Abstract
Purpose
This multiple case study aims to investigate the frugal business model innovation exemplified by three pioneering organisations in India: Aravind Eye Care System (AECS), ChotuKool and SELCO India. This study elucidates the key factors contributing to their success and explores the broader implications for frugal innovation in addressing societal challenges in emerging markets.
Design/methodology/approach
The authors use a qualitative case study methodology to analyse the approaches of AECS, ChotuKool and SELCO India towards product development, distribution strategies and financing mechanisms and their impact on underserved communities. Data is collected through archival research and analysis of secondary sources.
Findings
The findings of the study reveal common themes and unique characteristics of frugal business model innovation across the three organisations. Key findings include innovative approaches to product/service design, distribution channels tailored to reach underserved populations and the implementation of flexible financing mechanisms to make products/services accessible to low-income consumers.
Research limitations/implications
This study enhances the understanding of frugal innovation in emerging markets and highlights the importance of affordability, accessibility and sustainability in driving positive social impact. Limitations include focus on only three case studies and the qualitative nature of the research, which may limit generalisability.
Practical implications
This study offers insights for managers and decisionmakers on implementing frugal innovation strategies to address societal challenges and promote inclusive growth in emerging markets. Key managerial implications include the importance of understanding local contexts, building partnerships and leveraging innovative financing mechanisms. The study provides guidance for practitioners and social entrepreneurs in developing scalable and sustainable solutions for underserved communities. Practical implications include the adoption of decentralised distribution models, customisation of products/services and investment in capacity-building and training programmes.
Social implications
The study highlights the significant impact of frugal business model innovation on underserved communities, including improved access to essential services, enhanced quality of life and socioeconomic empowerment. Implications for society include the potential for frugal innovation to address pressing societal challenges and promote inclusive growth.
Originality/value
The originality and value of this study lie in its comprehensive analysis of frugal business model innovation across multiple sectors in the Indian context. By examining the experiences of AECS, ChotuKool and SELCO India, the study contributes to the literature on frugal innovation and provides actionable insights for businesses, policymakers and development practitioners seeking to create positive social impact in emerging countries.
Keywords
Citation
Natasha, S. (2025), "Frugal business model innovation in an Indian emerging market: a multiple case study", Asia Pacific Journal of Innovation and Entrepreneurship, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/APJIE-11-2023-0227
Publisher
:Emerald Publishing Limited
Copyright © 2024, Saqib Natasha.
License
Published in Asia Pacific Journal of Innovation and Entrepreneurship. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
1. Introduction
Recently, the concept of frugal innovation has garnered increasing attention as a promising approach to addressing pressing challenges in emerging markets (Morelos-Gómez et al., 2023; Saqib and Mathu, 2024; Provin et al., 2024; Quintino Sant’Ana et al., 2024; Zeschky et al., 2011). Frugal innovation, also known as jugaad innovation (Ananthram and Chan, 2021), refers to the process of creating high-quality products or services that are not only affordable but also resource-efficient and accessible to a wide range of consumers, particularly those at the bottom of pyramid (BOP) (Levänen et al., 2023a, 2023b). According to Hossain et al. (2016), frugal innovation is a resource-scarce solution that has been developed and used under financial, technological and material or other resource constraints, yet it is good enough to meet the needs of underserved customers who would otherwise be unable to afford the existing products and services. It encompasses (re)designing products, services and business models to reduce complexity and total lifecycle costs while providing high value and affordable solutions for BOP customers in developing countries. There are numerous examples of frugal innovation outcomes, such as cars, refrigerators, medical devices and health-care services that cost between 50% and 97% less than regular corresponding products and services. Such innovation is characterised by its emphasis on simplicity, affordability and sustainability, often achieved through the optimisation of resources and the adoption of unconventional solutions (Levänen et al., 2023a, 2023b).
The importance of frugal innovation in emerging markets cannot be overstated. These markets are often characterised by limited resources, infrastructure challenges and a significant proportion of the population living below the poverty line. Traditional approaches to innovation, which prioritise technological sophistication and high-end features, are often ill-suited to meet consumer needs in these contexts. Frugal innovation, in contrast, offers a viable alternative by focusing on affordability, accessibility and practicality (Ananthram et al., 2022). A key driver behind the rise of frugal innovation is the recognition of the untapped potential of emerging markets. Emerging markets represent a vast and largely untapped consumer base, offering significant opportunities for companies that can effectively cater to the needs and preferences of local consumers (Saqib and Shah, 2022; Saqib and Satar, 2023) By adopting a frugal approach to innovation, companies can develop products and services that are not only affordable but also tailored to the unique socio-economic and cultural contexts of emerging markets (Hossain et al., 2022).
Bhatti (2013) emphasised that frugal innovation does not necessarily involve new technologies but also new business models. It is critical to understand how firms create and capture value through novel propositions that reach customers in remote areas (Winterhalter et al., 2017). While the importance of business models in deploying solutions in BOP markets is recognised in the literature, empirical attention to frugal business model innovation – how corporations develop new business models tailored to such markets and how these models evolve – are relatively limited. Furthermore, much of the literature on frugal innovation, BOP contexts and business models is cross-sectional, often overlooking the dynamic nature of business models. This research gap raises the following concerns:
What drives frugal business model innovation in resource-constrained environments?
