Exploring frugal innovation in developed markets

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Master Thesis

Exploring frugal innovation in developed markets

A qualitative study of favorable conditions for frugal innovation projects

across different firms

Verena Ugele

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_{December, 2015}

_{Word count: 15,563}

University of Groningen Newcastle University

Faculty of Economics and Business Business School

M.Sc. International Business M.Sc. Advanced International Business

and Management Management and Marketing

Student number: S2673401 Student number: 140674727

Supervisor Supervisor

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Abstract: This dissertation explores frugal innovation at German firms. In the last few years

frugal innovation has evolved as a significant concept to serve not only resource-constrained bottom of the pyramid (BoP) customers but also customers in developed countries who increasingly value frugality. Using an inductive research approach based on qualitative case studies, this dissertation explores favorable conditions for frugal innovations at project as well as firm level.

The analysis revealed that a proximity to customers, a focus on a niche, the cooperation with external partners, and the support of related activities in the organization are favorable for frugal innovation projects. Moreover, agile and functional structures at SMEs were found to drive the transition to a frugal innovation strategy, suggesting that SMEs may be especially well-equipped for frugal innovation. Last, a number of factors were identified that can be both drivers and barriers of transitioning to frugal innovation.

This dissertation extends the insights of former studies by examining factors outside product development and including SMEs in the sample, a largely understudied field. Moreover, it contributes to practice by providing important insights for firms that are in the process of transitioning to a frugal innovation strategy.

Keywords: frugal innovation, resource-constrained innovation, reverse innovation, BoP,

emerging markets, developed markets, product development

Acknowledgements

I want to thank all research participants for their time and commitment to this project. Without your input, this thesis would not have been possible.

Besides, I would like to thank my supervisors Dr. Miriam Wilhelm and Dr. Hanna Bahemia for their valuable insights, feedback, and support throughout the process.

I would also like to thank Michael for his encouragement during the last months. I deeply appreciate your support and belief in me.

Last but not least, I would like to thank my family for their support, encouragement, and patience during my academic career.

Declaration

I hereby declare that this dissertation is my own work and that all the sources I have used have been acknowledged by means of complete references.

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List of Tables

Table 1: Sample definitions of frugal innovation according to recurrent themes ... 4

Table 2: The seven core dimensions of frugal innovation. ... 6

Table 3: Frugal innovation in comparison to conventional innovation ...10

Table 4: Miles and Huberman’s criteria for sample selection ...16

Table 5: Overview of the interviews ...18

Table 6: Implications for frugal innovation (BT) ...21

Table 7: Implications for frugal innovation (company A) ...24

Table 8: Implications for frugal innovation (HORO) ...26

Table 9: Implications for frugal innovation (Oldntec) ...28

Table 10: Implications for frugal innovation (company B) ...30

Table 11: Overview of the studied cases ...31

Table 12: Drivers and barriers of transitioning to a frugal innovation strategy ...38

List of Figures

Figure 1: An Overview of a Stage-Gate System ...12

Figure 2: The low-cost house ...20

Figure 3: NPD process of BT's low-cost house ...21

Figure 4: NPD process of company A’s frugal innovations ...23

Figure 5: Examples of heating cabinets. ...24

Figure 6: NPD process of HORO’s frugal innovation ...25

Figure 7: The ambiact. ...27

Figure 8: NPD process of Oldntec’s frugal innovation ...27

Figure 9: NPD process of company B’s frugal innovations ...29

Figure 10: Basic NPD process of firms focusing on DMs ...32

Figure 11: Comparison of NPD for firms engaged in innovation for EMs and DMs ...33

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List of Abbreviations

ALL Ambient Assisted Living B2B Business-to-business B2C Business-to-consumer BM Business Model

BMI Business Model Innovation BoP Base/ Bottom of the Pyramid CEO Chief Executive Officer CTO Chief Technology Officer DM Developed market ECG Electrocardiography EM Emerging Market GE General Electric

HR Human Resources

IHK Industrie- und Handelskammer MNC Multinational Corporation NPD New Product Development

OECD Organization for Economic Cooperation and Development R&D Research and Development

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1. Introduction

Innovation can be seen as the essence of economies and organizations since it identifies new sources of value creation and drives growth.

Traditionally, innovation models have been created in the context of developed markets (DMs) under the assumptions of predictability and abundances. However, as DMs globalized and emerging markets (EMs) became significant, there was a shift in the dominant innovation model to ‘glocalization’, describing the process of sending stripped-down versions of successful products from DMs to EMs (Govindarajan and Trimble, 2013). This concept proved successful for many years and allowed Western multinational corporations (MNCs) to tap into the highly promising BoP market.

Nonetheless, Western MNCs had to learn that stripped-down versions of Western products were not suitable for EMs with different customer needs and economic contexts characterized by resource scarcity. This led to another shift in the dominant innovation model recognizing that these differences need to be considered at an earlier stage in product development. This insight gave rise to numerous new innovation concepts, such as value innovation (Kim & Mauborgne, 2005), BoP innovation (Prahalad, 2009), frugal innovation (the Economist, 2010a), and reverse innovation (Govindarajan and Trimble, 2013). At their core, these concepts acknowledge that innovation needs are profoundly different in EMs.

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causes and demand businesses to play their part in making the world better. As a result, consumers’ values are shifting from quantity to quality and frugality is seen as a means to increase rather than decrease the quality of life (Radjou and Prabhu, 2015; Bhatti and Ventresca, 2013).

These economic changes and the increasing importance of BoP markets are helping to create a new economic system: the frugal economy (Radjou and Prabhu, 2015). Accordingly, more and more Western firms have chosen frugal innovation strategies and numerous examples have been studied. However, research has largely neglected the ongoing development of the concept and has focused on large MNCs. This is surprising considering the meaning of SMEs for innovation in most countries. In particular, which conditions are favorable for frugal innovation projects have not been studied extensively (see section 2.2.1).

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2. Literature review

In the following, the development of innovation approaches will be explained, followed by an analysis of frugal innovation.

2.1 The development of innovation approaches over time

From a historical perspective, most innovation took place in DMs. To innovate for these markets, companies offered new features or technologically sophisticated products (Prahalad & Mashelkar, 2010; Radjou et al., 2012a; Soni, 2013). However, globalization and the associated growing importance of EMs caused a shift in the dominant innovation model towards _{‘glocalization’ (Govindarajan and Trimble, 2013;} Trichet, 2007; Gupta and Wang, 2007; Kumar, 2014). In its essence, the concept describes the process of sending stripped-down versions of successful products from DMs to EMs. An example _{is Microsoft’s Windows XP starter version, a low-priced} version of the popular operating system (Gupta and Wang, 2007). However, rather than starting with the specific needs of EMs, the products are adjusted to the context at a very late stage.

