Jugaad (frugal innovation) in a tiger economy.

‘We want double digit sales growth and a $40Million reduction in operating costs – develop the strategy please’

Executive summary, a national company in a tiger economy striving for efficiency savings fell across an energy specialist who saved 18% in year one and subsequently delivered a solid 10% saving across the next four years at a national level. Attractive costs savings supporting profitability and new organizational skill sets developed. Read the full article.

Joining an entrepreneurial organization whose brands sit number one or two in every sector they operate within, sends a clear message about leadership expectation, this board wins and strives for elite performances across each portfolio in a tiger economy. However, I thought mentally I was ready BUT the challenge still came as a serious hammer blow of reality. The Chairman and Chief Executive laid down the financial challenge, develop a strategy for double digit growth and reduce operating costs by $40Milllion, your first draft is expected in 30 days. Of course, you cannot hurt customer services or remove head count.

In India ‘Jugaad’ means frugal innovation and is celebrated as a mindset that has generated major achievements through the centuries and I was about to be thrown into the deep end of the learning pool. Jugaad as a concept forces, challenges and encourages a cultural mindset of creativity and innovation, if you have no money to invest where can I find efficiencies, inefficiencies and pockets of resources not maximised by the organization today. Jugaad brings a smile to every local face as they have grown with the concept from birth, every Indian is trained to negotiate and loves to haggle, it is an art form, rite of passage and the grand masters are a wonder to watch during stiff rounds of negotiations.

During this strategic journey I and my team developed a list of unintended lines of EBITDA that led to significant and unexpected efficiencies. Energy & Utilities is not a gripping subject, but it soon became a huge win and a major area of new stream of efficiencies.

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I contacted an old friend in Tesco and explained I needed some help with energy efficiencies he happily suggested the chap they have used, and he is awesome. I then called the recommended chap who happened to be in India advising the government on hydroelectric dams and solar energy projects. To be fair he took on our challenge for his own amusement and personal interest and I am glad he did. Year one he helped us save 18% of the total energy bill, he paid for his services in week 2 of a 52-week contract. Year 2 and 3 he educated us on where we could save 10% annual savings on energy and utilities with zero investment.

This industry specialist had taught us to measure, analyse and target savings on energy that impacted design and layouts across the estate. Then phase 2 he suggested with frugal investments how we could target, track and monitor efficiency savings, water bricks in toilet systems reduce water usage by 30% in a metred environment 30% saving on every flush is a good saving. From simple to high technology solutions our specialist taught our team how to save energy, reduce consumption and save over 10% year on year at national level expense. Our particularly challenging CFO declared, give him whatever he needs he is good for the result and pays for himself always within 30 days of engagement. Results like this make instant impacts to the bottom line, fast, simple, effective and cheaper to operate. Our team did find the $40 Million, the results were delivered, blueprint operating models were developed and documented.

The utility savings were just part of a broader cost optimization plan and these results have been replicated across other large national companies. Tried and Tested results that impact EBITDA fast,

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