How do different business model components change, and how do these changes impact value creation and capture?
Meanwhile, the business model perspective has been proposed as a framework to better understand how sustainable innovations’ business model architectures are built to enable sustainable outcomes. Hence, this study uses a multiple-case study design and investigates three cases of frugal innovation. This study investigates how frugal innovation and novel business models rise in emerging markets and contribute to long-term development. This study makes two important contributions to the literature by examining the case of frugal innovation in India. Firstly, it demonstrates how frugal innovation, supported by novel business models, promotes sustainable development by providing affordable products to underserved customers. Secondly, it demonstrates how grassroots frugal innovation can inspire established firms and other entities to create products for underserved customers in developing countries.
The present article is structured as follows. Firstly, the extant literature relevant to business model innovation and frugal business model innovation is reviewed. Secondly, the research design is presented. Next, the findings are derived from the analysis and summarised. The paper concludes with a discussion of the theoretical and managerial implications.
2. Literature review
2.1 Business model
Business models play a pivotal role in shaping the strategic direction of organisations, as highlighted by Massa et al. (2017) and Zott et al. (2011). They are essential for gaining a competitive edge and ultimately determining the overall performance of a firm (Afuah, 2014; Saqib and Bashir, 2023; Saqib and Satar, 2021; Zott and Amit, 2008). These models provide a comprehensive framework encompassing factors that are both internal and external to the organisation, including value creation, value capturing and value proposition (Chesbrough, 2007; Doganova and Eyquem-Renault, 2009; Zott et al., 2011).
In the strategic literature, “value” often pertains to the exchange value perceived by customers or the benefits they receive from a product or service (Priem, 2007). Value creation involves the processes through which a company generates and delivers value to its stakeholders, encompassing activities such as research and development, production and sales (Doganova and Eyquem-Renault, 2009). In contrast, value capture relates to the firm’s revenue model and its ability to appropriate a portion of the value generated, typically through customer payments (Amit and Zott, 2001). Value capture extends beyond economic gains to include positive outcomes, such as job creation and economic development (Austin et al., 2006). Moreover, value creation and capture are intertwined processes that occur concurrently (Oskam et al., 2021), with the revenue model reflecting the financial implications of value creation activities (Doganova and Eyquem-Renault, 2009).
Business models are dynamic and evolve over time to adapt to changes in the external environment (Saebi et al., 2017). This adaptability is particularly crucial for multinational corporations (MNCs) operating in BOP contexts, characterised by resource constraints and institutional gaps (Bohnsack et al., 2014). In such contexts, business model innovation becomes imperative to develop solutions that are contextually appropriate and to address the unique challenges faced by these markets.
2.2 Frugal business model innovation
BOP markets present a unique set of challenges and opportunities due to limited resources and institutional gaps, prompting the need for innovative, locally relevant solutions (Leliveld and Knorringa, 2018). Initially defined by per capita income thresholds or household poverty levels, BOP markets encompass regions with severe resource constraints, notably in Africa, Asia and Latin America. MNCs aiming to tap into these markets must devise affordable, functional and accessible products and services for low-income consumers, leading to the emergence of frugal innovation as a paradigm.
Agarwal et al. (2017) defined frugal innovation as a product that is affordable and of “good enough” quality, specifically designed for resource-constrained consumers. In contrast, Zeschky et al. (2014b) suggested that frugal innovation involves higher levels of technical and market novelty compared to a mere “good enough” innovation. Basu et al. (2013) characterised frugal innovation as an innovative approach to process design. Frugal innovation, rooted in the concept of resource minimisation, has given rise to the development of solutions tailored to address the needs of underserved populations (Lim and Fujimoto, 2019). Characterised by simplification and cost-effectiveness, frugal innovations aim to provide essential products and services using limited resources, catering to the less privileged while maintaining quality (Radjou, 2012; Zeschky et al., 2011). Various terms such as “reverse innovation”, “Jugaad innovation” and “BOP innovation” have been coined to describe this phenomenon, all emphasising the imperative of doing more with less for more people (Prahalad and Mashelkar, 2010).
Frugal innovation involves redesigning products, services and business models to streamline complexity and reduce costs while enhancing functionality and affordability (Leliveld and Knorringa, 2018). It serves as a conduit for delivering high-quality yet affordable solutions to BOP markets, with organisations striving to strike a balance between value creation and capture through innovative business model designs (Winterhalter et al., 2017). Collaboration with diverse partners further complicates this balancing act, requiring strategic alignment and cooperation to ensure successful value delivery (Lepak et al., 2007). Weyrauch and Herstatt (2017) proposed three key criteria for defining frugal innovation: significant cost reduction, focus on essential functionalities and optimisation of performance levels. In contrast, von Janda et al. (2020) argued that frugality encompasses four dimensions – basic quality, cost-effectiveness, simplicity and sustainability – emphasising the integration of low cost and sustainability in product development. Despite this, policymakers often overlook consumers’ role in sustainable innovation. Dembek et al. (2018) suggested that while market-based approaches face challenges in serving low-income consumers, sustainable business models offer promising solutions to address poverty at the grassroots level. Notably, frugality is increasingly relevant in Western countries as well (Thøgersen, 2018).