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4 2.2 Frugal innovation

In this new context, the concept of frugal innovation, which is illustrated in the following, has evolved to serve EMs.

The literal meaning of ‘frugal’ already indicates the essence of the concept. Literally, ‘frugal’ means ‘characterized by or reflecting economy in the use of resources’ (Merriam Webster, 2015). In economic terms, frugal innovation has been coined by Renaul_{t’s CEO in 2006 to describe Indian engineers’ competency in developing} low-cost products providing essential functions. Tata Motor’s Nano, a small automobile priced at $ 2,200, is a well-known example (Sehgal et al., 2010; the Economist, 2010a; Tiwari and Herstatt, 2011; Bhatti, 2012).

From 2007 to 2015, frugal innovation has been further developed conceptually. Table 1 gives an overview of exemplary definitions, structured based on recurrent themes.

Early definitions/ description of the concept

Gupta and Wang

(2007, p.2) ‘(…) companies can’t simply adapt their business models to China or India (…) companies will have to invent their business model (…) from the ground up’ The Economist

(2010a) ‘ Frugal products need to be tough and easy to use (…) and are often sparing in the use of raw materials and their impact on the environment’ Zeschky et al.

(2011, p.39)

‘Frugal innovation, defined as responding to severe resource constraints with products having extreme cost advantages compared to existing solutions (…) The products (…) often look inferior to existing solutions because they provide limited functionality and are often made of simpler, cheaper materials’

Innovation concept beyond cost reduction

Sehgal et al. (2010, p.1)

‘Frugal engineering is not simply low-cost engineering. (…)Rather than simply cutting existing costs, frugal engineering seeks to avoid needless costs in the first place’

Bhatti (2012, p.5) ‘For the consumer a frugal solution extends from simply cost to functioning with few resources, against a lack of necessary infrastructure, and in how it works within complex (…) institutions.’

Innovation concept encompassing the entire value chain Tiwari and Herstatt

(2012a, p.98)

‘(…) frugal innovation refers to innovative products and services that seek to minimize the use of material and financial resources in the complete value chain (…)while fulfilling or even exceeding certain pre-defined criteria of acceptable quality standards’

Bhatti (2012, p.5) ‘(…)a frugal solution has to be designed, produced, delivered, and maintained _{to achieve the needs of underserved consumers in constrained environments’}

Frugal innovation as mindset, philosophy, or management approach

Sehgal et al. (2010, p.1)

‘Frugal engineering is not simply low-cost engineering. (…) Instead, frugal engineering is an overarching philosophy that enables a true ‘clean sheet’ approach to product development.’

Brem and Wolfram (2014, p.19)

‘A derived management approach, based on Jugaad, which focuses on the development, production, and product management of resource-saving products and services for people at the BoP (…)’

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First, early authors argue that Western companies cannot simply adapt their business models (BMs) to BoP markets but need to see their local operations as central. Accordingly, a ‘bottom up’ instead of a ‘top-down’ approach is needed (Gupta & Wang, 2007). However, early definitions remained largely limited to the cost-saving or functionality dimension of the concept (the Economist, 2010a; Zeschky et al., 2011). Subsequently, the concept has been taken beyond cost reduction: instead of reducing existing costs, frugal innovations seek to avoid needless costs in the first place (Sehgal et al., 2010) and do not need to compromise on quality (Rao, 2013; Mani et al., 2014).

Second, frugal innovation has been extended to a concept encompassing the entire value chain (Tiwari and Herstatt, 2012a, Bhatti, 2012, van Beers et al., 2014). This implies that business model innovation (BMI) is a prerequisite for frugal innovation (Bhatti, 2012) _{since Western firms’ BMs do not consider the constraints of BoP} markets (Agnihotri, 2014; Brem and Wolfram, 2014). Thus, targeting EMs requires a rethinking of BMs (Tiwari and Herstatt, 2012a; Basu et al., 2013; Radjou and Prabhu, 2015; Prahalad, 2009). This suggests that established BMs can constrain innovation (Bhatti and Ventresca, 2013), while new constraints, such as resource-scarcity in EMs, can help create new BMs (Ray and Ray, 2011).

Third, later authors have further extended the concept to a mindset (Soni and Krishnan, 2014), philosophy (Sehgal et al., 2010), or management approach (Brem and Wolfram, 2014). This suggests an extensive consideration of frugality in a firm’s daily business as well as in fundamental strategic decisions. However, not all authors provide an unambiguous definition (cf. George et al., 2012). The problem is that frugal innovation is often labelled as reverse innovation or vice versa (the Economist, 2010a; Bhatti and Ventresca, 2013; Govindarajan, 2011; Immelt, 2009).

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Product characteristics

Product

attributes Sustainability

Market _Cost _economic Socio-context

Conceptual Dimension

high value for

consumers functional minimal resource inputs BoP reduced cost of operation resource constraints frugal mindset

low cost robust local resources EM reduced

sales price affordability constraints frugal innovation as BM

new user-friendly reducing the

impact on the environment

low-income reduced cost of ownership

innovative affordable

resource-constrained setting frugal innovation as philosophy simple easy to use

Table 2: The seven core dimensions of frugal innovation. Source: based on Huenting (2015)

2.2.1 Practical application of the concept

Between 2006 and 2015, frugal innovation has been studied in numerous case studies, which allowed identifying a number of drivers for a frugal innovation strategy. First, a proximity to the market (Agarwal and Brem, 2012) was found to be crucial for frugal innovation (Ojha, 2014; Rao, 2014) as it is particularly important to understand the market context (Ray and Ray, 2011) and to adapt to it (Jindal et al., 2011; Rao, 2013; Heeks, 2012). To facilitate this, local R&D is helpful. More specifically, the way it is organized is crucial: giving a subsidiary a certain degree of autonomy (Zeschky et al., 2011) can, for example, help to identify market needs and reduce costs (Jindal et al., 2011; Zeschky et al., 2011).

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Kern, 2003) through risk sharing with partners. This contributes to the affordability of frugal innovations (Hossain, 2013a; Tiwari and Herstatt, 2012b). Moreover, involving external expertise also helps to get access to know-how (Hossain, 2013b) in order to create innovations suitable for a specific context (Jindal et al., 2011).

