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When you grow up in a developing country
like India, as I did,
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you instantly learn to get more value
from limited resources
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and find creative ways to reuse
what you already have.
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Take Mansukh Prajapati,
a potter in India.
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He has created a fridge
made entirely of clay
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that consumes no electricity.
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He can keep fruits and vegetables
fresh for many days.
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That's a cool invention, literally.
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In Africa, if you run out of
your cell phone battery, don't panic.
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You will find some
resourceful entrepreneurs
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who can recharge your
cell phone using bicycles.
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And since we are in South America,
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let's go to Lima in Peru,
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a region with high humidity
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that receives only one inch
of rainfall each year.
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An engineering college in Lima
designed a giant advertising billboard
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that absorbs air humidity
and converts it into purified water,
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generating over 90 liters
of water every day.
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The Peruvians are amazing.
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They can literally create
water out of thin air.
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For the past seven years,
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I have met and studied
hundreds of entrepreneurs
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in India, China, Africa and South America,
and they keep amazing me.
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Many of them did not go to school.
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They don't invent stuff in big R&D labs.
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The street is the lab.
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Why do they do that?
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Because they don't have the kind
of basic resources we take for granted,
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like capital and energy,
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and basic services
like healthcare and education
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are also scarce in those regions.
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When external resources are scarce,
you have to go within yourself
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to tap the most abundant
resource, human ingenuity,
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and use that ingenuity to find clever ways
to solve problems with limited resources.
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In India, we call it Jugaad.
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Jugaad is a Hindi word
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that means an improvised fix,
a clever solution born in adversity.
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Jugaad solutions are not
sophisticated or perfect,
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but they create more value at lower cost.
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For me, the entrepreneurs
who will create Jugaad solutions
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are like alchemists.
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They can magically transform
adversity into opportunity,
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and turn something of less value
into something of high value.
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In other words, they mastered the art
of doing more with less,
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which is the essence of frugal innovation.
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Frugal innovation is the ability
to create more economic and social value
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using fewer resources.
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Frugal innovation is not about making do;
it's about making things better.
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Now I want to show you how,
across emerging markets,
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entrepreneurs and companies are adopting
frugal innovation on a larger scale
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to cost-effectively deliver healthcare
and energy to billions of people
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who may have little income
but very high aspirations.
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Let's first go to China,
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where the country's largest
I.T. service provider, Neusoft,
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has developed a telemedicine solution
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to help doctors in cities
remotely treat old and poor patients
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in Chinese villages.
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This solution is based on
simple-to-use medical devices
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that less qualified health workers
like nurses can use in rural clinics.
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China desperately needs
these frugal medical solutions
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because by 2050 it will be home
to over half a billion senior citizens.
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Now let's go to Kenya,
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a country where half the population
uses M-Pesa, a mobile payment solution.
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This is a great solution
for the African continent
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because 80 percent of Africans
don't have a bank account,
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but what is exciting is that M-Pesa
is now becoming the source
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of other disruptive business models
in sectors like energy.
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Take M-KOPA, the home solar solution
that comes literally in a box
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that has a solar rooftop panel,
three LED lights,
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a solar radio, and a cell phone charger.
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The whole kit, though, costs 200 dollars,
which is too expensive for most Kenyans,
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and this is where mobile telephony
can make the solution more affordable.
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Today, you can buy this kit by making
an initial deposit of just 35 dollars,
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and then pay off the rest by making
a daily micro-payment of 45 cents
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using your mobile phone.
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Once you've made 365 micro-payments,
the system is unlocked,
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and you own the product and you start
receiving clean, free electricity.
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This is an amazing solution for Kenya,
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where 70 percent of people
live off the grid.
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This shows that with frugal innovation
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what matters is that you take what is
most abundant, mobile connectivity,
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to deal with what is scarce,
which is energy.
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With frugal innovation,
the global South is actually catching up
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and in some cases
even leap-frogging the North.
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Instead of building expensive hospitals,
China is using telemedicine
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to cost-effectively treat
millions of patients,
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and Africa, instead of building
banks and electricity grids,
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is going straight to mobile payments
and distributed clean energy.
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Frugal innovation is diametrically opposed
to the way we innovate in the North.
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I live in Silicon Valley,
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where we keep chasing
the next big technology thing.
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Think of the iPhone 5, 6, then 7, 8.
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Companies in the West spend
billions of dollars investing in R&D,
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and use tons of natural resources
to create ever more complex products,
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to differentiate their brands
from competition,
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and they charge customers
more money for new features.
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So the conventional business model
in the West is more for more.
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But sadly, this more for more model
is running out of gas, for three reasons:
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First, a big portion
of customers in the West
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because of the diminishing
purchasing power,
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can no longer afford
these expensive products.
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Second, we are running out of
natural water and oil.
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In California, where I live,
water scarcity is becoming a big problem.
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And third, most importantly,
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because of the growing income disparity
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between the rich
and the middle class in the West,
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there is a big disconnect
between existing products and services
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and basic needs of customers.
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Do you know that today,
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there are over 70 million Americans
today who are underbanked,
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because existing banking services
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are not designed to address
their basic needs.
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The prolonged economic crisis
in the West is making people think
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that they are about to lose
the high standard of living
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and face deprivation.
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I believe that the only way we can sustain
growth and prosperity in the West
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is if we learn to do more with less.
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The good news is,
that's starting to happen.
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Several Western companies
are now adopting frugal innovation
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to create affordable products
for Western consumers.
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Let me give you two examples.
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When I first saw this building,
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I told myself it's some
kind of postmodern house.
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Actually, it's a small manufacturing plant
set up by Grameen Danone,
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a joint venture between
Grameen Bank of Muhammad Yunus
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and the food multinational Danone
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to make high-quality yogurt in Bangladesh.
