Let’s start by addressing the elephant in the room – It isn’t the best time to start a startup! It may sound a bit clichéd, given the whole startup ecosystem is based on solving problems that the big corporations and existing players in the market tend to overlook. However, even startups are a function of the overall economy, and venture capitalists have dwindled in the last three years.
You don’t need to be an economist to know the fragility of the global economy or the events that have led us here. Just as we started making a comeback after two years of surreal battle against Coronavirus, the Russia-Ukraine War has dealt us a severe blow. Energy prices have soared, and so has inflation putting the economy back into the tailspin. The Twitter saga and mass layoffs at Amazon and Meta don’t create the right buzz in the market.
Overcoming the Headwinds
We all know when markets thrive, startups get their trust and generate the much-needed funds to drive their ideas to the masses. Naturally, it isn’t the best time to look for Angels and VCs and dream about those astronomical valuations in Series A and B funding. Startup valuations have dropped, and there is a good chance you won’t raise as much capital as you’d have hoped in the past.
Enough of these negative talks! You are an inherent risk-taker as a startup owner or someone planning to take the plunge. Adversity is also the best time to launch a new product that brings a tectonic shift to people’s lives. You must think out of the box and choose the less-walked path to succeed amidst the fund crunch. FRUGAL INNOVATION is the path you need to choose.
Do More with Less
Frugal innovation is just the strategy you need in this challenging market. As the name suggests, it is a strategy of doing more with less. Instead of spending huge funds on marketing and customer acquisition, you must channel your limited resources to create maximum impact. This strategy aims to cut down the flab and divert funds toward essential business functions.
It is a derivative of frugal engineering, which entrepreneurs have been practicing for a long time in developing countries to deliver products and services at competitive prices by cutting down on non-essential features. The term frugal innovation in startup parlance is India’s gift to the world, where the Jugaad (hack or non-conventional) philosophy has been the way of life for businesses.
How To Scale Up with Frugal Innovation?
Scaling up your business with frugal innovation needs more than just spending less. It may need a complete reset of your business process to implement this thought into action. Here’s how you need to approach frugal innovation.
Value Frugal Innovation Approach
Your entire team needs to be on board with this approach, and it is easier said than done. Bring in people who value frugal innovation and believe in the idea vehemently. If your team has been splashy in the past, it’s time for a complete change in the mindset. Hire people who have innovated through frugality and know how to optimize spending and prioritize decisions.
Customer-Centric Products In Focus
The traditional approach to R&D is expensive, and it is time-consuming. Frugal innovation takes an entirely new approach to R&D and does away with the top-down approach. Instead of creating complex products and testing them in the market, with frugal innovation, customers are a part of the R&D issue. Startups are driving innovation by involving customers in the process.
Strategies that previously worked with unlimited access to funding show diminishing returns. Savvy entrepreneurs have picked the cue early to fine-tune their business model, aligning it with the current realities of the market. Involving customers in the R&D process accelerates the process, reducing time to market and thereby ensuring scalability.
Localizing Is The Way Forward
The past three decades have seen big corporations move into developing countries to leverage cheap labor and easy access to raw materials. It has benefitted the companies and the local economy at the same time. Startups need to adopt the same philosophy moving forward. Training people in developing countries and upskilling them helps bring down the cost of operations and improve the profit margin.
Team Members Taking The Lead
Identify people in the team who are passionate about innovating and creating products that offer value for money to consumers. Job losses coupled with double-digit inflation in several countries worldwide have already dwindled the savings and purchasing power of the masses. In such an economy, people are looking for affordable products and services without compromising on quality. It widens your market and creates more room for future growth.
Sustainable Solutions Are the Future
Climate change is the most widely debated topic in the world. Unlike in the past, this debate has moved from the confines of academic settings into our living rooms. Modern customers are conscious of the products and services they use and how each of these reaches them. As a startup, you must create sustainable products and solutions that consume less energy and natural resources. You can reduce your costs by adopting the best practices of recycling and upcycling.
Wrapping Up
Frugal innovation is the next big thing in the startup economy. As the economy struggles to come out of the downturn and global tensions continue to occupy the discourse, we are unlikely to see the big-ticket investments which were the norm in the last decade. As a startup, you must get your act together and “do more with less” to scale your business.
Frugal innovation is promising, but your startup needs stimulating communication and marketing strategies to increase its market footprint. If you need an expert team to drive your growth and let you focus on the core areas of business, Growth Natives would be the perfect match. We are Marketing Automation experts and specialize in working with startups and emerging businesses. Let’s take your business to greater heights. Email us at info@growthnatives.com or visit our website to book a free consultation.