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How Frugal Innovation Can Kickstart Global Economy

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In late 2015 a Cambridge-based nonprofit released the Raspberry Pi Zero, a tiny £4 computer that was a whole £26 cheaper than the original 2012 model. The Zero is not only remarkable for its own sake – a computer so cheap it comes free with a £5.99 magazine – it is also symptomatic of a larger “frugal innovation” revolution that is taking the world by storm.

With the global economy struggling, this is the kind of innovation that could kickstart it in 2016. Empowered by cheap computers such as the Raspberry Pi and other ubiquitous tools such as smartphones, cloud computing, 3D printers, crowdfunding, and social media, small teams with limited resources are now able to innovate in ways that only large companies and governments could in the past. This frugal innovation – the ability to create faster, better and cheaper solutions using minimal resources – is poised to drive global growth in 2016 and beyond.

More than four billion people around the world, most of them in developing countries, live outside the formal economy and face significant unmet needs when it come to health, education, energy, food, and financial services. For years this large population was either the target of aid or was left to the mercy of governments.

More recently, large firms and smaller social enterprises have begun to see these four billion as an enormous opportunity to be reached through market-based solutions. These solutions must, however, be frugal – highly affordable and flexible in nature. They typically include previously excluded groups both as consumers and producers. Bringing the next four billion into the formal economy through frugal innovation has already begun to unleash growth and create unprecedented wealth in Asia, Africa and Latin America. But there’s much, much more to come.

Good news

Take the case of telecommunications. Over the last decade or so, highly affordable handsets and cheap calling rates have made mobile phones as commonplace as toothbrushes. In addition to bringing massive productivity gains to farmers and small businesses – not to mention creating new sources of employment – mobile phones also enable companies to roll out financial, healthcare and educational services affordably and at scale.

Take the case of Safaricom, Vodafone’s subsidiary in Kenya. In 2007 the company introduced M-Pesa, a service that enables anyone with a basic, SMS-enabled mobile phone to send and receive money that can be cashed in a corner shop acting as an M-Pesa agent.

This person-to-person transfer of small amounts of money between people who are often outside the banking system has increased financial inclusion in Kenya in a highly affordable and rapid way. So much so that more than 20m Kenyans now use M-Pesa and the volume of transactions on the system is more than US$25 billion, more than half the country’s GDP. M-Pesa (and services like it) have now spread to several other emerging markets in Africa and Asia.

Similar frugal innovations in medical devices, transport, solar lighting and heating, clean cookstoves, cheap pharmaceuticals, sanitation, consumer electronics and so on, have driven growth in Asia and Africa over the past decade and will continue to do so in the decades to come.

Catching on

Meanwhile the developed world is catching up. Declining real incomes and government spending, accompanied by greater concern for the environment, are making Western consumers both value and values conscious.

The rise of two massive movements in recent years, the sharing economy and the maker movement, shows the potential of frugal innovation in the West. The sharing economy, exemplified by Airbnb, BlaBlaCar and Kickstarter, has empowered consumers to trade spare assets with each other and thus generate new sources of income. The maker movement, meanwhile, features proactive consumers who tinker in spaces such as FabLabs, TechShops and MakeSpaces, designing solutions to problems they encounter.

Square, a small white, square device that fits into the audio jack of a smartphone, using its computing power and connectivity to make credit card payments, is an example of a product that was developed in a TechShop. Launched in 2010, the Square is on track to make US$1 billion in revenue in 2015.

Frugal innovation not only has the power to drive more inclusive growth by tackling poverty and inequality around the world, it is also increasingly the key to growth that will not simultaneously wreck the planet. The big issue at the Paris climate summit was the increasing wedge between the developed and the developing world. On the one hand, the rich countries cannot stop the poor ones from attempting to achieve the West’s levels of prosperity. On the other, however, poor countries cannot grow in the way the West did without wrecking the planet.