In contrast to developed markets, emerging-market business models necessitate unique adaptations to local dynamics (Eyring et al., 2014). Western firms often require support in adjusting their models to suit the intricacies of emerging markets, where two archetypes prevail: low-cost replications of existing models and entirely new models tailored to low-income contexts (Chliova and Ringov, 2017; Sanchez and Ricart, 2010). The former focuses on process efficiency to expand market reach, while the latter emphasises collaboration with local partners to ensure community acceptance and market penetration (London and Hart, 2004; Pitta et al., 2008; Prahalad, 2012).
Achieving success in emerging markets, especially at the BOP, hinges on striking a delicate balance between value creation and capture. Frugal innovation serves as a solution to this challenge by offering accessible and affordable value propositions tailored to the needs of low-income consumers (Govindarajan and Trimble, 2012). Despite originating in resource-constrained contexts, frugal innovation has transcended its roots, becoming a dynamic framework applicable to both emerging and advanced economies. Its potential to create new market segments, disrupt incumbents and foster sustainability underscores its transformative impact on innovation globally.
Frugal innovation involves developing affordable and scalable solutions that address the specific needs of underserved communities. By optimising resources and simplifying processes, frugal innovation enables organisations to deliver maximum value at minimal cost, prioritising functionality and affordability over extravagance.
2.3 Frugal innovation and emerging markets
Emerging markets, characterised by limited resources, infrastructure deficits and widespread poverty, present unique challenges for businesses and entrepreneurs. Traditional approaches to innovation, which prioritise high-cost and high-tech solutions, are often unsuitable for these markets due to affordability constraints and a lack of supporting infrastructure. Frugal innovation offers a viable alternative, enabling companies to develop solutions that are accessible, affordable and sustainable for the populations they serve (Mukherjee, 2012; Weyrauch and Herstatt, 2017; Winterhalter et al., 2017; Zeschky et al., 2011, 2014). Frugal innovation plays a crucial role in addressing key challenges in emerging markets. These innovations in healthcare, education, energy and other sectors help bridge gaps in access to essential services for underserved populations. By offering affordable and accessible solutions, frugal innovation contributes to improving quality of life and promoting social inclusion. Frugal innovation is designed to be cost-effective and scalable, making it suitable for large-scale deployment in resource-constrained environments. By leveraging local resources and expertise, frugal innovators can overcome barriers to adoption and reach a wide audience. Frugal innovation often incorporates sustainable practices, such as energy efficiency, waste reduction and resource optimisation. By promoting eco-friendly solutions, frugal innovators contribute to environmental conservation and mitigate the impact of resource depletion and pollution. Frugal innovation empowers local communities by providing them with tools and technologies to address their own needs. By fostering entrepreneurship and self-reliance, frugal innovation stimulates economic development and creates opportunities for income generation and wealth creation.
2.3.1 Research design.
Due to the paucity of work on frugal business model innovation in the Indian emerging market, a qualitative approach was adopted, which is aligned with our study’s exploratory and descriptive nature (Voss, 2010). As stated by Eisenhardt (1989), an inductive strategy based on the observation of a given element appears to be necessary when the target research object is relatively new. To answer our research questions, we conducted qualitative research through case study analysis. Case study research is the most popular form of qualitative research in business research (Saqib and Shah, 2022). It is widely used and can provide insights that cannot be achieved by other methods (Rowley, 2002). Case study research is used to conduct empirical studies on real-world phenomena (Sjoberg et al., 2020) rather than in a laboratory or through experiment (Eisenhardt and Graebner, 2007; Rowley, 2002). The main strengths of case study research are that phenomena are studied in their natural environments and that theories can be generated from practice (Recker and Muehlen, 2013).
To ensure that our research results were meaningful, we conducted a multiple case study since, as the number of cases increases, the results are more robust (Rowley, 2002) and provide a stronger foundation for building theories (Yin, 1994). A multiple case study approach facilitates the emergence of propositions instead of quantitatively posing statistical findings (Yin, 2012). Multiple case studies reinforce external validity and mitigate observer bias, allowing for the establishment of more robust and testable theories (Barratt et al., 2011). Multiple cases were used from a descriptive perspective. From such a perspective, one aims to portray the research object to know it better and provide a basis for further research (Maxwell, 2005; Robson, 2002; Yin, 1998).
The case selection process used in this study was purposeful and sequential, adhering to the principles of theoretical sampling outlined by Eisenhardt (1989). Using the maximum variation criteria proposed by Patton (1990), cases were chosen from a diverse range of industries, business model patterns (both service-and product-focused) and company sizes. This deliberate selection was anticipated to reveal contrasting patterns and variations in how companies harnessed the value of frugal innovation within their business models (Eisenhardt and Graebner, 2007). Furthermore, the selection strategy prioritised successful cases (Patton, 1990), focusing on pioneering organisations with established, profitable business models to analyse implemented frugal innovation. To refine the case selection process, an initial analysis of over eight potential cases was conducted based on the specified criteria, supplemented by preliminary interviews with subject matter experts. This meticulous approach ensured the optimal selection of cases for examination. Consequently, three cases spanning various industries within the Indian emerging market were selected for scrutiny. The decision to adopt a multiple case study approach stemmed from the necessity of gaining comprehensive insights into frugal business model innovation within the diverse contexts of the Indian emerging market. Each selected case represents a unique scenario, contributing to a multifaceted understanding of frugal business model innovation in this context. Through the examination of multiple cases, this study aims to facilitate comparisons, identify common trends and provide insights that transcend industry-specific or organisational boundaries, thereby enriching our understanding of frugal business model innovation in the Indian emerging market.
