Would you buy the record or a sandwich if you were down to your last dollar? This question was the final test for any new song at Motown – The music production company that has been producing hit records for over fifty years.
The question is a wonderful expression of frugal thinking (and the success of the label illustrates how financial success can be found at C.K. Prahalad’s “Bottom of the Pyramid«). For those looking to use frugal innovation to bring benefits in the face of minimal resources, understanding the customer is essential.
Since many of the existing frugal initiatives take place in the third world, those who have lived in these regions, and lived in poverty, have a natural advantage in developing products and services for this market. (Berry Gordy grew up in a middle class family, but he and his staff knew the lives of their primary audience, the urban poor, inside and out.) Those innovators who do not know this worldview are at a distinct disadvantage if they have not walked in the shoes of their customers.
I sat in the audience once as Prahalad talked about how a poor family in India would not invest in a bottle of shampoo, but they would be happy to buy enough for one use. Some of my colleagues were surprised that poor people would spend any money on shampoo. Others could not imagine not buying a larger size which was cheaper by the ounce. (I thought immediately of my father-in-law who said, “There is nothing more expensive that being poor.)
When imagination fails, experience and research are essential. Ideally, living the lives of customer, or even shadowing them for a time, can shake up the thinking of an innovator who has not had to live frugally. Such experiences offer the opportunity to answer questions such as:
- What are the unmet needs?
- How does meeting those needs change things?
- What are the social aspects?
- How do you get attention?
- What is attention grabbing and what is distracting?
- What are the trade-offs?
Of course, these same questions are used when trying to understand any customer, but, especially when dealing with the poor, they are too often answered with assumption. I remember arguments around the “digital divide,” that is, how disadvantages are amplified as part of the society did not get access to the Web. Was equipment really unaffordable? Data showed most of identified as disadvantaged spent more each year than the cost of a connection and equipment on videotapes. But was that an understandable choice? As it turns out, students in those families that got in-home access to the Web did saw their formal test results go down.
Real world data provides what often are more painful lessons than getting the customer’s perspective. (And, often, such results are ignored once decision makers are invested in the wrong solution.)
Beyond poverty and poor communities, there are other customers of frugal innovation. A start up company may need to do research on a shoestring. While there are big C customers (those who pay for the firm’s products and services), thinking of the innovators themselves as customers who need to be understood is important. What resources do they have? What causes them to trade away free time to find answers and develop improvements? Who needs to be on a project team for it to be successful? How are the ties between members improved?
And startups aren’t the only firms that need to innovate frugally. I was at IBM during the dark days of record losses in the 90s. In the face of imminent disaster, innovation did not have much appeal for management. Even great ideas had a hard time finding funding when money-making projects were being terminated and employees were being laid off.
In this environment, an ad hoc group came together to advocate for OS/2 (a now mostly defunct operating system), on their own time and, often, paying their own expenses to conferences. Even as some of these advocates were laid off, this community (connected by forums) continued to pull together. What did they get? Hope, inspiration, and friendships.
A related group of Underground Innovators formed a little later, and successfully lobbied for a Web presence, relatively liberal policies toward open source, and e-business. In important ways, this group shaped what IBM became. It methodically worked to understand what expense-challenged executives and managers needed by asking the right questions. More importantly, the group’s leaders kept together a volunteer army of innovators by understanding what its members needed and wanted.