Third, a _{firms’ resources and management support drive frugal innovation: resources} have to be used innovatively (Radjou and Prabhu, 2015) to drop non-value adding components (Ray and Ray, 2011; Tiwari et al., 2014) for frugal innovations. Similarly, management support is essential: managers committed to frugal innovation facilitate the shift to such a strategy (Tiwari et al., 2014; Sehgal et al., 2010; Hossain, 2014), as in the case of the Nano. Besides, some authors have identified barriers for frugal innovation: workers in EMs may lack skills, the infrastructure or market context may not be appropriate (Asrasaratnam and Humphrey, 2013; Radjou and Prabhu, 2015), and products that seem cheap may not be accepted by the customers (Tiwari and Herstatt, 2012b).

However, even though many drivers have been identified, a number of important factors have largely been omitted which will have to be explored in the context of the following overall research question:

‘What are favorable conditions for firms’ frugal innovation projects?’

In particular, case studies to date have the following shortcomings: first, they have mostly focused on big MNCs. This can partially be explained by the fact that frugal innovation seems to be more difficult to find at smaller firms due to barriers to innovation such as financial bottlenecks (Rammert et al., 2006), and limited internal knowledge (Mohnen and Rosa, 1999). Nevertheless, SMEs contribute tremendously to innovation in most economies (Rothwell and Zegveld, 1982; Massa and Testa, 2008) and the larger resource constraints they are usually faced with may intuitively make them better equipped for frugal innovation (Massa and Testa, 2008; Bhatti, 2012). Thus, SMEs should be included in the future study of the concept.

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give an example, teams need to be more interdisciplinary and flexible for frugal innovation projects (Tiwari et al., 2014). Such considerations are important for firms transitioning to a frugal innovation strategy and should thus be explored in future studies. This leads to the first research question:

‘What are the drivers and barriers of firms’ transition to a frugal innovation strategy?’ Third, even though many authors have recognized the importance of R&D for frugal innovation (Sehgal et al., 2010; Tiwari et al., 2014), they do not study how R&D processes have to be organized (differently) for frugal innovations. However, this is important for frugal innovations since resources may be scarce at all stages of NPD (Bhatti and Ventresca, 2013) which requires a rethinking of innovation (Eagar et al., 2011). The work of Sehgal et al. (2010) and Radjou et al. (2012), for example, could be significantly improved by analyzing the specific steps of their frugal NPD projects. This focus on R&D processes (Brem and Ivens, 2013) would allow to gain insights into specific capabilities needed for frugal innovation projects.

Moreover, to date most case studies have focused on the firm level. However, insights into different projects may be interesting (Ray and Ray, 2011) since many firms develop frugal as well as conventional innovations depending on the project. In particular, as the notion of frugality is gaining in popularity (Radjou and Prabhu, 2015), some firms may transition to a strategy that emphasizes frugal NPD projects. Thus, comparing projects at different firms would allow for a richer picture of frugal innovation. Accordingly, this dissertation will compare firms with different innovation portfolios, with regards to whether they are focusing on EMs or DMs in innovation. A special focus will be on NPD, defined as _{‘the transformation of a market opportunity} into a product available for sale’ (Krishnan & Ulrich, 2001). This focus is interesting since NPD is complex and usually involves hundreds of decisions that are made by intention or default (Krishnan & Ulrich, 2001). This leads to the following second research question:

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2.2.2 Frugal innovation in comparison to traditional innovation

To study frugal innovation, it is important to first distinguish the approach from traditional innovation.

Frugal innovation specifically targets lower-income populations in environments where customers are simultaneously faced with resource, affordability, and institutional constraints, whereas traditional innovation takes the needs of DM customers as a start (Bhatti, 2012; Brem and Wolfram, 2014). Moreover, due to their ‘no frills’ structure’, frugal innovations can be offered at lower prices (Radjou and Prabhu, 2015) and often have lower subsequent costs (Rao, 2013). Besides, they try to limit the amount of resources used (Radjou and Prabhu, 2015) and often use local resources (Huenting, 2015). In contrast, sustainability is usually not a core focus of conventional innovation (Agnihotri, 2014).

In short, frugal innovation can be described as ‘bottom-up’ approach (Brem and Wolfram, 2014) that highlights functionality. In contrast, conventional innovation presents a ‘top-down’ approach focusing on desirability and design (Basu et al., 2013).Thus, frugal innovation is driven by what customers truly need whereas conventional innovation focuses on what customers would like to have. This corresponds to the differenc_{es in innovation processes between ‘radical’ and} ‘incremental’, a classification of innovations based on their degree of novelty, complexity, and uncertainty (Souto, 2015; Vale and Vázquez-Bustelo, 2009).

Radical innovation describes a revolutionary change, a process of creative destruction or break with previous structures, activities, and products (Schumpeter, 1934 & 1942; Souto, 2015; Martínez-Ros and Orfila-Sintes, 2009). As such, it has a high degree of novelty and involves great opportunities and challenges (Teece, 2010; Tushman and Anderson, 1986). Those innovations are complex, involve uncertainty, and increase the need for flexibility, learning, and adaptability. In short, radical innovation gives rise to truly new products for both the company and the market (Valle and Vázquez-Bustelo, 2009).

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segments are normally known, and the technology required not very different from conventional practices employed by the company, incremental innovation arises under greater certainty (Lynn et al., 1998).

Having made this distinction, conventional innovation seems to follow incremental innovation, focusing on what customers would like to have whereas frugal innovation breaks with existing processes and results in non-obvious ideas focusing on what customers truly need (Radjou and Prabhu, 2015). Thus, frugal innovation usually follows radical innovation procedures.

Summarizing, Table 3 gives an overview of the differences between frugal and conventional innovation.

Table 3: Frugal innovation in comparison to conventional innovation.

Source: based on Bhatti (2012), Basu et al. (2013), Rao (2013), Brem and Wolfram (2014), Tiwari et al. (2014), Radjou and Prabhu (2015), Barnett et al. (2015), and Huenting (2015).

Characteristic Frugal Innovation Conventional Innovation

Target group  Customer in ‘extreme environments’ characterized by resource,

affordability, and institutional constraints

 Underserved customers in constrained environments

 BoP/ EMs/ low-income

markets/resource-constrained markets

 Customers in markets

characterized by predictability, affluences, and abundances  DMs/ high-income markets/

advanced markets

Approach  Bottom-up  Top-down

Drivers  What do customers need?  What would be nice to have?

