Jugaad or frugal innovation refers to problem-solving using limited resources innovatively. It aims to deliver more value at lower costs by adopting simplicity and low costs without sacrificing quality. Examples provided include the Foldscope paper microscope which performs like conventional microscopes at 140x magnification for only $1. Another example is the Embrace infant warmer incubator designed for developing countries that is affordable and easy to maintain. The principles of frugal innovation include engaging customers through iteration, flexing assets through new tools and approaches, creating sustainable solutions, shaping customer behavior, co-creating value with prosumers, and making innovative friends through collaboration.