Not “cheap”, but precisely high-quality and therefore “inexpensive”. This offers the mechanical and plant engineering industry opportunities not only for new markets, but also for established ones.
A new study by the IMPULS Foundation of the VDMA has investigated how frugal innovations can achieve something like the perfect price-performance ratio.
Frugal thinking is initially a major challenge. A recent study by the University of Virginia examined the “additive bias”, the human tendency to meet challenges by adding rather than omitting. The result: more than 1,000 test subjects from the USA, Germany and Japan showed that tasks are primarily solved by adding elements, even when removing was more efficient or adding was more expensive. This bias could only be overcome through explicit instructions and training.
Based on these findings on frugal thinking, the authors Liza Wohlfart, Kevin Klöpfer and Raphael Hägle from the Fraunhofer Institutes IAO and IPA presented the most important results of the above-mentioned VDMA IMPULS study in the Web-Erfa “Frugal innovations in mechanical and plant engineering”. The relevance of frugal innovations for German machine manufacturers was illustrated by the following data: 33% of European customers do not use more than 30% of the available machine functions. 68% of Chinese customers do not use more than 30% of the available machine functions. Frugal products offer a solution here, according to the speakers. These must have the following characteristics: In terms of functionality, focused on core and main functions, matched in performance to the application, high in core functions but without oversizing. Affordable in terms of price for the target customers, but still of high quality, robust and with a long service life. In terms of operability, ease of use is a prerequisite. The CLAAS Crop Tiger combine harvester was cited as an example. As the speakers went on to explain, the mechanical engineering industry is also expecting an increase in demand for simple and affordable quality products. Based on interviews with experts, economic motives are the main reason for the realization of frugal products, such as the consolidation of market position, price pressure and the development of new customer and market segments. Therefore, half of the companies surveyed already have frugal products in their portfolio and a quarter plan to do so. However, a quarter have no plans to do so.
The presentation of these basic study results was followed by an interactive exercise for the participants. The task was to define the features and functions that a car would have to fulfill for the emerging Indian market. There was a very high level of agreement among the participants. According to the resolution of the exercise, the requirements described correspond to the Renault Kwid, which was launched on the Indian market in 2015 and sold 150,000 models in India less than two years later. The Tata Nana, whose production was halted, was cited as a failed market launch in this respect.
The most important findings in the implementation of frugal innovations – such as the passenger car for the Indian market – are as follows: Frugal solutions primarily take the customer and the market as their basis, not a potentially beneficial technical innovation.
The event concluded with the presentation of the Frugal Innovation Index, which helps companies to measure, evaluate and increase their own innovative capacity with regard to frugal solutions in terms of simple quality products. The tool raises awareness of important levers for promoting frugal approaches and provides information on possible options for action. The index is provided by the Center for Fugal Products and Production Systems ZFP of the Fraunhofer Institutes IAO and IPA.
Further information
- Study by the IMPULS Foundation of the VDMA
- IMPULS study “New markets for mechanical and plant engineering through frugal innovation” – Fraunhofer IPA
Organizer
The event was offered by ProduktionNRW. ProduktionNRW is the cluster for mechanical engineering and production technology in North Rhine-Westphalia and is organized by VDMA NRW. ProduktionNRW sees itself as a platform for networking, informing and marketing companies, institutions and networks with each other and along the value chain. Significant parts of the services provided by ProduktionNRW are funded by the Ministry of Economic Affairs, Industry, Climate Protection and Energy of the State of North Rhine-Westphalia.