For data collection, we collected and compiled a comprehensive list of secondary documents for the cases, with sources including media articles, reports, video clips, documentaries and websites of the studied cases. These documents enabled us to understand the cases and their journey from inception to commercialisation. An extensive exploration of secondary data was useful for developing the first case descriptions according to the sequence of events and performing a cross-case analysis. In the analysis phase, we started with a within-case analysis by providing an overview of how companies have adopted frugal innovation. We then moved to a cross-case analysis where we compared cases and thus synthesised more general patterns and identified similarities and differences across the cases. The case studies of Aravind Eye Care System (AECS), ChotuKool and SELCO India exemplify the principles and practices of frugal innovation in diverse contexts.
3. Case study description and findings
3.1 Cases study 1 – Aravind Eye Care System
AECS stands as a beacon of innovation in healthcare delivery, particularly in the field of ophthalmology. Established in 1976 by Dr G. Venkataswamy, the system began as an 11-bed hospital in Madurai, Tamil Nadu, India, with a mission to eliminate needless blindness through compassionate and high-quality eye care accessible to all socioeconomic segments of society (Mukherjee and Chandwani, 2024). AECS’s frugal business model innovation has been pivotal in its ability to achieve scalability and impact. This model is built upon several key principles, including cross-subsidisation, high-volume and efficient processes. Through cross-subsidisation, AECS offsets the treatment costs for patients who cannot afford them, thus providing high-quality care to all socioeconomic segments (Saqib and Mathu, 2024). The success of AECS’s business model is also attributed to its emphasis on high-volume surgeries, which allow for economies of scale and cost efficiencies. By streamlining processes and standardising procedures, AECS has been able to significantly reduce the cost per surgery while maintaining quality standards (Mukherjee and Chandwani, 2024).
3.1.1 Case analysis.
AECS’s frugal business model innovation is characterised by its ability to deliver high-quality eye care at a fraction of the cost compared to traditional health-care providers. This has been achieved through a combination of strategic initiatives, including process optimisation, infrastructure efficiency and workforce empowerment. A key component of AECS’s frugal business model is its emphasis on process optimisation. By standardising clinical protocols and implementing efficient patient flow systems, AECS has been able to maximise resource utilisation and minimise waste, thus reducing overall costs (Saqib and Mathu, 2024). Another aspect of AECS’s model is its focus on infrastructure efficiency. The system strategically invests in high-quality equipment and facilities while minimising unnecessary overhead costs. This allows AECS to deliver world-class care without the need for extravagant infrastructure, making it financially sustainable and scalable (Avittathur, 2024).
The analysis of AECS’s frugal business model underscores the interconnectedness of its value proposition, value creation and value-capturing strategies. This model exemplifies a holistic approach to addressing complex health-care challenges in resource-constrained settings. By aligning its value proposition, creation and capturing strategies, it creates a meaningful impact, improves health outcomes and fosters social inclusion while maintaining financial viability and scalability. As a result, this system contributes to the advancement of global health equity and serves as a model for sustainable, frugal innovation in health-care delivery.
Table 1 provides an overview of the components that make up AECS’s business model, including the subcomponents that make up each component and how they correspond to frugal parameters. It demonstrates how AECS strategically incorporates frugality into various aspects of its business model to provide eye care services at affordable prices while maintaining financial sustainability and having a positive social impact.
3.1.2 Value proposition.
AECS’s value proposition revolves around providing high-quality, affordable eye care services to underserved communities. By leveraging innovative technologies and operational efficiencies, this system aims to address the prevalent issue of avoidable blindness in low-resource settings. The value proposition extends beyond clinical services to include community outreach, education and capacity-building initiatives. AECS’s mission is to make eye care accessible to all, regardless of their socioeconomic status, thereby enhancing quality of life and reducing the burden of preventable blindness (Saqib and Mathu, 2024).
3.1.3 Value creation.
AECS’s value creation strategy focuses on efficiency, scalability and quality assurance. Through standardised protocols, streamlined processes and continuous training programmes, AECS ensures the consistent delivery of high-quality eye care services across its network of facilities. The company invests in cutting-edge technologies, such as telemedicine and mobile clinics, to reach remote and underserved areas effectively. Moreover, it collaborates with local stakeholders, including government agencies, NGOs and corporate partners, to expand its reach and impact, thereby maximising the value created for patients and communities (Saqib and Mathu, 2024).
3.1.4 Value capturing.
AECS’s value-capturing strategy centres on affordability, accessibility and sustainability. The company adopts a tiered pricing model to ensure that its services remain affordable for patients from diverse socioeconomic backgrounds. Additionally, it uses cross-subsidisation and philanthropic funding to cover the costs of providing free or heavily subsidised services to economically disadvantaged individuals. By establishing trust, fostering patient loyalty and maintaining transparency in pricing and service delivery, AECS strengthens its brand reputation and market position, thereby capturing value and ensuring long-term sustainability (Saqib and Mathu, 2024).
3.2 Case study 2 – ChotuKool
ChotuKool, an innovative refrigeration solution developed by Godrej, revolutionised the concept of refrigeration in emerging markets (Williams et al., 2012). With its frugal design and unique business model, ChotuKool has made significant strides in addressing the refrigeration needs of rural and low-income communities. The concept of frugal innovation, which emphasises simplicity, affordability and accessibility, lies at the core of ChotuKool’s development (Hollensen and Raman, 2012; Simanis and Milstein, 2012). As Kuo (2017) pointed out, ChotuKool reduces the number of parts from the typical 200 found in regular refrigerators to a mere 20, making it cost-effective and easier to maintain. This frugal design not only lowers production costs but also reduces operational costs for users, making refrigeration more accessible to those with limited resources. ChotuKool’s frugal design is a testament to its innovative approach to addressing the refrigeration needs of underserved communities. By using cooling chips to replace traditional compressors and using battery power, ChotuKool achieves energy efficiency while minimising the use of costly components (Kuo, 2014). Furthermore, ChotuKool’s business model integrates local entrepreneurs and women into the value chain, thereby creating opportunities for economic empowerment and community development. Rosca et al. (2017) highlighted the importance of such business model innovations for sustainability, citing examples like ChotuKool as successful cases of integrating local stakeholders into the production and distribution processes.
The social impact of ChotuKool extends beyond mere refrigeration; it enhances the quality of life of rural and low-income households. With its affordable pricing and user-friendly design, ChotuKool enables households to store perishable goods, thereby reducing food wastage and improving nutrition (Kuo, 2014; Markides, 2012). Moreover, ChotuKool’s penetration into the market has been significant, particularly in regions where traditional refrigerators are inaccessible or unaffordable. ChotuKool’s portable and small-sized design has resonated well with consumers in India, where space constraints and unreliable electricity supply are common challenges. However, despite its success, ChotuKool faces several challenges in scaling up its adoption. Infrastructure and logistics pose significant barriers, particularly in remote rural areas where transportation and distribution networks are limited. Additionally, regulatory hurdles and policy constraints may impede the expansion of ChotuKool’s market reach (McMurray and de Waal, 2019). However, opportunities for scaling up abound, with potential collaborations and partnerships offering avenues for overcoming these challenges (Hossain, 2018). Leveraging technology, such as mobile applications for marketing and distribution, could also enhance ChotuKool’s scalability (Hossain et al., 2016). Overall, while challenges exist, the prospects for scaling up ChotuKool’s adoption remain promising, fuelled by its innovative design, social impact and market demand.
Table 2 provides an overview of the components that make up Godrej’s ChotuKool business model, including the subcomponents that make up each component and how they correspond to frugal parameters. It demonstrates how ChotuKool strategically incorporates frugality into various aspects of its business model to provide affordable products while ensuring financial sustainability and a positive social impact.
Each business model element and its corresponding sub elements are aligned with frugal parameters, emphasising efficiency, cost-effectiveness and optimisation throughout the value chain. The analysis of ChotuKool’s frugal business model reveals a deeply intertwined relationship between its value proposition, value creation and value-capturing strategies.
3.2.1 Value proposition.
ChotuKool’s value proposition lies in its ability to provide an affordable, portable refrigeration solution tailored to the needs of low-income consumers in rural and urban areas with unreliable electricity access. By offering a compact and energy-efficient refrigerator at a fraction of the cost of traditional models, ChotuKool addresses a critical pain point for consumers who require effective food preservation without the expense and infrastructure requirements of conventional refrigerators. Additionally, ChotuKool’s value proposition extends beyond mere product features to encompass the broader socioeconomic benefits of improved food storage, reduced food wastage and enhanced livelihood opportunities for small food businesses and vendors.
3.2.2 Value creation.
ChotuKool’s value creation strategy focuses on efficiency, innovation and sustainability. The product’s design and manufacturing processes are optimised to minimise costs while maintaining quality and performance standards. By leveraging innovative cooling technologies and lightweight materials, ChotuKool achieves significant resource savings and environmental benefits compared to traditional refrigerators. Furthermore, ChotuKool’s value creation extends beyond the product itself to include complementary services, such as distribution networks, after-sales support and financing options tailored to the needs of low-income consumers.
3.2.3 Value capturing.
ChotuKool’s value-capturing strategy revolves around affordability, accessibility and scalability. The product is priced competitively to ensure affordability for its target market segment, with flexible payment options and financing schemes available to further enhance accessibility. ChotuKool’s distribution model leverages existing retail networks and partnerships with local entrepreneurs to reach underserved communities effectively. Moreover, ChotuKool’s modular design and low maintenance requirements contribute to long-term cost savings for consumers, further enhancing its value proposition and capturing potential.
3.3 Case study 3 – SELCO India
SELCO India, a pioneering social enterprise, has been instrumental in providing innovative solar energy solutions to off-grid communities. Founded with the vision of addressing energy poverty in rural and underserved areas, SELCO India has developed a range of innovative products and services tailored to meet the unique needs of off-grid populations. The company’s approach to technology and business model innovation is deeply rooted in the principles of frugality, sustainability and social impact.
An analysis of SELCO India’s frugal approach to technology and business model innovation reveals its commitment to developing cost-effective and efficient solutions. SELCO India’s needs assessment process forms the basis for its innovation strategy, ensuring that solutions are designed to address specific challenges faced by off-grid communities. By leveraging locally available resources and incorporating user feedback into product development, SELCO India has been able to create solar energy solutions that are affordable, reliable and easy to maintain (Hossain et al., 2023; Levänen et al., 2022, 2023a, 2023b). Moreover, SELCO India’s business model is characterised by its focus on social entrepreneurship and sustainability. Ananthram et al. (2022) noted that SELCO India operates on a self-managed and self-sustained model, prioritising community engagement and empowerment. The company’s partnerships with local stakeholders and training programmes for entrepreneurs further enhance its social impact and reach (Hossain et al., 2022). Through initiatives such as the SELCO Solar programme, the company has empowered thousands of individuals to access clean and renewable energy solutions (Gandenberger et al., 2020).
An evaluation of the environmental and social benefits of SELCO India’s initiatives underscored the transformative impact of solar energy adoption in off-grid communities. SELCO India has contributed to the sustainable development goals, particularly in areas related to clean energy access, poverty alleviation and environmental sustainability (Sahni et al., 2023). By replacing traditional sources of energy with solar solutions, SELCO India has reduced greenhouse gas emissions, improved air quality and enhanced livelihood opportunities for underserved populations (Khan, 2016). However, a discussion on the scalability and sustainability of SELCO India’s model in the renewable energy sector raised important considerations for the future of off-grid electrification. While SELCO India has achieved significant success in scaling its operations and impact, challenges remain in expanding access to clean energy solutions in remote and marginalised areas (Jaiswal et al., 2022). Infrastructure constraints, policy barriers and financial limitations pose hurdles to the widespread adoption of solar energy technologies (Shivdas and Chandrasekhar, 2016). However, initiatives like SELCO India demonstrate the potential for frugal innovation to drive sustainable growth and development, offering a roadmap for inclusive and resilient energy transitions (Radjou and Prabhu, 2015).
SELCO India’s innovative approach to solar energy solutions embodies the principles of frugality, sustainability and social impact. Through its frugal design and inclusive business model, SELCO India has enabled off-grid communities to access clean and reliable energy, thereby improving livelihoods, enhancing environmental sustainability and fostering economic development. While challenges persist, SELCO India’s pioneering efforts offer valuable insights into the transformative potential of frugal innovation in addressing energy poverty and advancing SDGs.
Table 3 provides an overview of the components that constitute the SELCO business model, including the subcomponents that make up each component and how they correspond to frugal parameters. It demonstrates how SELCO India strategically incorporates frugality into various aspects of its business model to provide solar energy solutions at affordable prices while maintaining financial sustainability and having a positive social impact.
This framework outlines the key elements and sub-elements of SELCO India’s business model, along with the frugal parameters associated with each component. It emphasises SELCO India’s focus on providing reliable and affordable solar energy solutions to rural and underserved communities through innovative technology, distribution strategies and pricing models. The analysis of SELCO India’s frugal business model reveals a cohesive integration of its value proposition, value creation and value-capturing strategies.
3.3.1 Value proposition.
Frugal innovation emphasises sustainability more than mainstream innovations (Levänen et al., 2015). SELCO India’s value proposition centres on providing sustainable and affordable solar energy solutions tailored to the needs of rural and underserved communities. By offering decentralised solar power systems, SELCO India addresses the energy access gap prevalent in off-grid and unreliable grid areas. The value proposition extends beyond mere energy provision to include empowerment, economic development and environmental sustainability. SELCO India’s solutions enable households and businesses to access clean and reliable energy, thereby improving their quality of life, fostering entrepreneurship and reducing their environmental footprint.
3.3.2 Value creation.
SELCO India’s value creation strategy emphasises innovation, community engagement and scalability. Through continuous research and development efforts, SELCO India designs and customises solar energy solutions optimised for local conditions and consumer preferences. The company collaborates with local communities, NGOs and financial institutions to create awareness build capacity and facilitate access to solar energy technologies. SELCO India’s innovative financing models, including pay-as-you-go and microfinance schemes, enable low-income consumers to afford solar systems while ensuring financial sustainability for the company.
3.3.3 Value capturing.
SELCO India’s value-capturing strategy revolves around affordability, inclusivity and long-term relationships. The company adopts a tiered pricing approach to ensure affordability for customers across income levels while maintaining profitability. SELCO India leverages its extensive network of distribution partners, technicians and customer service representatives to reach remote and marginalised communities effectively. Moreover, the company prioritises customer satisfaction, reliability and trust-building to foster repeat business and word-of-mouth referrals, thereby enhancing its market presence and capturing potential.
SELCO India’s frugal business model exemplifies the seamless alignment of value proposition, creation and capturing strategies. By offering sustainable and accessible solar energy solutions, SELCO India creates tangible value for its customers, communities and the environment while capturing value through innovative financing, distribution and customer relationship management approaches. As a result, SELCO India contributes to sustainable development and social impact while ensuring business viability and growth.
3.4 Cross-case analysis
Frugal innovation has emerged as a transformative approach to addressing complex challenges in diverse industries, ranging from healthcare to energy access. Through the examination of three prominent case studies – AECS, ChotuKool and SELCO India – this study aims to compare frugal innovation strategies, identify common patterns and differences and offer insights into the applicability of frugal innovation principles across various sectors.