Core

capabilities  Functionality/ function-cutting  Solution-oriented  Simplicity, easy to use  Robust  User-friendly  Desirability  Design  Complexity  Superiority  Prestige Costs  Affordable

 High cost advantages

 Reduced cost of operation, ownership, and maintenance

 Higher costs

 Premium price for additional features and ‘frills’

Sustainability  Producing with minimal amounts of resources, economies of scale  Using local resources

 Sustainability is not core focus  Sustainable/ ‘green’ products

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2.2.3 Reverse innovation

Reverse innovation is closely related to frugal innovation. This section explains the concept and differentiates it from frugal innovation.

Generally, reverse innovation follows an _{‘in country, for the world’ approach: MNCs} take innovations created for EMs and adapt them for global use (Criscuolo and Narula, 2007; Govindarajan, 2009). Thus, frugal innovations describe solutions targeting BoP markets while reverse innovations are frugal innovations that have been modified for DMs (Nunes and Breene, 2013; Agarwal and Brem, 2012). An example is _{GE’s low-cost handheld Electrocardiography (ECG) machine: originally} developed for India, it became a success in the UK as well (Basu et al., 2013).

Accordingly, reverse innovation is contrary to the traditional ‘flow’ of innovation, challenging the belief that innovation originates in wealthy countries (Sinha, 2013). However, the assumption that frugal innovation necessarily first serves BoP customers (Simula et al., 2015) can also be challenged: given the recent rise of ‘frugal living’ in DMs (McKeown, 2014), frugal innovations specifically for DMs have been developed that would not be suitable for many EMs since they require a certain public infrastructure (e.g. electricity) to work (Eckert et al., 2014).

2.2.4 Summary

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12 2.3 Formalizing NPD

Innovation at firms is usually organized formally to allow for a structured and coherent approach to problem-solving. The following section discusses the Stage-Gate-model, a frequently used NPD model.

2.3.1 The Stage-Gate model

The Stage-Gate model (Cooper, 1990) depicts product innovation as a process and divides it into stages and gates, typically between 4 and 7. The entrance to each stage is a gate. Each gate is characterized by a set of inputs (deliverables that must be brought to the gate), a set of criteria (obstacles a project must pass to open the gate to the next stage), and an output (decision at the gate, typically a ‘go/kill/hold’ decision). The inputs and criteria can change from gate to gate and stage to stage. Figure 1 shows a Stage-Gate model with the stages and gates described below (Cooper, 1990).

Figure 1: An Overview of a Stage-Gate System. Source: Cooper (1990)

-Idea: A new product idea is submitted to gate 1.

-Gate 1: Initial screen: first decision to commit resources to the project.

-Stage 1: Preliminary Assessment: determines market potential, market size and

likely acceptance in the market.

-Gate 2: Second Screen: a repeat of gate 1 in the context of the new information obtained in stage 1.

-Stage 2: Definition: the final stage before development. The attractiveness of the

project is verified and the project is clearly defined before committing to it.

-Gate 3: Decision on Business Case: the last point at which the project can be killed

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-Stage 3: Development of product, test, marketing, and operations plan.

-Gate 4: Post-Development Review: the progress and attractiveness of the project is

checked continuously.

-Stage 4: Validation: the overall viability of the project is checked, including in-house

product tests, field trials, pilot production, test markets, and financial analysis.

-Gate 5: Pre-Commercialization Decision: final point where the project can still be

killed, review of the operations and marketing plans.

-Stage 5: Commercialization: implementation of the operations and marketing plan.

-Post-Implementation Review: Execution of a post-audit, the project’s strengths

and weaknesses are critically assessed.

This model has several strengths: first, checkpoints in the form of gates ensure that high quality standards are met and that no critical activities are omitted (Cooper, 1990). This leads to a complete and market-oriented process (Cooper, 2014), which is especially important in the context of frugal innovation as explained in section 2.3.2. Besides, there has been empirical evidence that such a model impacts performance positively (Booz, Allen & Hamilton, 1982).

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2.3.2 The Stage-Gate model in the context of frugal innovations

The Stage-Gate model seems to fit well in the context of frugal innovations as it emphasizes market-orientation (Booz, Allen, Hamilton, 1982; Cooper, 1990, 2014). Whereas market orientation is generally important and a lack of it is frequently cited as major reason for new product failures (Hollensen, 2007; Cooper, 1990), it has a specific meaning for frugal innovations, as the market context is often more challenging (Radjou and Prabhu, 2015). This is highlighted by examples of frugal innovation that were comparatively _{unsuccessful, such as Tata Motor’s Nano: the} sales for the Nano were disappointing since it was not market-oriented: customers climbing into India’s middle class want cheap cars that do not seem cheap (McLain, 2013). Researching the market more closely prior to development would likely have helped Tata Motor to be more successful. This example shows that a NPD model that is used for frugal innovation should have a strong market orientation.

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3. Methodology

The following section describes the methodology including the overall research approach, data collection and analysis, as well as ethical issues and limitations.

3.1 Research approach

As the discipline of frugal innovation is relatively new, a theory-building approach based on qualitative case studies will be used (Glaser and Strauss, 1967; Marczyk et al., 2005, Eisenhardt and Graebner, 2007). Qualitative research offers the flexibility to follow leads that emerge (Charmaz, 2006; Suddaby, 2006; Miles and Huberman, 1994) which is needed in order to examine frugal innovation projects.

3.2 Theoretical Sampling

The analysis will be at the project level. This enables to study frugal innovations regardless of whether the firm focuses on conventional innovation at the overall firm level. However, as it is difficult to strictly separate project and firm level, factors on the firm level will also be considered (cf. Dvir et al., 1998).

The sample will be limited to German companies since Germany seems to be a good place to study frugal innovation: German firms have developed considerable competencies in R&D (Asheim & Gertler, 2005) and increasingly have to rely on growth in EMs. Moreover, German customers are becoming increasingly cost-conscious (Bergthaler, 2013; McKeown, 2014).

However, there is some uncertainty where to find frugal innovation. The literature review revealed the importance of frugal innovation across different industries (cf. Mani et al., 2014; Heeks, 2012). Accordingly, it can be reasonably assumed that a cross-industrial sampling of companies is best. To contact potential participants, different approaches were used. First, companies were contacted via the _{‘innovation} management’ and ‘frugal innovation’ groups on LinkedIn. Second, the company database of the Industrie- und Handelskammer1_{(IHK) was used to identify SMEs that}

are unlikely to be reached via LinkedIn. Third, companies were selected based on geographical location and public information they provide about innovation.

