5 Stages Of Grief – Finnish (European) Economy in 2016 & The Need For Frugal Solutions

I started out helping Finnish businesses in India 5 years ago. Two years into it, I realized that when customers in developing countries like India are asking for an IKEA type  solution, most Finnish businesses are instead giving them an Artek. At the same time, I noticed that the European economic crisis began to manifest in a way where more Finnish families and businesses are having lesser purchasing power. This made me realize that pretty soon they will need high tech, new tech, low cost, sustainable ( =Frugal) solutions.

Source: http://www.findikaattori.fi/en/3

This, I believe, is not just Finnish issue but a Nordic and Europe wide issue leading me to imagine the 5 stages of grief that the Finnish (European) business will go through before they create frugal solutions.

Stage 1 – Denial

The businesses attempt to shut themselves from seeing what’s actually happening or create an alternate reality that they would like to have. “Wait long enough” and then things will go back to as they were! They seem to try to convince themselves that the situation is just temporary or that the crisis won’t affect them or their industry. “We shall start seeing our traditional markets grow anytime now and since we make the best possible solution, the buyers in developing countries need to get around to our viewpoint and see the quality and value of our offering and just not haggle about the price!”

The 2016 Economic Report of the President from the White House with this particular figure illustrates what’s on my mind:

I also see that most businesses have begun to move to the next 4 stages.

Stage 2 – Anger

At this stage, businesses will start to be angry. The economists, politicians, the consumers, the system- all letting them down. Are the Chinese flooding the market and driving down prices? Are we to blame ourselves for not planning properly and not seeing this looming economic crisis?

Stage 3 – Rationalizing

Businesses will reach out to banks and other lenders to renegotiate payment terms. Reach out to others in the same tough spot and try to rationalize that this is not something that is uniquely affecting their particular business. Or maybe the next big deal is right around the corner but when the negotiations start to stretch out and combined with stages 1 and 2, it leads to the next stage.

Stage 4 – Despair

What if the credit lines don’t get extended. Maybe the big deal they thought was happening  doesn’t happen and they come back asking for a ridiculously lower price or that they don’t want to purchase that item any more or they found another better offer. There will be a lot of uncertainty leading to despair and making businesses question if what they are offering is the right product fit and market fit anymore!

Stage 5 – Acceptance

A business person is an entrepreneur at heart. A smart one would quickly go through or even be able to skip some of those grief stages to accept the reality of the situation. This will help them make peace with the situation and begin to develop a strategy to deal with it.

I would say that businesses will start to integrate a different product line comprising of frugal solutions that will help them stabilize and get them on to the road to profits. They will realize that solutions that are of good quality but at the same time that are also affordable and sustainable will be a real win-win. This will bring into fore a more user focused design process or a change in their business model and value chain. These successful businesses will figure out that Frugal solutions can be produced using high tech/new tech, low cost approach.

 These frugal solutions can be arrived at by using principles and processes of circular economy, shared economy, open innovation, inclusive/social innovation, DIY/Maker movement and co-creation.

We at The Nordic Frugal Innovation Society (http://tnfis.org) are working with both public and private sector to show that slow growth, deleveraging, environmental constraints, ageing societies in Finland and other developed economies on one hand and emerging world markets on the other will push businesses to create frugal solutions.

 Our 2 day innovation and thought leadership event called InnoFrugal (www.innofrugal.com) is where attendees can listen, learn, interact and network on co-creating affordable & sustainable solutions with new technologies to standout from their competitors in their traditional (developed) markets as well as newer (emerging) markets.

I welcome you to join us in this co-creation journey at the 2nd edition ofInnoFrugal during April 25-26, 2016 at Heureka-The Finnish Science Centre.

Author: Venkata Gandikota

Venkata has more than 13 years of technical engineering, research, ideation, strategy and business modeling experience. Based on his experience with the Indian market and realizing also the need for affordable & sustainable solutions for Finland and other European markets, he started The Nordic Frugal Innovation Society in late 2013 with 2 colleagues. By organizing ideation workshops and 2 major conferences involving Cities, Universities, and businesses he started to mainstream the concept in Finland and the Nordics. Gandikota has also written several articles focusing on frugal innovations in the Finnish media. He has also been helping Finnish businesses in India as CEO of Indianeer Consulting and gives guest lectures at JAMK University of Applied Sciences in Jyväskylä. He has a Bachelors in Chemical Engineering from India and a Masters in Environmental Engineering from USA.