0:00:00.693,0:00:04.924
When you grow up in a developing country[br]like India, as I did,

0:00:05.754,0:00:11.107
you instantly learn to get more value[br]from limited resources

0:00:11.107,0:00:15.237
and find creative ways to reuse[br]what you already have.

0:00:16.127,0:00:20.005
Take Mansukh Prajapati,[br]a potter in India.

0:00:20.435,0:00:25.977
He has created a fridge[br]made entirely of clay

0:00:25.977,0:00:28.275
that consumes no electricity.

0:00:28.275,0:00:32.130
He can keep fruits and vegetables[br]fresh for many days.

0:00:32.130,0:00:36.680
That's a cool invention, literally.

0:00:36.680,0:00:40.906
In Africa, if you run out of[br]your cell phone battery, don't panic.

0:00:40.906,0:00:43.920
You will find some[br]resourceful entrepreneurs

0:00:43.920,0:00:46.565
who can recharge your [br]cell phone using bicycles.

0:00:46.565,0:00:48.698
And since we are in South America,

0:00:48.698,0:00:51.842
let's go to Lima in Peru,

0:00:51.842,0:00:54.466
a region with high humidity

0:00:54.466,0:00:59.230
that receives only one inch[br]of rainfall each year.

0:00:59.230,0:01:06.124
An engineering college in Lima[br]designed a giant advertising billboard

0:01:06.124,0:01:12.787
that absorbs air humidity[br]and converts it into purified water,

0:01:12.787,0:01:17.664
generating over 90 liters[br]of water every day.

0:01:17.664,0:01:19.751
The Peruvians are amazing.

0:01:19.751,0:01:24.432
They can literally create[br]water out of thin air.

0:01:24.432,0:01:26.476
For the past seven years,

0:01:26.476,0:01:30.252
I have met and studied[br]hundreds of entrepreneurs

0:01:30.252,0:01:36.840
in India, China, Africa and South America,[br]and they keep amazing me.

0:01:36.840,0:01:40.041
Many of them did not go to school.

0:01:40.041,0:01:43.517
They don't invent stuff in big R&D labs.

0:01:43.517,0:01:46.550
The street is the lab.

0:01:47.480,0:01:49.059
Why do they do that?

0:01:49.059,0:01:52.526
Because they don't have the kind[br]of basic resources we take for granted,

0:01:52.526,0:01:54.367
like capital and energy,

0:01:54.367,0:01:57.315
and basic services[br]like healthcare and education

0:01:57.315,0:02:00.958
are also scarce in those regions.

0:02:00.958,0:02:06.945
When external resources are scarce,[br]you have to go within yourself

0:02:06.945,0:02:10.905
to tap the most abundant[br]resource, human ingenuity,

0:02:10.905,0:02:17.700
and use that ingenuity to find clever ways[br]to solve problems with limited resources.

0:02:17.700,0:02:21.986
In India, we call it Jugaad.

0:02:21.986,0:02:24.162
Jugaad is a Hindi word

0:02:24.162,0:02:30.190
that means an improvised fix,[br]a clever solution born in adversity.

0:02:30.190,0:02:34.824
Jugaad solutions are not[br]sophisticated or perfect,

0:02:34.824,0:02:37.623
but they create more value at lower cost.

0:02:38.353,0:02:41.812
For me, the entrepreneurs[br]who will create Jugaad solutions

0:02:41.812,0:02:43.786
are like alchemists.

0:02:43.786,0:02:47.849
They can magically transform[br]adversity into opportunity,

0:02:47.849,0:02:53.350
and turn something of less value[br]into something of high value.

0:02:53.350,0:03:00.318
In other words, they mastered the art[br]of doing more with less,

0:03:00.318,0:03:05.287
which is the essence of frugal innovation.

0:03:05.287,0:03:10.917
Frugal innovation is the ability [br]to create more economic and social value

0:03:10.917,0:03:14.277
using fewer resources.

0:03:14.277,0:03:20.104
Frugal innovation is not about making do;[br]it's about making things better.

0:03:21.238,0:03:26.210
Now I want to show you how,[br]across emerging markets,

0:03:26.210,0:03:31.109
entrepreneurs and companies are adopting [br]frugal innovation on a larger scale

0:03:31.109,0:03:35.565
to cost-effectively deliver healthcare[br]and energy to billions of people

0:03:35.565,0:03:40.440
who may have little income[br]but very high aspirations.