To increase the chances that the firms engage in frugal innovation, the following steps were taken:

1_{The term IHK describes the Chamber of Commerce in Germany which, amongst other activities, plays a leading}

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- Search for ‘frugal innovation’ on the firm’s website

- Check whether the firm has a presence in or targets EMs - Study the firm’s website for a clue to frugal innovations

- Internet search for ‘future innovation awards’ in combination with the name of the firm (Radjou and Prabhu (2015) suggest that award-winning future-oriented innovations are often frugal innovations.)

A firm was only contacted if at least one criteria was fulfilled. To evaluate the approach, the criteria provided by Miles & Huberman (1994, p.34) were applied, as shown in Table 4.

Miles and Huberman's criteria Fulfillment/ Relevance to dissertation 1. Relevance to research

question Yes: focus on NPD, choice of firms that are likely to innovate frugally 2. Potential to generate rich

information

Yes: potential to talk to various member of the organization/to visit company sites etc.

3. Analytic generalizability Yes: while making no claim to be statistically generalizable, analytic generalizability should hold for all case studies. 4. Potential to generate

believable explanations Yes: insights from different perspectives/ organizations were compared

5. Feasibility Relevant: access to companies determined feasibility, potentially limited access to information concerning R&D 6. Ethics Yes: ethics were considered with regards to the participants

Table 4: Miles and Huberman’s criteria for sample selection in case studies. Source: Miles &

Huberman (1994), Curtis et al. (2000)

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17 3.3 Interviews

For data collection, interviews were used. First, exploratory interviews were conducted since the preliminary literature review revealed various interesting research gaps. These interviews suggested that exploring favorable conditions for frugal innovation projects at firms with different innovation portfolios (with regards to innovation focus on EMs or DMs) would be interesting. Second, five casestudy firms were studied in depth. To sample firms, the following characteristics were relevant: Industry characteristics:

- Type of industry: firms from unrelated industries were preferred.

- Degree of innovation: firms from innovative industries according to OECD (2011) were preferred.

- Business environment: firms operating in Business-to-business (B2B) and firms operating in Business-to-consumer (B2C) were chosen to account for the different types of commercial relationships.

Firm characteristics:

- Firm size: firms of different sizes according to the European Commission (2015) were preferred. To account for the meaning of SMEs in Germany, studying multiple SMEs was preferred over studying multiple large organizations.

- Innovation focus: firms with different innovation portfolios were chosen.

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Interviews

Company Industry Position of interviewee Interview _duration Interview _mode B.T. innovation GmbH Building materials supplier, construction

Project engineer 57:52 Skype

Project leader low-cost house 32:11 phone Company A Tribology & _Construction

Development engineer (A) 28:22 in person Development engineer (A) 59:03 in person Development engineer (B) 42:12 phone HORO Dr.

Hofmann GmbH

Heating, tempering, humidifying, cooling

Managing director 54:17 in person Managing director 50:03 in person Managing director 22:03 in person Oldntec GmbH Assistance products, _{home automation}

CEO 23:48 phone

CEO 38:14 phone

CTO 37:11 phone

Company B Electromagnetic _systems R&D Manager 57:43 phone

Head of R&D 30:02 phone

Table 5: Overview of the interviews

Structure of the interviews:

To start the interview, each participant was asked about the innovation focus of the firm (EMs vs. DMs). Subsequently, three blocks of questions were asked: the first concerned a recent frugal innovation project: the Stage-Gate model was explained to the interviewees, so they were able to judge whether it applies to the project. If not, the interviewees were asked to describe the NPD model used for the project. Besides, more detailed questions concerning the steps of NPD were asked. Subsequently, the second block of questions compared the frugal innovation project with a conventional innovation project. Finally, the third block examined the drivers and barriers of frugal innovation at firm and project level.

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19 3.4 Data analysis

Following the transcription of the audio files, the answers were analyzed in detail. To do so, coding was used_{. ‘Coding means categorizing segments of data with a short} name that simultaneously summarizes and accounts for each piece of data’ (Charmaz, 2006). Coding helps to add precision to qualitative work. Moreover, it is an iterative process: original codes were reworked when going through the memos again and when new data came in. Thus, a clear cut between data collection and analysis was not made (cf. Suddaby, 2006; Miles and Huberman, 1994; Charmaz, 2006).

Based on codes, memos were written. Memo writing means treating some codes, i.e. the focused codes (see Appendix C), as categories to analyze (Charmaz, 2006). Following memo writing, theoretical sorting was used to organize the analysis.

3.5 Ethical issues and limitations

In general, ethics in qualitative research are more complex than in quantitative research since the researcher-participant relationship plays a greater role (Stevens, 2013; Thomas, 2004). To ensure that the decision to participate was made from a well-informed position (Stevens, 2013), the researcher provided participants with information about the study and collected consent to participate. Besides, data was treated confidentially and participants had the right to withdraw at any time.

Moreover, gatekeepers were necessary since external organizations were involved. The gatekeepers were informed about the research, the involved universities, and how data are handled. Before submission, all involved organizations had the opportunity to review the work, often referred to as member-checking (cf. Miles and Huberman, 1994; Carlson, 2010).

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3. Analysis and Findings

This section analyses the cases. First, each case is analyzed individually. Second, the drivers and barriers are analyzed across all cases, followed by an analysis of NPD processes according to different innovation portfolios. To enable the reader to judge the relation between the data and the conclusions drawn, Appendix B provides exemplary interview transcripts.

4.1 Case studies

4.1.1 B.T. innovation GmbH (BT)

BT is headquartered in Magdeburg and was founded in 1991. It provides technology products for construction with approximately 50 employees in Germany and partners all over the world (BT, 2015a). In the last years, BT transformed its business activity from a distributor to a developer of innovative products.

I have spoken a project engineer and a project leader. They explained one example of a frugal innovation project to me, namely the low-cost house. The low-cost house provides quality housing to impoverished parts of the population. It is a solid concrete house with 36 m2_{base area, depicted in Figure 2, which can be set up in two hours,}

costs € 5,000, and provides room for up to 8 people (BT, 2015b).

Figure 2: The low-cost house. Source: BT (2015)

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Analysis of NPD:

The development of the low-cost house followed the steps in Figure 3.

