Peugeot’s Parent Company PSA Group’s Europe Boss Denis Martin Commits To Frugal Innovation

Article in Auto News Europe reports that Peugeot Citroën Moteurs Group new direction is “frugal innovation,” says Europe boss Denis Martin.

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PSA is Europe’s second largest carmaker after Volkswagen Group but only sells about 3 million vehicles globally, while VW Group’s worldwide volume is more than three times larger. “It’s not a question of size, it’s a question of agility,” Martin told the Automotive News Europe Congress here last week. He described PSA’s new direction as “frugal innovation.”

Said Martin: “We have changed our mindset for r&d and capital expenditure. We will optimize each euro.”

Before CEO Carlos Tavares launched a focus on controlling expenditure PSA was old fashioned with a “no risk spirit,” Martin said. “Parts of PSA still ran on the kind of old-style bureaucracy you find in some traditional companies, with people working in separate silos. It is for this reason that we were in a particularly deep crisis in 2013.”

This Ikea Advert Is So Amazing, I Have To Share It!

With a slogan – “IKEA. It’s that affordable.”, MEMAC OGILVY has created an awesome marketing campaign for Ikea.

More at this Facebook Page 

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Impact Solutions Are Not Necessarily Frugal Solutions But The Opposite Is True

I am seeing lot of ‪#‎Impact‬ examples where ‪#‎affordability‬ to end user is missing. I made this note for myself:

“What is ‪#‎Frugal‬ can be ‪#‎Impactful‬ but an #Impact solution isn’t necessarily a #Frugal Solution.”

My definition of Frugal = Quality, Accessible, Sustainable & Affordable.

The comment I have heard from a Finnish colleague is “This might not be a top priority for a typical Finnish engineer or technological solution, i.e. being tech-centric as opposed to user-centric. I suppose the point-of-view depends what target market a product or service is being designed for. Personally I understand an impactful product or service to be either affordable for the end user or otherwise accessible (paid for my someone else), because what impact is there if the product or service does not reach its intended users?”

But isn’t it so that because even if we think of a developed country market..eg: Finland:

  • Average pension is less than 2000 Euros, Pensioners (1.525 million) make up almost 28% of the population;
  • Currently 341000 people are unemployed (The Ministry of Employment and the Economy has forecasted that by 2017 the long-term unemployed will rise to nearly 40 % of all unemployed …A bigger issue is if increasing number of unemployed have stopped looking for work);
  • The recent Employer-employee contracts show that wage growth will be more or less stagnant;
  • Government funding cuts to organisations already shows in lesser resources for education, research, healthcare, social security, pensions etc.. Also means government can’t or wont subsidise much;
  • Also I read that a growing number of Finns financial difficulty is now at record levels. 372,000 people had problems paying the bills in April 2016 (Turun Sanomat May 30, 2016).

    So with these in mind how can we push the conversation in this country that actually “Frugal” solutions are needed here as well, not just in some distant faraway Africa or Asia.

    Scathing Review of Internationalisation Among Finnish Businesses From EU Report

    The most damning thing I was reading today about the state of business affairs in Finland. Bad indicators in Finland on number of businesses started & going international.

    EUFinlandReport2016

    … 3.4 new companies per 1000 persons of the working-age population are created. This proportion is lower than the EU median……. Early-stage entrepreneurs in Finland are less internationally oriented and see their businesses as less innovative than early-stage entrepreneurs in most other EU Member States.

    The info is from this EU Country Report Finland 2016.

    The thing that I was so surprised to see in those two graphs is we are in this situation even though since 2009 there has been huge talk about entrepreneurship from politicians, policy makers etc and there has been big startup/business events like Slush, Nordic Business Forum, Arctic 15 etc.. I assumed there would be some positive affect of them in reality. Apparently not much.

    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.