a member of the World Economic Forum's Global Agenda Council on Design Innovation and a columnist at the Harvard Business Review.
Navi Radjou | Speaker | TED.com