Post COVID-19, we need to reinvent the U.S. economy from the ground up to make it socially inclusive and ecologically virtuous. To do so, we can’t rely on the old U.S. innovation formula—costly R&D projects and top-down innovation processes.
Instead, the U.S. must look to places like India, Brazil, Africa, and China for a new approach to frugal and flexible innovation called jugaad—a Hindi word meaning “the gutsy art of improvising a solution in difficult conditions with limited resources.”
In our book, Jugaad Innovation, Jaideep Prabhu, Simone Ahuja and I identify six key principles used by nimble entrepreneurs in emerging markets to innovate faster, better, and cheaper. Let me show you how large companies and startups in America could use these six jugaad principles to co-build a socially inclusive and eco-regenerative U.S. economy.
1: Seek opportunity in adversity
We are entering a VUCA (Volatility, Uncertainty, Complexity, Ambiguity) world. When faced with such extreme adversity, organizations tend to act like a deer caught in the headlights. But agile startups and corporations with a jugaad mindset are more resilient. Like alchemists, they can creatively convert adversity into an opportunity for innovation and growth. Optimistic by nature, they see the glass as half full in every situation. For jugaad innovators, a problem is nothing but a solution waiting to be revealed.
For instance, while many believe rural areas in the U.S. are doomed to decline, Rural Sourcing sees rural America as a vast untapped reservoir of talent and creativity that can benefit the whole country. Rural Sourcing has convinced many Fortune 500 companies, Big Tech vendors, and startups to outsource their IT services to rural areas of the U.S. rather than to foreign countries.
Monty Hamilton, CEO of Rural Sourcing, explained to me that his rural employees have a lot of fire in their bellies and boast strong work ethics, adaptability, and creativity. By actively engaging with them, Rural Sourcing’s clients boost their agility and productivity, lower cost, and accelerate innovation. Rural communities benefit, too, as Rural Sourcing not only creates local jobs but also boosts the long-term employability of its workers, especially young people from minority groups.
2: Do more—and better—with less
Capitalism exhorts us to “do more with more,” that is spend ever-more resources to produce and consume ever-more-expensive products. But we can’t have infinite growth on a finite planet. We must apply the thrifty jugaad mindset to innovate frugally and “do better with less” by making the most of all existing resources to maximize the value for all stakeholders.
Specifically, to meet the needs of cost-conscious and eco-aware consumers, U.S. businesses must create frugal products that combine affordability and sustainability. For instance, GM and Ford can learn from French carmaker Renault, which, after launching the $6,000 Logan in 2004 and the $4,000 Kwid in 2015, just released in France the $14,600 Dacia Spring, Europe’s cheapest electric car.
Companies can also do better with less by eschewing competition and sharing their physical and intangible resources with each other. Business-to-business sharing can yield significant economic, social, and ecological benefits. For example, Civica Rx is a nonprofit group that aggregates the purchasing power of 1,350 hospitals across America to reduce the cost of quality generic drugs and improve their availability. And the AI-powered employer-to-employer platform People + Work Connect helps employees who have been laid off swiftly find a job in another organization.
3: Think and act flexibly
To thrive in today’s fast-paced economy, corporate leaders and entrepreneurs need to be nimble-footed and nimble-minded. By adopting the agile mindset of jugaad innovators, U.S. businesses and startups can radically shift their worldviews and craft counterintuitive solutions that not only disrupt existing markets but also shape entire new markets and industries.
For instance, carbon dioxide (CO2) is vilified for causing pollution and damaging our planet. Yet carbon is a key building block of life itself on Earth. By reframing carbon as a valuable resource rather than waste, visionary U.S. entrepreneurs are using captured carbon to produce fuels, fibers, fertilizers, and useful products.
Air Company makes a new type of vodka from captured CO2. And Carbon180 is a nonprofit that works with scientists, farmers, businesses, and policymakers to co-build a world that removes more carbon than it emits. With its entrepreneur-in-residence fellowship program, Carbon180 also accelerates efforts of startups committed to removing 1 billion tons of CO2 per year by 2030.
4: Keep it simple
Jugaad isn’t about overengineering complex and costly products to impress customers, but about developing “good enough” solutions that address real end-user needs and get the job done. In the 20th century, U.S. firms engaged in an arms race to out-innovate each other, hence generating ever-more-complex products disconnected from market reality. Today, as Gens Y and Z customers and citizens embrace a minimalist lifestyle, private and public enterprises must make simplicity a key tenet of all their innovation projects.