3.4.1 Common patterns.
Despite operating in different industries, AECS, ChotuKool and SELCO India share several common patterns in their frugal innovation strategies. Firstly, all three organisations prioritise affordability and accessibility, designing products and services that cater to the needs of low-income and underserved populations (McMurray and de Waal, 2019). Secondly, all three embrace simplicity and efficiency in their solutions, leveraging technology and process optimisation to minimise costs and maximise impact. Thirdly, they adopt a user-centric approach to innovation, involving end-users in the design and development process to ensure relevance and usability.
3.4.2 Differences.
Despite these commonalities, there are also notable differences in the frugal innovation strategies of AECS, ChotuKool and SELCO India. One key difference lies in their target markets and customer segments. While AECS primarily serves patients in need of eye care services, ChotuKool targets rural households in need of refrigeration solutions and SELCO India focuses on off-grid communities in need of clean-energy access (Ananthram et al., 2022). Additionally, the nature of innovation varies across the cases, with AECS focusing on process innovation in health care delivery, ChotuKool focusing on product innovation in refrigeration technology and SELCO India focusing on both product and service innovation in solar energy solutions (Rosca et al., 2017).
3.4.3 Overarching themes.
Despite these differences, overarching themes emerge from the comparison of frugal innovation strategies across AECS, ChotuKool and SELCO India. Firstly, the importance of context-specific solutions is evident, as each organisation tailors its innovations to the unique needs and constraints of its target market (Khan, 2016). Secondly, collaboration and partnerships play a crucial role in driving innovation and scaling impact, as seen in the alliances formed between AECS and local healthcare providers, ChotuKool and distribution partners and SELCO India and microfinance institutions (Hossain et al., 2022). Finally, a commitment to social impact underpins all three cases, with each organisation striving to create positive change and improve the lives of marginalised communities (Albert, 2022).
3.4.4 Insights into applicability across diverse industries.
The comparison of frugal innovation strategies in AECS, ChotuKool and SELCO India offers valuable insights into the applicability of frugal innovation principles across diverse industries. Firstly, it highlights the importance of understanding local context and user needs in driving innovation and achieving sustainable impact (Jaiswal et al., 2022). Secondly, it underscores the potential for frugal innovation to address pressing societal challenges, from health care access to energy poverty, by leveraging technology, creativity and inclusive business models (Radjou and Prabhu, 2015). Thirdly, it emphasises the role of collaboration and partnership in scaling frugal innovation and reaching underserved populations effectively (Shivdas and Chandrasekhar, 2016).
The cross-case analysis of frugal innovation strategies adopted by AECS, ChotuKool and SELCO India demonstrates the diverse applications and transformative potential of frugal innovation across different sectors. While each organisation faces unique challenges and opportunities, all of them share a common commitment to affordability, accessibility and social impact, making them powerful exemplars of frugal innovation in action. By drawing lessons from these cases, policymakers, practitioners and researchers can better understand the principles and practices of frugal innovation and harness its potential to address complex global challenges. This summary Table 4 provides a concise overview of the key aspects and comparisons across AECS, ChotuKool and SELCO India, highlighting their industry focus, technology utilisation, distribution channels, social impact, financial sustainability, community engagement and scalability.
4. Conclusion and implications
The findings from the case studies underscore the importance of frugal innovation as a catalyst for positive socioeconomic and environmental changes. The case studies highlight the remarkable impact of frugal innovation in driving positive change across diverse sectors, ranging from healthcare and consumer goods to renewable energy. AECS’s innovative healthcare delivery model has revolutionised access to quality eye care services, particularly for marginalised communities in rural areas, demonstrating the power of frugal principles such as efficiency, affordability and scalability in transforming health care delivery. Similarly, ChotuKool’s frugal design and business model have enabled it to cater to the needs of low-income consumers in India, underscoring the role of simplicity, adaptability and affordability in driving market penetration and social impact. SELCO India’s innovative solar energy solutions further illustrate the transformative potential of frugal innovation in promoting environmental sustainability and improving livelihoods in off-grid communities, highlighting the importance of context-specific solutions tailored to the needs and constraints of end-users.
The three case studies offer valuable insights and implications for managers, policymakers and social entrepreneurs. The case studies emphasise on adopting a frugal mindset and leveraging technology to develop affordable, accessible solutions for underserved markets. Managers can learn from the success stories of AECS, ChotuKool and SELCO India by prioritising social impact alongside profitability and embracing inclusive business models. By understanding the unique needs and constraints of their target markets, businesses can identify opportunities for frugal innovation and create sustainable value for both shareholders and stakeholders.
Policymakers play a crucial role in creating an enabling environment for frugal innovation through supportive policies, regulations and incentives. By fostering collaborations among government, industry and civil society, policymakers can facilitate the scaling up of frugal innovation initiatives and address systemic barriers to access and affordability. Moreover, policymakers can promote knowledge-sharing and capacity-building initiatives to empower entrepreneurs and innovators to develop locally relevant solutions to pressing societal challenges.
Social entrepreneurs can draw inspiration from AECS, ChotuKool and SELCO India to design and implement innovative solutions that address the needs of marginalised communities. By adopting a participatory approach and co-creating solutions with end users, social entrepreneurs can ensure the relevance, effectiveness and sustainability of their initiatives. Furthermore, they can explore opportunities for collaboration and partnership with other stakeholders, including businesses, government agencies and non-profit organisations, to maximise their impact and reach.