0:03:40.960,0:03:43.180
Let's first go to China,

0:03:43.180,0:03:47.197
where the country's largest[br]I.T. service provider, Neusoft,

0:03:47.197,0:03:50.030
has developed a telemedicine solution

0:03:50.030,0:03:54.722
to help doctors in cities[br]remotely treat old and poor patients

0:03:54.722,0:03:56.553
in Chinese villages.

0:03:56.553,0:04:01.198
This solution is based on[br]simple-to-use medical devices

0:04:01.198,0:04:06.355
that less qualified health workers[br]like nurses can use in rural clinics.

0:04:06.355,0:04:10.370
China desperately needs[br]these frugal medical solutions

0:04:10.370,0:04:17.568
because by 2050 it will be home[br]to over half a billion senior citizens.

0:04:17.568,0:04:20.516
Now let's go to Kenya,

0:04:20.516,0:04:26.507
a country where half the population[br]uses M-Pesa, a mobile payment solution.

0:04:26.507,0:04:29.247
This is a great solution[br]for the African continent

0:04:29.247,0:04:33.332
because 80 percent of Africans[br]don't have a bank account,

0:04:33.332,0:04:38.031
but what is exciting is that M-Pesa[br]is now becoming the source

0:04:38.031,0:04:42.650
of other disruptive business models[br]in sectors like energy.

0:04:42.650,0:04:48.468
Take M-KOPA, the home solar solution[br]that comes literally in a box

0:04:48.468,0:04:53.463
that has a solar rooftop panel,[br]three LED lights,

0:04:53.463,0:04:56.687
a solar radio, and a cell phone charger.

0:04:56.687,0:05:02.915
The whole kit, though, costs 200 dollars,[br]which is too expensive for most Kenyans,

0:05:02.915,0:05:08.858
and this is where mobile telephony[br]can make the solution more affordable.

0:05:08.858,0:05:15.011
Today, you can buy this kit by making[br]an initial deposit of just 35 dollars,

0:05:15.011,0:05:20.398
and then pay off the rest by making[br]a daily micro-payment of 45 cents

0:05:20.398,0:05:22.790
using your mobile phone.

0:05:22.790,0:05:27.712
Once you've made 365 micro-payments,[br]the system is unlocked,

0:05:27.713,0:05:33.958
and you own the product and you start [br]receiving clean, free electricity.

0:05:33.958,0:05:36.280
This is an amazing solution for Kenya,

0:05:36.280,0:05:39.530
where 70 percent of people[br]live off the grid.

0:05:40.940,0:05:44.128
This shows that with frugal innovation

0:05:44.128,0:05:49.120
what matters is that you take what is[br]most abundant, mobile connectivity,

0:05:49.120,0:05:54.191
to deal with what is scarce,[br]which is energy.

0:05:54.191,0:05:58.761
With frugal innovation,[br]the global South is actually catching up

0:05:58.761,0:06:02.288
and in some cases [br]even leap-frogging the North.

0:06:02.288,0:06:07.480
Instead of building expensive hospitals,[br]China is using telemedicine

0:06:07.480,0:06:11.109
to cost-effectively treat[br]millions of patients,

0:06:11.109,0:06:15.799
and Africa, instead of building[br]banks and electricity grids,

0:06:15.799,0:06:21.116
is going straight to mobile payments[br]and distributed clean energy.

0:06:21.116,0:06:27.875
Frugal innovation is diametrically opposed[br]to the way we innovate in the North.

0:06:27.875,0:06:29.521
I live in Silicon Valley,

0:06:29.521,0:06:32.934
where we keep chasing[br]the next big technology thing.

0:06:32.934,0:06:37.578
Think of the iPhone 5, 6, then 7, 8.

0:06:37.578,0:06:41.967
Companies in the West spend[br]billions of dollars investing in R&D,

0:06:41.967,0:06:46.431
and use tons of natural resources[br]to create ever more complex products,

0:06:46.431,0:06:49.767
to differentiate their brands[br]from competition,

0:06:49.767,0:06:53.854
and they charge customers[br]more money for new features.

0:06:53.854,0:07:00.095
So the conventional business model [br]in the West is more for more.