Take the convoluted and bloated U.S. healthcare system: It is in dire need of simplification. By U.S. doctors’ own reckoning, up to 30% of medical services are unnecessary. Wasteful spending—a whopping $935 billion—accounts for 25% of annual U.S. healthcare expenditures.
Penn Medicine is harnessing simplicity to deliver better care at lower cost to more Americans. For instance, breast cancer patients who had breast reconstruction surgery used to come to the clinic for follow-up visits, which was time consuming. Instead, Penn Medicine trained nurses to visit patients at home and perform medical procedures typically done by doctors.
This simple solution shifted 80% of follow-up visits from the clinic to the home, saving patients 20 hours and freeing up the clinic’s capacity to take on more patients. Likewise, a simple change to its electronic medical record system enabled Penn Medicine to “nudge” its doctors to prescribe generics by default, thus saving more than $32 million over two and a half years.
5: Include the margin
According to Financial Health Network’s 2020 U.S. Financial Health Pulse study, which tracks the changes in Americans’ financial health year over year, more than two-thirds of Americans—167 million citizens—are struggling financially to some extent. Since February 2020, more than 2.5 million women left the U.S. workforce, reversing decades of social progress. Half of Hispanic and Black women, with just $300 in savings, have struggled to pay for basic necessities like rent and childcare in the past year.
U.S. businesses must focus on the marginal segments—made up of low-income consumers and debt-laden Millennials and Gen Zers—which are rapidly expanding in size as the American middle class loses its purchasing power. U.S. firms need to emulate jugaad entrepreneurs who devise inclusive business models and create radically affordable solutions to address the needs of millions of underserved customers.
For instance, the Financial Solutions Lab (FSL), co-founded by the Financial Health Network and JPMorgan Chase and supported by Prudential Financial, works with big banks, nonprofits, and fintech firms to cocreate affordable, tech-enabled solutions that boost financial health, especially among low-income and minority groups.
FSL-supported HoneyBee is a certified B Corporation that helps employees, irrespective of credit history, to access an extra week’s pay at any time to cope with an emergency. Summer is another FSL-backed B Corporation that enables student loan borrowers to reduce their debt by enlisting them in affordable repayment and forgiveness programs.
6: Follow your heart
The heart is the seat of passion, intuition, and empathy. Yet U.S. businesses exhort their employees to rely solely on cold logic and data to make decisions rather than motivate them to heed their intuition and pursue their passion—a mistake that results in costly employee disengagement. But heart-powered companies with a jugaad culture empower employees to tap into their empathy and passion to unearth meaningful ways to contribute positively to the company, the society, and the planet.
In 2004, Ray Anderson, founder of Interface, a world-leading modular carpet tiles manufacturer, had a “spear in the chest” epiphany when he realized his petroleum-intensive business was a “plunderer of the Earth.” He reckoned: “Someday people like me will end up in jail (for stealing our children’s future).” That big change of heart led Anderson to embark his firm on a sustainable development journey called Mission Zero.
By harnessing its employees’ passion and ingenuity, Interface achieved this noble mission in 2019 when all its products became carbon neutral. Interface is now aiming higher. It will leverage its employees’ heart energy to become a regenerative business that runs a net-positive supply chain and sells carbon-negative products.
Socially conscious entrepreneurs across the U.S. are also using their heart energy to create innovative solutions to heal and regenerate people and communities. For instance, Bo Shao, a successful venture investor in Silicon Valley, set up Evolve Ventures and Foundation, which invests in and supports startups and nonprofits focused on enhancing people’s physical, emotional, and spiritual well-being. In New York, Ngozi Okaro founded Custom Collaborative, a nonprofit that trains women in low-income and immigrant communities to design and sell sustainable fashion products by upcycling fabric waste.
To build back better after the pandemic, America needs thousands of conscious innovators with an entrepreneurial mind, a social heart, and an ecological soul. These wise innovators—be they corporations, nonprofits, or startups—can apply the six jugaad principles to create greater value for all stakeholders faster and better. In doing so, the U.S. can build from the bottom up a caring society and a regenerative economy.
Navi Radjou is an innovation and leadership scholar and adviser based in New York. He is the coauthor of Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth.