A Literature Review-based Assessment of Compatibility and Scope

Frugal Innovations as a Countermeasure against Planned Obsolescence

[Background] [Objectives] [Proposed Methodology] [Relevant Readings]

A project of:

• Institute of Technology and Innovation Management (TIM @TUHH)

Project team: Rajnish Tiwari and Jaakko-Pekka Nieminen

Start: Sept. 2015

Proposed duration: Three months

Project status: Completed (Dec. 2015)

Keywords: Frugal Innovation; Innovation Path; Innovation Trajectories; Planned Obsolescence; Responsible Innovation; Sustainability; Resource Efficiency; Resource Effectiveness; Consumerism; Consumption

Schlüsselwörter: Frugale Innovation; Innovationspfade; Geplanter Verschleiß; Verantwortungsvolle Innovation; Nachhaltigkeit; Ressourceneffizienz; Ressourceneffektivität; Konsumismus; Konsum

Background

Consumption patterns in Europe have changed significantly in the post-World War II period. Some of the most important shaping factors in this period are an increase in disposable incomes, globalization of economies, evolution of technology (especially in the field of information and communication) and the changing socio-demographic structures that include, but are not limited to, a decreasing number of members per household (EEA 2012). Consumption-related expenditures by private households have increased steadily over the last decades in Europe. Figure 1 shows that the financial crisis around 2008-09 has, however, caused a stagnating influence on consumption growth.

Figure 1: Percentage change in the final consumption expenditure of households over the previous year
Source: Own depiction based on Eurostat data

Environmental footprint is an indicator of the environmental impact resulted by consumption. In year 2010 the average environmental footprint per person in European Economy Area was double in comparison to the available biocapacity. Growing global trade and increasing import of final and intermediate goods is incrementally shifting the environmental impacts, caused by European consumption, beyond Europe (EEA 2012). Besides environmental issues, many citizens of the EU member countries are facing increasing risk of poverty or social exclusion due to material deprivation, as per data by Eurostat (also see Tiwari and Herstatt, 2013). Based on these factors, prospects of consumption suggest an increasing demand in future (voluntary or induced by regulatory measures) for sustainable, affordable and resource-efficient products in the European Economy Area.

Planned obsolescence means production of goods with (artificially) limited life-span in order to stimulate product replacement purchases (Bulow 1986, Handelsblatt 2013). Manufacturers hope to benefit economically from the limited life-span of the products whereas producers of durable goods end up facing problems in maintaining sustained high rates of sales. Replacement of goods on account of planned obsolescence is seen by some as contributing to firms' success through revenue stimulation on one hand, and because of reduced competition from (second-hand) used-goods markets on the other hand (Adamson 2003, Guiltinan 2009, Economist 2010). Hence, planned obsolescence seems to favor business success and to increase competitive advantages of firms thereby having a supposedly positive impact on the economic growth of the society as a whole. Nevertheless, as a stimulator of increased (and in some instances unnecessary) consumption, planned obsolescence certainly has negative environmental impacts and is seen by many experts as an environmentally unethical practice (see, e.g., Guiltinan 2009, Slade 2007, Böcking 2013).

The concept of frugal innovation due to its focus on resource efficiency and the intentional efforts to avoid integrating unnecessary features in products is seen by some experts as a mitigating countermeasure against "unnecessary" consumption and the resultant negative environmental impacts of planned obsolescence. Frugal innovations aim to offer robust and good quality products or services while reducing the total cost of ownership and minimizing the use of resources, both financial and material (Tiwari and Herstatt 2014). In emerging countries, like India and China, frugal innovations have already provided successful business models for companies by offering sustainable, affordable and good quality products to price sensitive customers (Mukerjee 2012, Tiwari and Herstatt 2012).

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Objectives

This research seeks to examine compatibility of frugal innovation as a countermeasure against planned obsolescence. The objective is to review literature on planned obsolescence and frugal innovation and their implication to societies, especially in the EU. We look into following questions:

• Can, and if yes then to what extent, frugal innovation help against planned obsolescence?
• What are the limits of frugal innovation as a countermeasure against planned obsolescence
• Can there also be a positive correlation between planned obsolescence and frugal innovation? And if yes, then how much planned obsolescence is justified in promoting frugal innovations?

Proposed Methodology

The objectives of the study shall be mostly met through literature review and analysis of obtained information. More specifically:

• Choose relevant literature sources from books, journals, articles and governmental databases. Literature is mostly obtained from local libraries and through the Internet.
• With source literature establish the framework of the study by defining contemporary consumption patterns in Europe and its impacts on societies and environment.
• Determine the main concepts of the study: Planned Obsolescence and Frugal Innovations. It is essential to identify the different types of planned obsolescence, define positive and negative implication on societies and obtain information about present regulations and attitudes on planned obsolescence. With frugal innovations the focus is on benchmarking of the success in developing countries and review literature on frugal innovations in developed countries.
• Through analysis of literature, identify the compatibility of the main concepts and determine the attributes where compatibility is feasible. The objective is answer to research questions and give a proposal for the future research.
• The documentation of the results and the conclusion in a form of s scientific report.

Relevant Readings

• Adamson, G., Ed. (2003): Industrial Strength Design: How Brooks Stevens Shaped Your World, Cambridge, Mass., MIT Press.
• Böcking, D. (2013, March 20): "Studie zu Geräte-Verschleiß: Der kaputte Konsum," last retrieved 08.12.2015.
• Bulow, J. (1986): An Economic Theory of Planned Obsolescence: The Quarterly Journal of Economics: Vol. 101: p. 729-750.
• Economist (2010, June 10): "Technology and complexity: In praise of techno-austerity," last retrieved 08.12.2015
• EEA (2012): Consumption and the environment: 2nd edition. European Environment Agency, Luxembourg: Publications Office of the European Union.
• Guiltinan, J. (2009): Creative Destruction and Destructive Creations: Environmental Ethics and Planned Obsolescence, in: Journal of Business Ethics, Vol. 89: p. 19-28.
• Handelsblatt (2013): "Geplanter Verschleiß: Hersteller planen Lebensdauer von Geräten," last retrieved 08.12.2015.
• Mukerjee, K. (2012): "Frugal innovation: the key to penetrating emerging markets," last retrieved 08.12.2015.
• Slade, G. (2007): Made to Break: Technology and Obsolescence in America, Cambridge, Mass., Harvard University Press.
• Tiwari, R. and Herstatt, C. (2012): Frugal Innovation: A Global Networks’ Perspective” in: Die Unternehmung, 66(3): 245-274.
• Tiwari, R. and Herstatt, C. (2013): "Too good" to succeed? Why not just try "good enough"! Some deliberations on the prospects of frugal innovations, Working Paper No. 76, TIM/TUHH.
• Tiwari, R. and C. Herstatt (2014): Aiming Big with Small Cars: Emergence of a Lead Market in India, Heidelberg, Springer.

[ For any enquiries, please contact Rajnish Tiwari ]

Important notice: Research proposals containing project description generally depict initial ideas submitted by students in response to a call for project initiated by the RPGI team. Even though the proposals are cross-checked and edited by the RPGI team before putting them in the public domain, no guarantees can be taken at this stage of the quality and/or other aspects of good academic practices. Their adherence is, however, duly examined when students submit their reports, and prior to any publication of the report.