First, the idea evolved from personal experiences of the managing director: Being aware of the housing conditions in EMs, providing people with secure housing was a priority to him. Thus, the project did not have to compete for resources. Second, in the concept phase, the base area and other technical terms were specified. Third, BT examined how to realize the concept. Fourth, in the design phase, the first prototype was developed using traditional production methods and BT proved that it is possible to set the house up in two hours. However, the prototype was built following German standards and was thus too expensive and sophisticated for the targeted EMs. Accordingly, BT developed a second prototype using a new shuttering system. In the final phase, adjustments were made, a final prototype was developed, and the house was set up for demonstration.

Implications for enabling or hindering frugal innovation:

Idea generation + motivation, management support + market knowledge (travels in EMs)

+/- no formal project selection  fast decision: saves costs, but risky Concept phase + experience with precast concrete elements

+ specific internal know-how (construction industry) Feasibility phase + cooperation with research institutes

+ external funding  research grants

+ cooperation with industrial partners  sourcing of specialized knowledge Design phase + experience from former projects (‘a product of our products’)

- ignorance of the market-context for the first prototype

Adaptation + long-term outlook  development of a new shuttering system Completion - limited financial resources

Table 6: Implications for frugal innovation (BT) Figure 3: NPD process of BT's low-cost house

Personal motivation

How can this design be realized in a cost-efficient manner?

Development of a second prototype (using the new shuttering system)

Adjustments How can this

concept be realized? Research project

Prototype/ Introduction

Prototype/ Test Prototype/ Adaptation Development of first

prototype (using traditional production methods) First test (set-up of house in two hours)

How can the idea be realized?

Concept phase Idea

generation Feasibility phase

Design

phase Adaptation Completion

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The way the project was organized in combination with factors outside the project had implications for enabling (+) and hindering (-) frugal innovation, as presented in Table 6. First, the project was motivated by personal experiences of the managing director, possessing knowledge about the target market. Accordingly, the decision to commit to the project was made quickly. This can be a driver of frugal innovation since evaluation steps were not necessary, which saves costs. However, since the project was not evaluated formally, it was also more risky. Second, experience in the industry, and specific internal know-how enabled to keep the project organization simple, which helped to reduce costs. Similarly, cooperating with research institutes and an external industry partner (for the new shuttering system) enabled the sourcing of external knowledge which is important in the challenging EM context. In particular, not having to do research internally enabled BT to focus on its core competencies (namely concrete construction) and saved costs.

However, the project was organized in a way that _{focused on ‘trial and error’. To give} an example, the first prototype was developed based on German standards. The market context of EMs was completely ignored, resulting in a 56 tons heavy house, costing 50,000 €. This lack of market-orientation generated enormous costs.

4.1.2 Company A

Company A, headquartered in Stuttgart, develops innovative wear protection with approximately 15 employees. It focuses on _{‘tribological’}2_{developments for DMs,}

mostly in a B2B environment, which offer saving potentials for industrial areas.

I have spoken to two development engineers. They explained two frugal innovation projects to me, namely the development of a shovel for a cement mixer with cost, maintenance, and durability advantages, as well as the development of a mixing arm with comparable advantages. With regards to the classification of innovations, both projects are incremental innovations since only certain dimensions of the product, such as load-carrying mechanical components were improved and streamlined. The case is interesting since it presents an example of a firm focusing on DMs which will be helpful in the comparison of firms according to innovation portfolios.

2Derived from Greek, ‘tribology’ deals with ‘the study of friction, wear, lubrication, and the design of bearings’

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NPD for company A’s frugal innovations followed the steps depicted in Figure 4.

First, the idea evolved from a customer request and the requirements for the products were specified with the customer. Second, the basic characteristics and possible manufacturing methods were identified. Third, in the design phase, the requirements were specified and a theoretical model was developed using simulations and 3D-data. Fourth, prototype(s) were developed and tested. Besides, the customer was able to give feedback and request changes. Finally, adaptations were made before the innovation went into production.

Moreover, the horizontal bar above and underneath the steps in Figure 4 represent the evaluation steps and customer involvement in the process. A first calculation was performed during the concept phase, it was corrected and adapted as soon as new information came in, leading to a final calculation in the fifth phase. Moreover, the customer was involved in all steps: in idea generation, his experience was combined with _{the company’s experience and subsequently, the customer was able to request} changes and give feedback.

The way the frugal innovation project was organized had implications for enabling (+) frugal innovation, as presented in Table 7.

Customer request Prioritization of requirements Final adaptations Production Delivery Specification of requirements Theoretical development Development of a model

Customer request Customer feedback Presentation to the customer & feedback Customer feedback First cost calculation Corrections & Adaptations Final cost calculation Evaluation steps

Customer

Presentation of the model Adaptations

Development of prototype(s) & tests Development of a solution strategy Determination of basic product characteristics Concept phase Idea generation Design phase Adaptation & Testing Completion

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Idea generation + management support

+ proximity to the market (regional customers)

+ combination of customer experience with internal know-how

+ customer involvement (requirements were specified with the customer) Concept phase + internal know-how, experience (with niche firm is operating in)

+ flexible production structures + customer involvement

Design phase + limited financial resources (simulations had to be done virtually) + customer involvement

Adaptation and Testing

+ customer involvement (feedback on prototypes, change requests) Completion + customer involvement (satisfaction, problems)

Table 7: Implications for frugal innovation (company A)

First, the project organization enabled customer involvement at all stages. This helped to combine the customers_{’ experiences with the firm’s internal know-how and} experience with the niche they are operating in. This enabled them to deliver a product that fulfills the expectations of the market. To do this, flexible production structures were necessary. Second, the limited financial resources were favorable for the frugal innovation project as they forced the firm to perform simulations virtually, using 3-D data, which kept the costs of the project low.

4.1.3 HORO Dr. Hofmann GmbH (HORO)

HORO is based in Ostfildern and was founded in 1945. With approximately 20 employees, the firm produces and distributes drying, heating, and humidification cabinets directly to B2B customers or through partners (Horo, 2015). HORO develops products for EMs and DMs.

I have spoken to the managing director and I visited the manufacturing site. He explained one example of a frugal innovation project to me, namely the development of a heating cabinet. Examples of heating cabinets are depicted in Figure 5.

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The cabinet consists to 90 % of recyclable material, uses simple screws, a basic circuit diagram, and has some visual limitations but does not compromise on quality. The heating cabinet presents an incremental innovation since only 5 -10 % of the components had to be developed from scratch whereas the other parts were produced using common manufacturing methods. The case is interesting since HORO’s portfolio encompasses innovations for DMs and EMs. Besides, it will be interesting to study how HORO profits from partners.