0:07:01.225,0:07:06.744
But sadly, this more for more model[br]is running out of gas, for three reasons:

0:07:06.744,0:07:10.890
First, a big portion[br]of customers in the West

0:07:10.890,0:07:13.872
because of the diminishing[br]purchasing power,

0:07:13.872,0:07:16.702
can no longer afford[br]these expensive products.

0:07:16.702,0:07:21.820
Second, we are running out of[br]natural water and oil.

0:07:21.820,0:07:25.721
In California, where I live,[br]water scarcity is becoming a big problem.

0:07:25.721,0:07:28.338
And third, most importantly,

0:07:28.338,0:07:30.713
because of the growing income disparity

0:07:30.713,0:07:33.773
between the rich [br]and the middle class in the West,

0:07:33.773,0:07:37.191
there is a big disconnect[br]between existing products and services

0:07:37.191,0:07:39.372
and basic needs of customers.

0:07:39.372,0:07:41.270
Do you know that today,

0:07:41.270,0:07:46.036
there are over 70 million Americans[br]today who are underbanked,

0:07:46.036,0:07:49.358
because existing banking services

0:07:49.358,0:07:53.616
are not designed to address[br]their basic needs.

0:07:53.616,0:07:57.508
The prolonged economic crisis[br]in the West is making people think

0:07:57.508,0:08:00.782
that they are about to lose[br]the high standard of living

0:08:00.782,0:08:03.638
and face deprivation.

0:08:03.638,0:08:08.096
I believe that the only way we can sustain[br]growth and prosperity in the West

0:08:08.096,0:08:11.597
is if we learn to do more with less.

0:08:11.597,0:08:14.635
The good news is,[br]that's starting to happen.

0:08:14.635,0:08:18.150
Several Western companies[br]are now adopting frugal innovation

0:08:18.150,0:08:22.515
to create affordable products[br]for Western consumers.

0:08:22.515,0:08:24.945
Let me give you two examples.

0:08:24.945,0:08:26.718
When I first saw this building,

0:08:26.718,0:08:29.875
I told myself it's some[br]kind of postmodern house.

0:08:29.875,0:08:35.123
Actually, it's a small manufacturing plant[br]set up by Grameen Danone,

0:08:35.123,0:08:38.579
a joint venture between [br]Grameen Bank of Muhammad Yunus

0:08:38.579,0:08:40.515
and the food multinational Danone

0:08:40.515,0:08:43.830
to make high-quality yogurt in Bangladesh.

0:08:43.830,0:08:47.774
This factory is 10 percent the size[br]of existing Danone factories

0:08:47.774,0:08:50.536
and cost much less to build.

0:08:50.536,0:08:54.070
I guess you can call it a low-fat factory.

0:08:54.070,0:08:58.760
Now this factory, unlike Western factories[br]that are highly automated,

0:08:58.760,0:09:04.828
relies a lot on manual processes in order [br]to generate jobs for local communities.

0:09:05.493,0:09:07.769
Danone was so inspired by this model

0:09:07.769,0:09:11.749
that combines economic efficiency[br]and social sustainability,

0:09:11.749,0:09:16.121
they are planning to roll it out[br]in other parts of the world as well.

0:09:16.121,0:09:18.123
Now, when you see this example,

0:09:18.123,0:09:21.917
you might be thinking, "Well,[br]frugal innovation is low tech."

0:09:21.917,0:09:23.560
Actually, no.

0:09:23.560,0:09:26.782
Frugal innovation is also[br]about making high tech

0:09:26.782,0:09:29.963
more affordable and more[br]accessible to more people.

0:09:29.963,0:09:31.787
Let me give you an example.

0:09:31.787,0:09:34.993
In China, the R&D engineers[br]of Siemens Healthcare

0:09:34.993,0:09:39.986
have designed a C.T. scanner[br]that is easy enough to be used

0:09:39.986,0:09:43.709
by less qualified health workers,[br]like nurses and technicians.

0:09:43.709,0:09:47.517
This device can scan[br]more patients on a daily basis,

0:09:47.517,0:09:49.792
and yet consumes less energy,

0:09:49.792,0:09:53.713
which is great for hospitals,[br]but it's also great for patients

0:09:53.713,0:09:58.406
because it reduces the cost[br]of treatment by 30 percent

0:09:58.406,0:10:02.052
and radiation dosage by up to 60 percent.

