On Innovation, Entrepreneurship, Economic Growth and Democracy

Image credit: Aruinathan

The Economist, has posted a video interview with Vijay Govindarajan, the founding director of Tuck’s Center for Global Leadership, in which Govindarajan explains the concept of “frugal innovation” – the idea that while historically multinationals would innovate in rich countries like the US and sell to the developing world, in recent times this trend has reversed. 

“Frual innovation is where we innovate in poor countries and bring those products to rich countries,” says Govindarajan, citing GE’S low cost ultrasound machine, developed in Asia and now sold in the US.

According to Govindarajan, the idea of frugal innovation encompasses innovations that facilitate 300-400 percent decreases in the price point, rather than simply 30-40 percent decreases.

While conceiving of an innovation is important, Govindarajan emphasizes this is just "one percent" of the battle – the remainder falling to execution, which most companies tackle badly. 

He goes on to cite companies like Kodak, Sears and Microsoft as all having failed at executing innovation – whether this be in commercializing the digital camera, mass discount retail, or the ebook.

The most interesting part of the interview comes towards the end, when Govindarajan responds to a question about whether India could ever overtake China’s economic growth.