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This factory is 10 percent the size
of existing Danone factories
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and cost much less to build.
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I guess you can call it a low-fat factory.
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Now this factory, unlike Western factories
that are highly automated,
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relies a lot on manual processes in order
to generate jobs for local communities.
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Danone was so inspired by this model
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that combines economic efficiency
and social sustainability,
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they are planning to roll it out
in other parts of the world as well.
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Now, when you see this example,
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you might be thinking, "Well,
frugal innovation is low tech."
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Actually, no.
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Frugal innovation is also
about making high tech
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more affordable and more
accessible to more people.
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Let me give you an example.
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In China, the R&D engineers
of Siemens Healthcare
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have designed a C.T. scanner
that is easy enough to be used
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by less qualified health workers,
like nurses and technicians.
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This device can scan
more patients on a daily basis,
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and yet consumes less energy,
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which is great for hospitals,
but it's also great for patients
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because it reduces the cost
of treatment by 30 percent
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and radiation dosage by up to 60 percent.
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This solution was initially designed
for the Chinese market,
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but now it's selling like hotcakes
in the U.S. and Europe,
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where hospitals are pressured
to deliver quality care at lower cost.
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But the frugal innovation revolution
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in the West is actually led
by creative entrepreneurs
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who are coming up with amazing solutions
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to address basic needs
in the U.S. and Europe.
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Let me quickly give you
three examples of startups
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that personally inspire me.
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The first one happens to be launched
by my neighbor in Silicon Valley.
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It's called gThrive.
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They make these wireless sensors
designed like plastic rulers
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that farmers can stick
in different parts of the field
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and start collecting detailed
information like soil conditions.
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This dynamic data allows farmers
to optimize use of water energy
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while improving quality
of the products and the yields,
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which is a great solution for California,
which faces major water shortage.
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It pays for itself within one year.
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Second example is Be-Bound,
also in Silicon Valley,
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that enables you
to connect to the Internet
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even in no-bandwidth areas
where there's no wi-fi or 3G or 4G.
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How do they do that?
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They simply use SMS, a basic technology,
but that happens to be the most reliable
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and most widely available
around the world.
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Three billion people today with
cell phones can't access the Internet.
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This solution can connect them
to the Internet in a frugal way.
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And in France, there is
a startup calle Compte Nickel,
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It allows thousands of people
to walk into a Mom and Pop store
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and in just five minutes activate
the service that gives them two products:
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an international bank account number
and an international debit card.
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They charge a flat annual
maintenance fee of just 20 Euros.
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That means you can do
all banking transactions --
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send and receive money,
pay with your debit card --
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all with no additional charge.
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This is what I call low-cost banking
without the bank.
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Amazingly, 75 percent
of the customers using this service
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are the middle-class French
who can't afford high banking fees.
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Now, I talked about frugal innovation,
initially pioneered in the South,
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now being adopted in the North.
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Ultimately, we would like to see
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developed countries
and developing countries
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come together and co-create
frugal solutions
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that benefit the entire humanity.
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The exciting news is
that's starting to happen.
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Let's go to Nairobi to find that out.
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Nairobi has horrendous traffic jams.
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When I first saw them,
I thought, "Holy cow."
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Literally, because you have to dodge cows
as well when you drive in Nairobi.
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To ease the situation,
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the engineers at the IBM lab in Kenya
are piloting a solution called Megaffic,
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which initially was designed
by the Japanese engineers.
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Unlike in the West, Megaffic
doesn't rely on roadside sensors,
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which are very expensive
to install in Nairobi.
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Instead they process images, traffic data,
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collected from a small number of
low-resolution webcams in Nairobi streets,
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and then they use analytic software
to predict congestion points,
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and they can SMS drivers
alternate routes to take.
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Granted, Megaffic is not
as sexy as self-driving cars,
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but it promises to take Nairobi drivers
from point A to point B
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at least 20 percent faster.
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And earlier this year, UCLA Health
launched its Global Lab for Innovation,
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which seeks to identify frugal healthcare
solutions anywhere in the world
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that will be at least 20 percent cheaper
than existing solutions in the U.S.
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and yet more effective.
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It also tries to bring together
innovators from North and South
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to cocreate affordable healthcare
solutions for all of humanity.
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I gave tons of examples of frugal
innovators from around the world,
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but the question is, how do you go about
adopting frugal innovation?
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Well, I gleaned out three principles
from frugal innovators around the world
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that I want to share with you
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that you can apply
in your own organization
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to do more with less.
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The first principle is: Keep it simple.
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Don't create solutions
to impress customers.
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Make them easy enough to use
and widely accessible,
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like the C.T. scanner we saw in China.
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Second principle:
Do not reinvent the wheel.
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Try to leverage existing resources
and assets that are widely available,
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like using mobile telephony
to offer clean energy
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or Mom and Pop stores
to offer banking services.
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Third principle is:
Think and act horizontally.
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Companies tend to scale up vertically
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by centralizing operations
in big factories and warehouses,
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but if you want to be agile and deal
with immense customer diversity,
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you need to scale out horizontally
using a distributed supply chain
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with smaller manufacturing
and distribution units,
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like Grameen Bank has shown.
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The South pioneered frugal innovation
out of sheer necessity.
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The North is now learning to do
more and better with less
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as it faces resource constraints.
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As an Indian-born French national
who lives in the United States,
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my hope is that we transcend
this artificial North-South divide
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so that we can harness
the collective ingenuity
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of innovators from around the world
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to cocreate frugal solutions
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that will improve the quality of life
of everyone in the world,
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while preserving our precious planet.
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Thank you very much.
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(Applause)