HORO does not follow a general NPD process. Nevertheless, Figure 6 depicts the approach that was used for the project. The process consists of five stages. First, the idea evolved from a customer request. Second, a test of possible solutions was performed to determine the risk of failure. Third, since this showed a good level of feasibility, an agreement with the customer was made. Moreover, the product was specified in thresholds since it is impossible to exactly determine physical values during NPD.

Besides, a formal step of comparing different solution strategies might in general be included, but is not required and was not done for the heating cabinet. Fourth, the focus was on the risky parts of the product. In this stage, prototypes were built and tested, which is an iterative process. Last, the product went into production, was delivered to the customer, and the customer gave feedback. Simultaneously to all steps, an evaluation of the progress/ product took place.

Figure 6: NPD process of HORO’s frugal innovation

Building and testing of prototypes Evaluation Customer request General testing of possible solutions Evaluation Comparison of different solutions Agreement with customer Evaluation

Production & Evaluation Delivery

Final customer feedback

Working phase Idea generation Concept &

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Idea generation + customer involvement, proximity to customers  market-orientation + focus on a niche

+/- no formal project selection  fast decision, but: more risky Concept &

Testing + experience with former projects + specific internal know-how

+/- Early start of pretests  reduces risks, but: high number of tests  costs! Working phase + customer involvement

Adaptation

phase + focus on risky parts of the project (building & testing of prototypes was an iterative process) - high number of prototypes  costs!

Production + customer involvement (specifications and feedback)

Table 8: Implications for frugal innovation (HORO)

The way the frugal innovation project was organized had implications for enabling (+) and hindering (-) frugal innovation, as presented in Table 8. In particular, the project organization allowed HORO to involve customers extensively in the project. This helped to combine HORO’s know-how and experience with that of the customer, leading to a market-oriented innovation.

However, other parts of the project organization were less favorable for frugal innovation: first, the decision to commit resources to the project was not made based on formal criteria but based on the experience of the managing director. Thus, the decision was made quickly, which saved time. Nevertheless, such a decision bears risks, which potentially jeopardizes the success of the project. Second, due to the high perceived complexity of the project, pretests had to start early. This can be seen as an attempt to address the risks the firm was faced with. However, a higher number of tests also increases the costs of the project which can adversely affect the affordability of the resulting frugal innovation.

4.1.4 Oldntec GmbH

Oldntec is a start-up, founded in 2013 to develop innovations for the domestic care market, a market dominated by large competitors in Germany.

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5 € per month. The ambiact presents an incremental innovation since it was developed using simple technical parts that did not require a deviation from common production processes.

Figure 7: The ambiact. Source: Oldntec (2015 b,c)

This case is particularly interesting since it presents a frugal innovation specifically developed for DMs that requires a certain public infrastructure to work. Accordingly, it would not be suitable for many EMs.

Oldntec_{’s example of a frugal innovation project, the ambiact, has been the first and} currently only product developed by the company. However, Oldntec is currently developing a new product using the same process, as depicted in Figure 8.

First, the need was voiced by a potential customer, a social alarm provider, and Oldntec immediately started analyzing the market. Second, a non-functional prototype was developed to explain the concept more closely and the expected costs were assessed. Third, a functional prototype was developed using commercially

Figure 8: NPD process of Oldntec’s frugal innovation

Customer need Stakeholder analysis

Conversation with potential stakeholders

Development of 2nd_{(functional) prototype} Conversation with potential stakeholders Pilot production

1st_{field trial & feedback from participants} Modifications

Series production nd

Assessment of expected costs

Development of 1st_{(non-functional) prototype} Presentation of non-functional prototype

Exploration phase Idea generation Concept & Design phase Adaptation & Testing Completion

Final tests & modifications Production

Commercialization Customer Involvement

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available parts. After customer feedback, pilot products were developed. Fourth, a field trial, involving 60-100 participants was conducted over 6 months to get feedback from users. The product was improved based on this, before it went into series production. After the first batch was produced, Oldntec conducted a second (smaller) field test. Finally, the product was modified and tested for functionality and safety, before it went into production. Following this, the product was commercialized.

Idea generation + personal background/ motivation (experience at a research institute) + cooperation with external partners (Johanniter Unfallhilfe)

+ customer involvement (exploration of customer needs) Exploration phase + market knowledge

+ research grants

+ customer involvement (presentation of prototype/ feedback) Concept & Design

phase - limited resources + cooperation with industry partner (for production of components) + customer involvement (feedback on prototypes/ modifications) Adaptation & Testing + proximity to market

+ cooperation with Johanniter Unfallhilfe (for field tests & adaptations) + customer involvement ( 1st_{field trial)}

Completion + cooperation with Johanniter Unfallhilfe (for field tests & adaptations) + customer involvement (2nd_{field trial)}

Table 9: Implications for frugal innovation (Oldntec)

The way the project was organized had implications for enabling (+) and hindering (-) frugal innovation, as presented in Table 9. First, the project organization enabled customer involvement at all stages. In particular, the involvement of Johanniter Unfallhilfe3 was essential as it helped Oldntec to get input from users. Similarly,

Oldntec cooperated with an industry partner having specific knowledge in the field of electronical components. This knowledge, in combination with Oldntec_{’s experience,} facilitated the development of the product. Second, the project organization at Oldntec reflects the research background of the founders (with an exploration phase and field trials). This approach certainly helped Oldntec to obtain research grants. Without these grants, the realization of the project would have been more difficult.

3_{Johanniter Unfallhilfe is a registered charity in Germany that provides primarily emergency medical service,}

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4.1.5 Company B

Company B develops electromagnetic components for different industries. With more than 2,500 employees, it engages in innovation for EMs and DMs. Most development takes place in Germany, the main market.

I have spoken to a R&D Manager and the head of R&D. They explained two examples of frugal innovation projects to me. First, an electromagnetic drive for an elevator that is significantly more cost-effective compared to other solutions due to a lower usage of copper in production and a focus on the essential functions. Second, a magnet for a safety switch with comparable advantages. Both cases present incremental innovations since only certain dimensions of the product were streamlined, such as the usage of copper for the electromagnetic drive.

This case is interesting since the firm is significantly bigger compared to the other cases in the sample. Besides, as a supplier to different industries, company B operates in B2B rather than B2C.