Analytical framework for mapping the AECS business model
| Business model elements | Business model sub elements | Frugal parameters |
|---|---|---|
| Value proposition | Affordable eye care services | Low-cost service delivery |
| High-quality treatment | Efficient resource utilisation | |
| Comprehensive eye care | Tiered pricing for various services | |
| Value creation | High patient volume | Optimised facility utilisation |
| Efficient surgical procedures | Minimised material and equipment waste | |
| In-house lens manufacturing | Cost-effective intraocular lenses | |
| Value capturing | Cross-subsidisation | Subsidised care for economically challenged |
| Tiered pricing strategy | Variable pricing based on affordability | |
| Supplementary revenue streams | Product sales (lenses, pharmaceuticals) | |
| Partnerships and grants | Collaborative funding for projects | |
| Research funding | Grants and collaborations for research | |
| Brand reputation | Positive patient experiences | |
| Patient referrals | Word-of-mouth recommendations | |
| Social enterprise model | Revenue generation aligned with the mission | |
| Capacity utilisation | Efficient resource allocation |
Source: Saqib and Mathu (2024)
Analytical framework for mapping the ChotuKool business model
| Business model elements | Business model sub elements | Frugal parameters |
|---|---|---|
| Value proposition | Compact and portable design | Efficient use of materials and resources |
| Battery-powered operation | Cost-effective technology implementation | |
| Affordable price point | Reduced number of components for cost efficiency | |
| Value creation | Reduced energy consumption | Minimal operational costs |
| Simplified architecture | Use of thermoelectric cooling mechanism for cost savings | |
| Lightweight construction | Optimisation of manufacturing processes | |
| Value capture | Affordable pricing strategy | Targeted pricing for low-income consumers |
| Revenue from product sales | Supplementary revenue streams | |
| Cost-efficient distribution | Leveraging partnerships for cost reduction |
Source: Author’s own compilation
Analytical framework for mapping the SELCO business model
| Business model element | Business model sub elements | Frugal parameters |
|---|---|---|
| Value proposition | Product offering | Solar energy solutions |
| Target market | Rural communities, underserved areas | |
| Value proposition | Reliable, affordable, sustainable | |
| Value creation | Technology | Solar panel efficiency, innovative design |
| Distribution channels | Last-mile delivery, community-based approach | |
| Innovation | Customised solutions, modular systems | |
| Value capture | Pricing strategy | Flexible payment plans, micro financing options |
| Revenue streams | Product sales, installation services | |
| Cost structure | Low operational costs, minimal overhead | |
| Partnerships | Local NGOs, government agencies |
Source: Author’s own compilation
Cross-case analysis
| Aspect | Aravind eye care system | ChotuKool | SELCO India |
|---|---|---|---|
| Industry focus | Health care | Consumer goods | Renewable energy |
| Technology utilisation | Advanced medical technology for eye care | Thermoelectric cooling technology | Solar energy solutions |
| Distribution channels | Hospital network and outreach camps | Local retailers and distributors | Direct sales and partnerships |
| Social impact | Provides affordable eye care to underserved communities | Offers affordable refrigeration solution | Provides access to clean energy solutions |
| Financial sustainability | Self-sustaining model through cost-effective services | Low-cost product design and manufacturing | Revenue from product sales and services |
| Community engagement | Involves local communities in outreach and capacity building | Engages with customers for feedback and support | Empowers communities through solar initiatives |
| Scalability | Expanded network of hospitals and outreach programmes | Increased market penetration through rural distribution channels | Growth in market share and geographic expansion |
Source: Author’s own compilation
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Further reading
Agnihotri, A. (2015), “Low-cost innovation in emerging markets”, Journal of Strategic Marketing, Vol. 23 No. 5, pp. 399-411.
Cadeddu, S.B.M., Donovan, J.D., Topple, C., de Waal, G.A. and Masli, E.K. (2019), Frugal Innovation and the New Product Development Process: Insights from Indonesia, 1st ed., Routledge, London.
de Waal, G.A. (2017), “Resource-constrained innovation: required adaptations for successful implementation”, Paper presented at the XXVIII International Society for Professional Innovation Management (ISPIM) Conference, Vienna, Austria.
Leliveld, A., Bhaduri, S., Knorringa, P. and van Beers, C. (2023), “Capturing frugal innovation: Introduction to the handbook on frugal innovation”, Handbook on Frugal Innovation, Edward Elgar Publishing, pp. 1-27.
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Corresponding author
About the author
Saqib Natasha is currently working as Sr. Assistant Professor at the Department of Management Studies, University of Kashmir, India. She received her BSc (Hon.) Industrial Chemistry from University of Kashmir, MBA from Islamic university of Science and Technology and PhD from University of Kashmir, India. Dr Natasha has more than 14 years of experience in academia. She has several research publications in internationally acclaimed journals like International Journal of Emerging Markets, Online Information Review, Journal of Entrepreneurship in Emerging Economies, Young Consumers, Journal of Tourism Analysis, International Journal of Innovation Science, Asia Pacific Journal of Innovation and Entrepreneurship, Management and Labour studies and PSU Research Review, among others.