The Importance of Frugal Engineering

Vikas Sehgal, Kevin Dehoff, and Ganesh Panneer write in Strategy & Business:

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The central tenet behind every frugal engineering decision is maximizing value to the customer while minimizing nonessential costs. The term frugal engineering was coined in 2006 by Renault Chief Executive Carlos Ghosn to describe the competency of Indian engineers in developing products like Tata Motors’ Nano, the pint-sized, low-cost automobile. Companies such as Suzuki paved the way for the development of low-cost automobiles, but there may be no better example of frugal engineering than the Nano, which will allow millions of people with modest means to reliably drive their own car. The Nano is not — like so many other low-cost vehicles — a stripped-down version of a traditional, more expensive car design. Like other newly engineered products selling well in emerging markets, ranging from refrigerators to laptop computers to X-ray machines, it is based on a bottom-up approach to product development.

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