Frugal innovation: What governments can learn from emerging markets

Many governments are facing a perfect storm: smaller budgets, less staff, higher citizen expectations, retiring baby boomers, legacy systems and broken processes among other obstacles.

The Economist recently featured a special report on innovation in emerging markets. This report discussed how companies in the emerging markets, especially India and China, are forging ahead faster and smarter than the rest of us here in the so-called rich countries.

One of the articles within this report caught my attention. It discussed in detail the concept of ‘Frugal Innovation (login required).’ I think this concept applies to government organizations during these tough economic times. The companies mentioned in the article have mastered the ability to constantly squeeze costs out of everything they do while continuing to reach more and more customers. Applying this approach to government can help local, county state and provincial organizations deal with the position they find themselves in today where budgets are tight yet citizen and management expectations are increasing every day.

Frugal innovation doesn’t mean just coming out with low-end products or services. It involves rethinking the whole process of how you do work in a way that helps minimize costs while still allowing for increased service levels. The article offered several examples of companies in emerging markets that have adopted frugal innovation to deliver better results, and I got thinking about how governments can adopt the same mindset.

There are three key concepts that I think governments can adopt from these emerging markets. These are quite bold statements and not always possible for governments, but you would be surprised to know that they are already taking place in governments across North America.

Here are some ideas:

  1. Focus on your core business and contract out the rest – Governments are realizing that they are in the business of protecting and serving the citizens and not in the business of writing software applications. This is one reason why we are seeing a huge push towards Commercial Off The Shelf solutions and away from custom applications. This also applies to how governments deliver services. The City of Arlington, Texas, has a program called Code Rangers, where citizens are trained in the most common code enforcement violations to help with bylaw enforcement issues and has outsourced several inspections to third party firms all because they know their core focus.
  2. Use existing technology in imaginative new ways – The world where every department within a government organization bought their own siloed workflow application for its own purpose where it didn’t have to share data with the rest of the organization are gone. Also gone are the days where governments could easily find and retain talented IT staff to sustain all those applications. When Province of Nova Scotia was asked to quickly develop a tax rebate system by the Premier, it had a couple of options: build from scratch or see what existing technology they can leverage. Within a matter of months, Nova Scotia had a rebate system up and running on a COTS platform. The City of St. Paul, Minnesota has leveraged its existing permitting software to also automate its internal IT support and ticketing functions. On a personal note, I’m excited to see that governments are using existing technology in such creative and imaginative ways. This imaginative thinking has helped government agencies deliver more services with less costs, effort and resources.
  3. Apply mass production techniques in new and unexpected areas – If you were to walk into the first floor of city hall or the building department of City of San Jose, CA, City of Arlington, TX, or Orange County, FL, you will see a well laid out and planned One Stop Shop for Permitting. Where previously, the permitting process was disjointed, these organizations have setup a One Stop Shop to manage large volumes of customers in a streamlined and efficient manner. The sheer volume of applicants these organizations face has forced them to rethink their processes, specialize its people, and leverage various technologies to deliver the required results.

These are tried, tested and true concepts that have been proven successful in business and are being proved in governments today. Challenge yourself, your team, and your organization to adopt the ‘Frugal Innovation’ mindset, and I promise you, you will be building a stronger foundation for the future.

About Nitish Mukhi

Nitish Mukhi is the Vice President of Business Development for CSDC Systems, which provides Local, County and State/Provincial government agencies with a Business Performance Framework, AMANDA, to improve operational efficiency and ensure the consistent delivery of citizen services. AMANDA is designed to comply with open standards and is easily configurable, to meets the changing needs of governments. Nitish can be reached at

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