(Image : CNN.com)
Jaideep Prabhu, professor of Cambridge Judge Business school argues about bottom-up approach to value creation,large companies are already being challenged by new consumer-orchestrated value ecosystems, which allow consumers to design, build, market, distribute, and trade goods and services among themselves, eliminating the need for intermediaries. (WEF, 2015)
Out of the three leavers suggested in the CISL paper, I would focus on design and innovation. The rise of peer to peer economy, suggests strong trend in consumer attitudes and transition to frugal economy. Reuters reported that in world’s third largest economy in Japan, millennials have shown a reluctance in spending money and desire to lead minimalist lifestyle. Japanese millennials throw around words like “cospa” — short for “cost performance,” or value for money — to rate anything from cosmetics to hotels. They want to be viewed as being frugal rather than generous with money, according to a survey by Dentsu Innovation Institute, a marketing and consumer research company. (Reuters, 2016). This is the generation who has grown up in the economy that never seems to grow.
Two key factors are fuelling the frugal economy’s growth: a protracted financial crisis, which has weakened the purchasing power of middle-class consumers in the West, and these consumers’ increasing sense of environmental responsibility. (Project Syndicate, 2015).
It’s all about diching traditional pyramid model, moving away from large scale state level intervention to developing accessible and affordable innovations that meets the basic needs of large number of people while moving away from consumption based mind set to minimalistic mind set. According to the conversation, innovations in the frugal economy can also help reduce inequality. In India healthcare sector is bringing affordable services to large number of people through reduced rate in heart surgery, while in Africa solutions such as m-pesa are increasing financial inclusion.(Prabhu, 2018). Bike sharing, car sharing, home sharing schemes across the world are good examples of innovations in Frugal economy while reducing climate impact.
Some of the key challenges that works against frugal innovation are, measures – primary measure for growth GDP is based on consumption, means – current trend of the economy seems to be heading towards consolidation where large organisations are getting larger, that promotes pyramid structure, model – policy level solutions are encouraging increased regulations, again top down model that works against frugal model.
Economy is complex system but often solution can be most effective if interventions or solutions are not contradicting or counter productive but works in the same direction. Top down and bottom up approach could work together to promote ‘fugal economy’ in order to solve climate challenge.