0:10:02.052,0:10:05.674
This solution was initially designed[br]for the Chinese market,

0:10:05.674,0:10:09.691
but now it's selling like hotcakes[br]in the U.S. and Europe,

0:10:09.691,0:10:15.302
where hospitals are pressured[br]to deliver quality care at lower cost.

0:10:16.122,0:10:18.584
But the frugal innovation revolution

0:10:18.584,0:10:22.833
in the West is actually led[br]by creative entrepreneurs

0:10:22.833,0:10:24.992
who are coming up with amazing solutions

0:10:24.992,0:10:28.175
to address basic needs[br]in the U.S. and Europe.

0:10:28.175,0:10:31.377
Let me quickly give you[br]three examples of startups

0:10:31.377,0:10:33.049
that personally inspire me.

0:10:33.049,0:10:36.657
The first one happens to be launched[br]by my neighbor in Silicon Valley.

0:10:36.657,0:10:38.506
It's called gThrive.

0:10:38.506,0:10:42.337
They make these wireless sensors[br]designed like plastic rulers

0:10:42.337,0:10:45.146
that farmers can stick[br]in different parts of the field

0:10:45.146,0:10:49.070
and start collecting detailed[br]information like soil conditions.

0:10:49.070,0:10:54.085
This dynamic data allows farmers[br]to optimize use of water energy

0:10:54.085,0:10:58.335
while improving quality[br]of the products and the yields,

0:10:58.335,0:11:02.964
which is a great solution for California,[br]which faces major water shortage.

0:11:02.964,0:11:05.463
It pays for itself within one year.

0:11:05.463,0:11:09.108
Second example is Be-Bound,[br]also in Silicon Valley,

0:11:09.108,0:11:11.732
that enables you[br]to connect to the Internet

0:11:11.732,0:11:16.681
even in no-bandwidth areas[br]where there's no wi-fi or 3G or 4G.

0:11:16.681,0:11:18.164
How do they do that?

0:11:18.164,0:11:24.568
They simply use SMS, a basic technology,[br]but that happens to be the most reliable

0:11:24.568,0:11:26.970
and most widely available[br]around the world.

0:11:26.970,0:11:30.280
Three billion people today with [br]cell phones can't access the Internet.

0:11:30.280,0:11:34.788
This solution can connect them[br]to the Internet in a frugal way.

0:11:34.788,0:11:38.573
And in France, there is[br]a startup calle Compte Nickel,

0:11:38.573,0:11:41.174
[br]which is revolutionizing[br]the banking sector.

0:11:41.174,0:11:45.167
It allows thousands of people[br]to walk into a Mom and Pop store

0:11:45.167,0:11:49.486
and in just five minutes activate[br]the service that gives them two products:

0:11:49.486,0:11:53.716
an international bank account number[br]and an international debit card.

0:11:53.716,0:11:58.256
They charge a flat annual [br]maintenance fee of just 20 Euros.

0:11:58.256,0:12:00.558
That means you can do[br]all banking transactions --

0:12:00.558,0:12:02.953
send and receive money,[br]pay with your debit card --

0:12:02.953,0:12:05.321
all with no additional charge.

0:12:05.321,0:12:09.222
This is what I call low-cost banking[br]without the bank.

0:12:09.222,0:12:13.665
Amazingly, 75 percent[br]of the customers using this service

0:12:13.665,0:12:18.463
are the middle-class French[br]who can't afford high banking fees.

0:12:18.463,0:12:22.875
Now, I talked about frugal innovation,[br]initially pioneered in the South,

0:12:22.875,0:12:24.965
now being adopted in the North.

0:12:24.965,0:12:27.333
Ultimately, we would like to see

0:12:27.333,0:12:29.678
developed countries[br]and developing countries

0:12:29.678,0:12:32.743
come together and co-create[br]frugal solutions

0:12:32.743,0:12:35.135
that benefit the entire humanity.

0:12:35.135,0:12:37.923
The exciting news is[br]that's starting to happen.

0:12:37.923,0:12:40.547
Let's go to Nairobi to find that out.

0:12:40.547,0:12:44.167
Nairobi has horrendous traffic jams.

0:12:44.167,0:12:47.082
When I first saw them,[br]I thought, "Holy cow."

0:12:47.082,0:12:52.258
Literally, because you have to dodge cows[br]as well when you drive in Nairobi.