The only way to square this circle is to ensure that the growth is sustainable. The need for frugal innovation is therefore all the more vital in areas such as energy generation and use, manufacturing systems that are more local, and a move to a circular economy where companies (and consumers) reduce, reuse and recycle materials in a potentially endless loop.

Never before have so many been able to do so much for so little. Aiding and stimulating this frugal innovation revolution holds the key to driving global growth by employing more people to solve some of the big problems of poverty, inequality and climate change that stalk the planet.

This article was written by Jaideep Prabhu, Director of Centre for India & Global Business at Judge Business School, University of Cambridge. see more.

Callum Connects

Clairine Runtung, Investment Manager of Convergence Ventures

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Early-stage venture capitalist, Clairine Runtung, shares her story and passion for helping build Indonesia’s technology ecosystem. In her role, she helps local entrepreneurs looking to grow their business, while also finding time to coach and mentor young women in venture capital through an organisation she co-founded in early 2017.

What’s your story?
Having lived in 4 different cities within 3 different countries throughout my career working in finance, I had always been drawn to not only numbers but also diversity, people and their stories. When an opportunity came about for me to join a tech VC firm in Jakarta, I jumped at the chance, after working for a number of years in a boutique investment consulting firm, a global asset management firm and a non-profit foundation.

I currently lead the investment team at Convergence Ventures, an Indonesia-based early-stage venture capital fund. My work includes sourcing deals, conducting due diligence, reviewing legal documents and most importantly, working with my colleagues in Investment, HR and Business Development teams to support our founders. My job requires relentless intellectual curiosity, analytical and communication skills, and ultimately passion to help the shaping and building of Indonesia’s tech ecosystem.

Early in 2017, I co-founded a Young Women in VC (renamed SheVC Indonesia in September 2017, as part of the global Pan-Asian SheVC network), focused on networking, mentoring and building a community for junior to mid-level female VCs. Our local membership grew to over 20 people within 6 months, and I personally mentored 3 young women just joining the industry. Aside from tech VC, I am also involved in being a Council for Yayasan Cinta Anak Bangsa, a non-profit organization focusing on youth and education, as well as being a mentor and a judge to a number of local tech startup events and competition. Beginning September, I will be attending Yale School of Management to pursue a 2-year MBA program.

What excites you most about your industry?
The never-ending learning, rapid progress, and people attempting to solve real problems through technology. I cannot wait to see what will unfold within tech-VC space in Indonesia in the next 5-10 years. My team and I think we are following China’s growth trajectory though to get there we need major support from the Government and foreign investors.

What’s your connection to Asia?
I was born and raised in Jakarta, Indonesia. I worked for 2.5 years in Singapore. I was educated in the United States and lived there but I am still very much deeply-rooted in Asia. After grad school, I plan on moving back to Asia for sure.

Favourite city in Asia for business and why?
Jakarta and Singapore for two extremely different reasons.
Jakarta, because the city’s urban challenge actually shapes you to become a resilient hustler. Not to mention the fact that the city has a dynamic tech VC landscape that’s rapidly evolving year by year.
Singapore, because I take pleasure in how efficient, effective and structured the city state is!

What’s the best piece of advice you ever received?
“The only way out is through”
“Leave your mark, build a legacy, no matter how tiny you think it is.”

Who inspires you?
My dad and everyone around me who was not born with silver spoons in their mouth.

What have you just learnt recently that blew you away?
It’s amazing how your body can truly adjust to the power of your mind. I have recently increased the frequency of my Intermittent Fasting routine, from only once a week to twice a week. Essentially, twice in a week I’d fast between 22-24 hours. Though skeptical and challenging at first, after a month, I rarely feel hungry/starving on those two scheduled fasting days. Interestingly, I also feel the most productive at work on days that I am fasting.

If you had your time again, what would you do differently?
Nothing. If there is anything I’d like to tell myself over and over again, is to never regret and to look only forward.

