Four types of resource constrained innovation are described: cost innovation, good-enough innovation, frugal innovation, and reverse innovation. Cost innovation reduces costs through local sourcing, alternatives, and efficiencies. Good-enough innovation improves core functions and adds features while maintaining low energy use. Frugal innovation focuses on new product architectures and applications at low prices to create new markets. Reverse innovation develops products in emerging markets to first serve local needs but also meet demands in developed countries in a cost-effective way.

1. Four Types of Resource Constrained Innovation
Type What? How?
Cost
innovation
• It transforms the cost structure to bring
more value for money.
• Saves material resources to focus on
acceptable quality of the product.
It reduces costs in the value-chain by local sourcing or raw materials, using
alternatives, using cost-effective activities/material, capitalizing on
standards and common components, capitalizing on existing technologies,
bringing efficiency in processes and economies of scale, and capitalizing of
location-based advantages.
Good-enough
innovation
• Offers standard product functionality by
adapting and reengineering the
existing/old product.
• It improves specific value-adding
functions in the product based on users
requirement.
It is achieved through constant focus on core functionalities of the
product, bringing novelties, ease of use, robustness and new features in
the limitation of low energy consumption.
Frugal
innovation
Instead of focusing on cost and re-
engineering, it focuses on new products
and product architecture to enable new
applications/uses at significantly low prices.
Unlike other types it has the potential to create new markets because it is
directed towards intended purpose based on the context. It is more of a
needs-based perspective keeping a close attention to price-performance
ratio. Therefore, balances out the demand-performance equation.
Reverse
innovation
It stresses upon the market realm rather
than the product realm. (E.g., Healthcare
innovations in India)
The innovative product is designed and manufactured in resource
constrained environments (emerging economies) to serve local demands
but results in meeting high-end needs of developed economies. Serves the
cost conscious and efficiency seeking customers of developed countries.