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Frugal Innovation Scores One other Victory In Cuba: Lessons From An Embargo-Busting Small Tractor Company

In early 2016, tiny Alabama-based Cleber, LLC managed to conquer two Goliaths with one stone. It became the first American firm to obtain authorization from each the US and Cuba to arrange a producing operation on the island’s Mariel Particular Improvement Zone. Like David within the biblical story, Cleber used simple technology to accomplish what no one else had managed to before: slay two sets of monster bureaucracies with one blow. The embargo-busting, low-tech stone is its ‘Oggun’ tractor, an up stone island facebook to date model of the 1940’s Allis-Chalmers Mannequin G.

Large Compass Print Cotton Jersey T-Shirt in BlackThe co-founders, Cuban-born Saul Berenthal and Alabaman Horace Clemmons, are former IBM engineers and retired entrepreneurs, who found unlikely success in Cuba in great half resulting from their intuitive grasp of ‘frugal innovation’ ideas. Like different frugal innovators worldwide, they created a low-price, excessive-high quality good by re-imagining processes and repurposing resources to meet the needs of a market with enormous financial constraints.

The adaptation of frugal innovation ideas to the wants and challenges of creating nations like Cuba has been described by Navi Radjou, Jaideep Prabhu and Simone Ahuja of their work on Jugaad Innovation. ‘Jugaad’, a colloquial Hindi phrase, roughly translates as an innovative fix or an improvised solution born from ingenuity and cleverness. The term bears a surprising similarity to the colloquial Cuban time period ‘resolver’ – improvising and making do through inventiveness. No surprise, then, that the Cuban expertise is home to a wealth of local frugal innovation examples.

Cleber’s entrance into the Cuban market provides another example of how the six guiding principles of jugaad/frugal innovation can be used to create value in Cuban markets.

1. Search Alternative in Adversity. Frugal entrepreneurs understand harsh constraints as an invitation to innovate.

The small-hold farmers and cooperative members who farm 70% of Cuba’s arable land deal with frequent input shortages (from fertilizers, to seeds, to fuel, to parts), obsolete technology, and major inefficiencies in transportation and distribution. The situation is additional aggravated by two factors – the final shopper’s wallet is restricted to the $25/month salary of average Cuban workers, and pressure on market prices and on quality specifications from a growing tourist sector.

The top result is low productiveness, larger costs, variable high quality and a wasteful drag on foreign reserves as Cuba resorts to importing approximately 80% of its food requirements, much of it, cash in advance.

Cleber realized that this overwhelming set of related problems was a Cuban nationwide precedence and a dynamic that needed to be resolved earlier than US vacationers landed en masse on Cuban soil. Solely ‘out of the field’ pondering might uncover a solution.

2. Keep it simple. The “resolver” mindset requires that frugal entrepreneurs focus on developing “good enough” offerings which might be accessible and straightforward to make use of.

Since the entire patents for the Allis-Chalmers Mannequin G tractor had expired, the companions were able to simply copy the basic design, upgrade it with newer technology (e.g. from manual lift to hydraulic raise) and cobble collectively a car from simply acquired Stone Island Shorts off-the-shelf components.
The end result is perfect for small plots, simple to operate and maintain, and relatively cheap when compared to different tractors. Fossil gasoline fashions will ultimately give technique to all electrical fashions charged by solar panels. Granted, the car will promote for about $8,000 to $10,000, a steep price for a small farmer in Cuba, but Berenthal and Commons are putting their bets on remittances serving to to defray prices.

Three. They do extra with much less. Frugal innovators compensate for an absence of sources by discovering methods to leverage social networks and the intimate information of their communities to create and ship worth.

Berenthal and Clemmons noted that many U.S. companies arrive in Cuba asking: “What can we promote you ” They, then again, discovered a solution to ship superior worth to the Cuban market by as an alternative, asking what customers need. “Quite a lot of our plan simply got here from listening to what the Cuban individuals need and what the Cuban authorities needs…we recommend that potential Cuba entrepreneurs at all times embrace in any proposal economic, social, and cultural justifications”.