How do you unwind?
Take a hot shower, drink a cup of tea and read a book (I alternate between fiction and non-fiction) or watch videos (I also alternate between entertaining and educating videos). On some days, you can find me winding down over a nice dinner with friends or family.

Favourite Asian destination for relaxation? Why?
Bali, Jogjakarta and Manado. All cities are in Indonesia.
Bali for its beaches, sunshine and the feeling of being surrounded by carefree people. Jogjakarta for its Javanese cultural and heritage. Manado because it’s where my dad was born and where my grandparents live. In my opinion, each city has something different to offer that contributes to my way of relaxing.

Everyone in business should read this book:
The Golden Passport – Duff McDonald

Shameless plug for your business:
Instagram Story and straight up telling friends, acquaintances and even strangers about how awesome the work that I do is.

How can people connect with you?
LinkedIn: https://www.linkedin.com/in/clairineruntung/
Personal email: [email protected]

Twitter handle?
@clairineruntung though I have been inactive for years. I am much more active on LinkedIn these days. Find me on IG @clairineruntung as well.

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started,
built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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Callum Connects

Rishabh Singhvi & Varun Saraf, Co-Founders of Why Q

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Surprised by the lack of delivery services available for local Singaporean hawker stall foods, Rishabh and Varun started their own delivery service.

What’s your story?
Varun and I moved to Singapore in 2008 and soon turned into foodies. After completing our studies at SMU, we worked in corporate offices in the Singapore CBD for 4 years. Here, we faced the problem of long queues and found it hard to find feasible delivery options on a day to day basis. We made it our goal to help others like us, so they don’t face the same problem of finding affordable yet tasty options to eat their daily meal. The name asks all those queuing up at food courts and hawker centres a simple question – Why Queue … when we can bring Singapore’s favorite hawker food to you?

What excites you most about your industry?
The Hawker culture is the most exciting and intriguing part of the food industry in Singapore. It is deep-rooted in the local Singapore culture. There is rich variety of cuisines available under one roof, food is delicious and very affordable. We were very surprised how this part of the food industry was completely ignored by other food deliveries.

What’s your connection to Asia?
I was born and brought up in India and have been staying in Singapore for the past 10 years.

Favourite city in Asia for business and why?
The ease of running a start-up and the professionalism makes Singapore my favourite city for business. It has the most business-friendly regulations, low start-up costs and takes only a week to register and get your business going.

What’s the best piece of advice you ever received?
“If you do build a great experience, customers tell each other about that. Word of mouth is very powerful.” – Jeff Bezos

Who inspires you?
Hawker Uncle and Aunties are our Hawker Heroes. Most of the stalls are family-run businesses. The dedication and hard-work that they put in is commendable. They come to the hawker centre at 3am to start preparing food for the day and leave only in the evening after cleaning and washing everything.

What have you just learnt recently that blew you away?
We are leaning so much about our hawker partners through our #HawkersOfSG series, inspired by #HumansOfNewYork. For example, one of our hawker partners was into advertising (until the 2008 recession started, after which he started one of the most popular hawker stalls in the country) while the other used to sell and ride Harley Davidson bikes (and now sells black pepper rice bowls). Their stories and how they turned into our Hawker Heroes continues to inspire us and blow us away.

If you had your time again, what would you do differently?
I think I haven’t reached that stage in life yet where I look back and want to do things differently.

How do you unwind?
Watching and playing football 🙂

Favourite Asian destination for relaxation? Why?
Bali, definitely. One of the most beautiful and chill places.

Everyone in business should read this book:
Zero to One by Peter Thiel

Shameless plug for your business:
Cheapest and largest Hawker Food delivery in Singapore.

How can people connect with you?
On whatsapp at 90268776 or email at [email protected]

Twitter handle?
We’re on Instagram – https://www.instagram.com/whyqsg/ and Facebook – https://www.facebook.com/whyqsg/

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started,
built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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