0:12:52.258,0:12:54.186
To ease the situation,

0:12:54.186,0:13:00.707
the engineers at the IBM lab in Kenya[br]are piloting a solution called Megaffic,

0:13:00.707,0:13:05.250
which initially was designed[br]by the Japanese engineers.

0:13:05.250,0:13:10.424
Unlike in the West, Megaffic[br]doesn't rely on roadside sensors,

0:13:10.424,0:13:12.702
which are very expensive[br]to install in Nairobi.

0:13:12.702,0:13:16.397
Instead they process images, traffic data,

0:13:16.397,0:13:22.026
collected from a small number of[br]low-resolution webcams in Nairobi streets,

0:13:22.026,0:13:26.216
and then they use analytic software[br]to predict congestion points,

0:13:26.216,0:13:30.117
and they can SMS drivers[br]alternate routes to take.

0:13:30.117,0:13:34.459
Granted, Megaffic is not[br]as sexy as self-driving cars,

0:13:34.459,0:13:39.446
but it promises to take Nairobi drivers[br]from point A to point B

0:13:39.446,0:13:42.696
at least 20 percent faster.

0:13:42.696,0:13:49.412
And earlier this year, UCLA Health[br]launched its Global Lab for Innovation,

0:13:49.412,0:13:54.087
which seeks to identify frugal healthcare [br]solutions anywhere in the world

0:13:54.087,0:13:59.474
that will be at least 20 percent cheaper[br]than existing solutions in the U.S.

0:13:59.474,0:14:01.584
and yet more effective.

0:14:01.584,0:14:06.339
It also tries to bring together[br]innovators from North and South

0:14:06.339,0:14:10.857
to cocreate affordable healthcare[br]solutions for all of humanity.

0:14:12.027,0:14:16.300
I gave tons of examples of frugal[br]innovators from around the world,

0:14:16.300,0:14:20.328
but the question is, how do you go about[br]adopting frugal innovation?

0:14:20.328,0:14:23.923
Well, I gleaned out three principles[br]from frugal innovators around the world

0:14:23.923,0:14:25.669
that I want to share with you

0:14:25.669,0:14:27.940
that you can apply[br]in your own organization

0:14:27.940,0:14:30.649
to do more with less.

0:14:30.649,0:14:34.829
The first principle is: Keep it simple.

0:14:34.829,0:14:37.870
Don't create solutions[br]to impress customers.

0:14:37.870,0:14:41.121
Make them easy enough to use[br]and widely accessible,

0:14:41.121,0:14:44.128
like the C.T. scanner we saw in China.

0:14:44.128,0:14:48.319
Second principle: [br]Do not reinvent the wheel.

0:14:48.319,0:14:52.405
Try to leverage existing resources[br]and assets that are widely available,

0:14:52.405,0:14:56.399
like using mobile telephony[br]to offer clean energy

0:14:56.399,0:15:00.091
or Mom and Pop stores[br]to offer banking services.

0:15:00.091,0:15:04.381
Third principle is:[br]Think and act horizontally.

0:15:04.381,0:15:07.567
Companies tend to scale up vertically

0:15:07.567,0:15:11.097
by centralizing operations[br]in big factories and warehouses,

0:15:11.097,0:15:15.253
but if you want to be agile and deal[br]with immense customer diversity,

0:15:15.253,0:15:20.052
you need to scale out horizontally[br]using a distributed supply chain

0:15:20.052,0:15:22.906
with smaller manufacturing[br]and distribution units,

0:15:22.906,0:15:27.164
like Grameen Bank has shown.

0:15:27.164,0:15:32.379
The South pioneered frugal innovation[br]out of sheer necessity.

0:15:32.379,0:15:36.684
The North is now learning to do[br]more and better with less

0:15:36.684,0:15:39.958
as it faces resource constraints.

0:15:39.958,0:15:45.321
As an Indian-born French national[br]who lives in the United States,

0:15:45.321,0:15:51.702
my hope is that we transcend[br]this artificial North-South divide

0:15:51.702,0:15:54.043
so that we can harness[br]the collective ingenuity

0:15:54.043,0:15:56.397
of innovators from around the world

0:15:56.397,0:15:59.021
to cocreate frugal solutions

0:15:59.021,0:16:03.479
that will improve the quality of life[br]of everyone in the world,

0:16:03.479,0:16:06.358
while preserving our precious planet.

0:16:06.358,0:16:08.448
Thank you very much.

0:16:08.448,0:16:12.046
(Applause)