Potential companions would also be properly served to “learn, understand and respect the Cuban tradition; adopt a style that shows mutual respect; research, understand and follow established protocols; expect onerous enterprise negotiations; and, be affected person and persevere.” In different phrases, fostering information networks is as necessary as having the best product or service.

Since the Oggun is an open-source manufacturing model (OSMM) that uses a modular design and common components across a broad range of agricultural and light construction equipment, the essential design serves as a platform from which modules could be created with interchangeable elements. This gives for different and economical equipment that can be made available to small-scale farmers that can easily be adapted to suit their needs. It also makes it simple and inexpensive to service and maintain, as parts and components are available in a wide variety of international markets stone island facebook and from different suppliers.

But the current configuration of the Oggun is only the beginning. Once the Mariel facility is operating smoothly, Cleber plans to invite Cuban inventors and entrepreneurs to submit their Oggun-based product ideas and plans for possible adoption. For a percent of the business, Cleber will also produce the product for these entrepreneurs with great precision and cost efficiency if that is how the inventors choose to market it.

The Oggun takes advantage of Cuba’s extraordinary DIY self-sufficiency and it will soon, reap the benefits of its inventiveness and creativity.

4. Think and act flexibly. To innovate in a constraint-based surroundings, frugal entrepreneurs must quickly respond to changes in their atmosphere with completely new value propositions.

Cleber’s rollout strategy additionally demonstrates adaptability. It balances available investment capital, responsiveness to increasing market demand, and adjustment to the vagaries of US-Cuba normalization negotiations by building capacity to serve the market even before the Mariel Zone is absolutely operative.

Initially, the Oggun automobiles will be assembled in Alabama and exported to Cuba. As soon as the Mariel plant is ready in 2017, U.S. manufactured parts will probably be exported to Cuba and automobiles assembled in there. The following phase of the challenge calls for Cuban manufactured components to be assembled on site for nationwide markets. They count on to construct 100 tractors a yr to start out with. Over time, the partners expect to ramp up to a thousand vehicles a year for both local and export markets.

And the Oggun is just not only a tractor. It’s also an excavator and a skidsteer loader with vast variety of purposes in the construction sector. Solving the agricultural, construction and housing bottlenecks is an essential component of the country’s economic growth and social welfare strategy, particularly as the nation ramps up for a rising US vacationer sector. The Oggun will present a backside-up solution.

5. They include the margin. Frugal innovators search for ways to include marginal segments of society, not just out a sense of empathy, but because it makes business sense for them.

The fact that Cleber is already receiving inquiries and solicitations from Latin America, Africa and Asia bodes well for the corporate’s future export success in ‘base of the pyramid markets’ where jugaad innovation is key. ‘Base of the pyramid’ (BoP) is a term given to the 4.5 billion people on the earth who stay on $5 per day or less. More and more, private-sector firms and traders, usually in partnership with local communities, are developing profitable business models that provide creative low-cost/low price options to the various day-to-day challenges confronted by particular person on this world US $15 trillion financial system.

The mixture of Cuban ‘resolver’ in a jugaad innovation lab, together with an adaptive Cleber platform and a large BoP export market could turn this modest business experiment into a global success not solely serving to Cuba by producing overseas revenue and tax revenues, however by additionally benefiting the world with nice products at affordable prices for these largely underserved and marginalized markets.

6. They follow their hearts. Frugal innovators take risks, trust their intuition, are obsessed with what they do, and imagine they pursue a very good trigger in the method.

While the Oggun is an ideal instance of jugaad innovation, neither the Cleber owners nor the Cuban government had any knowledge of these six principles. The business partners found each other because of their shared passion for solving some of Cuba’s mind-boggling problems through instinct, intuition and creativity. Think of what could happen if both sides were to study and apply these rules in order to leverage the potential of jugaad/resolver innovation for Cuba and for global ‘base of the pyramid’ and low income markets. Cuban jugaad innovation might actually become a revolutionary movement, not solely in, however outdoors of Cuba as properly.

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