Heuristics of frugal service innovations

Abstract

Frugal innovations in products are vital in developing countries to reach price sensitive customers that seek robust products at low prices. Similarly frugal service innovations can create larger markets among customers that cannot afford expensive conventional services. While frugal innovations in products are easily identified by expert examination, frugal innovations in services cannot be identified without comprehensive mapping of all service processes. We identify three broad innovation heuristics used to achieve frugality in services: (a) innovatively combining existing materials, processes and resources at hand through bricolage, (b) innovatively reducing wastage of time, materials and human resources and (c) innovating on creating self-service options for users. We use a diverse set of Indian cases of service frugality to identify and analyse the specific techniques used to achieve frugality within these three heuristics. We then synthesize a conceptual frame of innovation heuristics for frugal services. Our framework is of value to service firms attempting to achieve frugality without conceding service quality and reliability. It is also relevant to product firms that can add frugal services to reduce commoditization and enhance value of their products. Finally, the heuristics we identify in creating frugal services can be adapted to achieve frugality in physical products.

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