NPD followed the steps depicted in Figure 9. First, in the planning phase the idea was generated, involving a meeting with a client. Second, a preliminary evaluation of the project took place. Third, the attractiveness and feasibility of the project were evaluated. This involved two steps: first, the attractiveness of the market was evaluated and second, the profitability of the project was assessed.

Release of the next phase Phase of the NPD process

Idea generation Client meeting First project evaluation Evaluation of market attractiveness Evaluation of project attractiveness Feasibility analysis Profitability assessment Technical simulations Development of prototypes Modifications & tests Series production & delivery Planning phase Concept phase Feasibility phase Working phase

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Third, in the working phase, simulations were performed and prototypes were developed that were subsequently modified and tested, involving the customer. Finally, series production started and the product was delivered. Besides, it was verified for each step whether the step was completed before the next step was released. This corresponds to the gates in the Stage-Gate model (see section 2.3.1).

Implication for enabling or hindering frugal innovation:

Planning phase + customer involvement

+ market knowledge (due to firm size and experience) Concept phase + internal research

+/- evaluation of project  less risk, but: higher costs & slower decision making Feasibility phase

Working phase + /- customer involvement: helps to understand what the market wants, but: changing customer requirements complicated the projects

- high number or prototypes  costly, long duration of project

Table 10: Implications for frugal innovation (company B)

The way the project was organized had implications for enabling (+) and hindering (-) frugal innovation, as presented in Table 10. First, being a large MNC, company B conducts internal research and possesses comprehensive market knowledge. These insights were used in the concept and feasibility phase of the project. This helped to keep costs low, to focus on the essential features of the product, and to deliver what the market needs. Second, the project involved a formal evaluation step: on the one hand, this helped to reduce the risks associated with the project. On the other hand, the process took time which created costs and slowed down decision-making. Similarly, involving the customer can be seen as enabling as well as hindering the project: by involving the customer early, the project organization enabled to understand what the market needs. However, since the customer changed his requirements frequently, customer involvement complicated the project resulting in a longer duration, higher costs, and potentially a higher price for the product.

4.1.6 Summary of the case studies

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Firm Employees Innovation

portfolio Frugal product(s) Type of innovation Type of business B.T. innovation

GmbH 50 EMs and DMs Low-cost house radical B2B

Company A 15 DMs Shovel for cement

mixer, mixing arm incremental B2B/B2C HORO Dr.

Hofmann GmbH

15 EMs and DMs Heating cabinet incremental B2B Oldntec GmbH 2 DMs Ambiact (smart meter) incremental B2B/B2C Company B 2,500 EMs and DMs Electromagnetic drive,

magnet for safety switch

incremental B2B

Table 11: Overview of the studied cases 4.2 Comparison of the cases

Having analyzed each case separately, the following section compares NPD according to the innovation portfolios of the firms. Moreover, differences between frugal and conventional innovation will be explored.

4.2.1 Innovation focus on DMs (company A, Oldntec)

The NPD processes of both firms consisted of 5 phases. Similarly, the idea for both projects evolved from a customer (company A) or potential customer (Oldntec). It is remarkable that, being from different industries and backgrounds, both firms involved customers almost equally in all steps of NPD.

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Summarizing, the NPD processes of firms focusing on frugal innovations for DMs are characterized by simple structures, which reduces costs and helps to ensure that only the essential features are included in the final product.

Abstracting from firm-specific circumstances, NPD for this part of the sample can be summarized as consisting of mainly four steps with concurrent cost calculation and customer involvement, as in Figure 10.

4.2.2 Innovation focus on DMs and EMs (BT, HORO, company B)

The NPD processes for firms engaged in innovation for DMs as well as EMs consisted of 4-6 phases. Generally, the processes differed more between firms compared to the other group of companies. This can partially be explained by the fact that more firms were compared and that company B was significantly bigger.

However, the firms were found to share important NPD characteristics: first, NPD was of higher complexity. This complexity is especially apparent in evaluation: for HORO, evaluation occurred during all steps and for company B, gates existed to evaluate the completion of each phase before the next phase was released, corresponding closely to a Stage-Gate system (see section 2.3.1). Even though no evaluation was performed by BT, the process was complex, consisting of a high number of steps. Accordingly, it can be said that the overall complexity is higher. Second, the design phases of NPD had an _{‘experimentation’ character, allowing for} flexibility. To give examples, for BT, _{design was a ‘trial’ process: a first prototype was} developed and the insights gained were used for further development. Similarly, HORO experimented with manufacturing processes and specified the resulting product characteristics in thresholds to allow for flexibility.

Third, customers were involved in NPD. Company B involved the customer in idea generation and testing. Similarly, BT usually involves customers. However, for the low-cost house direct customer involvement was not possible due to geographical

Figure 10: Basic NPD process of firms focusing on DMs

Idea generation/

exploration Concept & Design Adaptation & Testing Completion Cost Calculation

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distance to EMs. Instead, BT involved ambassadors that are close to the market. Thus, customers were involved - either direct or indirect.

However, some differences were also found in the cases: the idea evolved from customers in two cases (HORO and company B), whereas personal motivation initiated BT’s project. Second, project selection and evaluation differed: HORO conducted pretests, whereas company B assessed the attractiveness theoretically. Given the social motivation of the project, BT did not perform any evaluation. Moreover, differences between firms of different sizes could be observed: company B, the biggest in the sample, follows a general NPD process for all projects, resembling a Stage-Gate system. Compared to the smaller firms in the sample, this process was much more structured.

Summarizing, the NPD processes of firms engaged in innovation for EMs and DMs are more complex compared to the other group of companies. This complexity is necessary since the processes need to be suitable for different contexts, targeting EMs as well as DMs. Besides, especially for SMEs, the interviewees indicated some flexibility with regards to the number of steps. _{For HORO’s frugal innovations, for} example, a formal step of comparing different solution is complementary (see 4.1.3). This can be advantageous for frugal innovation as it allows to adjust to the requirements of each project.

When comparing NPD at the three firms, as depicted in Figure 11, it becomes evident that it is difficult to summarize the NPD. Thus, this thesis makes no claim to provide a general NPD model for firms engaged in innovation in EMs and DMs.

However, based on the analysis above, it can be concluded that the processes need to be structured and flexible enough to be adjusted to the requirements of different projects. Idea phase Concept phase Feasibility phase Design phase Adaptation phase Completion

Idea phase Concept &

Testing Adaptation phase Production Working Phase BT HORO Company B Planning phase Concept phase Feasibility phase Working phase Completion

Exploring frugal innovation in developed markets

Master Thesis