6 electric ideas changing the way we manage: Part 1

23 June 2016 -

In the first of out series, we take a look at how Frugal Innovation is inspiring companies to do more (better) with less

In 2008, France’s national railway, SNCF, was in trouble. Having built up a global reputation for technical excellence and innovation – by building ever-faster trains – it was now staring down the barrel of liberalisation, and the end of its state monopoly on domestic and European train travel.

SNCF realised that, in this new, open market, and with increased competition, a business based on long-term research and development, and 10-year new product cycles, wouldn’t satisfy the needs of travellers looking for value and quick delivery of new services.

So, in 2008, the company teamed up with innovation and strategy consultancy ExploLab to set up a specialised research unit, TGV Lab, that would develop six to eight high risk, high-potential projects each year.

TGV Lab was a small operation, with just two dedicated project managers. It had modest budgets and was given little time to deliver results.

No over engineered offerings would be tolerated.

But it was a phenomenal success – and, since 2008, more than half of the 30 pilots developed by TGV Lab have been rolled out.

These include smartphone-based productivity tools for the 10,000 ticket inspectors on the SNCF TGV network, and a text message-based system for communicating with hearing impaired customers.

The alternative option to this latter project would have required years of development and a complete multimillion-euro refit.

TGV Lab’s impact on SNCF is an eye-opening example of what Navi Radjou and Jaideep Prabhu call ‘frugal innovation’ in their book of the same name. Their arguments are resonating in many global boardrooms.

While all organisations are encouraged to do more with less, frugal innovation insists that, actually, we can all do better with less.

The movement is inspired by US president and founding father Benjamin Franklin, who wrote: “The way to wealth is as plain as the way to market. It depends chiefly on two words, industry and frugality: that is, waste neither time nor money, but make the best use of both.”

For modern frugal innovators, the equation is: Greater Value ÷ Fewer Resources.

It is the responsibility of modern managers and leaders, Radjou and Prabhu argue, to reduce not just the financial cost of doing business, but also its environmental and temporal cost.

So here’s how managers can achieve this:

Engage and iterate – Innovations need to be implemented from the perspective of the consumer. By focusing on customer needs, companies can develop and improve products and services.

Flex your assets – Agility and flexibility are needed to enable organisations to do more (better) with less. Focusing on processes and efficiency can help companies unlock hidden potential.

Create sustainable solutions – In a world where companies are increasingly under the microscope, sustainability and a green business model are vital.

Shape customer behaviour – The rise of smartphones and apps can help companies manage the in-home consumption of their customers, reducing their environmental footprint.

Co-create value with prosumers – Consumers who are actively involved in the maker movement and sharing economy can help organisations develop the next generation of products and services. Not only does this aid research and development, but it brings vital customer insight at an earlier stage.

Make innovative friends – Partnerships with complementary organisations can provide the skills and innovation needed to unlock the hidden potential in an organisation and drive success to the next level.

Frugal Innovation by Navi Radjou and Jaideep Prabhu is CMI’s Management Book of the Year. CMI members can buy it for just £9 (including P&P) at bit.ly/1Xxb3gk. Enter FRUGALCMI at the checkout