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Digital Transformation as Enabler of Affordable Green Excellence: An Investigation of Frugal Innovations in the Wind Energy Sector

Part of the Contributions to Management Science book series (MANAGEMENT SC.)

Abstract

While the concept of frugal innovation originated in the previous decade with a focus on resource-constrained, under-served consumers living in the Global South, it is finding increasing acceptance and adoption in the economically developed nations of the Global North. Furthermore, frugal solutions are today neither exclusively targeted at (household) consumers nor at the “poor” per se, nor are they confined to a “low tech” context. We can increasingly observe frugal products and services that enable “affordable excellence” to users across customer segments, industrial boundaries, societal strata, institutional domains, and national geographies. A large, but still somewhat unnoticed role in this development is played by the technical advancement in the form of digital transformation. Cutting-edge, general purposes technologies, such as Internet of Things (IoT) and artificial intelligence, are enabling high-quality and context-sensitive products, processes and services that are affordable in terms of their financial and environmental costs. High affordability, high target-specificity and highly effective (not just efficient) resource utilization characterize a digitally frugal solution. This paper is contextualized in the global wind power sector. With the help of illustrative case studies and content analysis, the study generates preliminary evidence that frugal innovations in conjunction with digital transformation can enable “affordable green excellence.” Propositions are made for further research and a definitional update for frugal information is provided.

Keywords

  • Frugal innovation
  • Digital transformation
  • Wind energy
  • Context-sensitive products
  • Predictive maintenance

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Fig. 1

(Source Adapted from Cetindamar et al. [2020, p. 52])

Fig. 2

(Source Illustration after Tiwari and Tiwari [2019]; originally based on a generalized model of value chains for clean energies technologies proposed by CEMAC [2017])

Fig. 3

(Source Own illustration based on Statista [2020])

Fig. 4

(Image © 2019 IRENA, Source [IRENA 2019a, p. 30]. Used with permission)

Fig. 5

(Source Own illustration. Senvion faced financial difficulties and filed for insolvency in April 2019. Its annual report for 2018 was not available, so that data for 2018 only covers 5 firms)

Fig. 6

(Source Own illustration)

Fig. 7

(Source Own illustration)

Fig. 8

(Source Own illustration; technology enablers adapted from Cetindamar et al. [2020])

Notes

  1. 1.

    For Stengel’s work on sufficiency, see Stengel (2011) .

  2. 2.

    In engineering and healthcare disciplines there is an increasing number of publications that showcase how frugal (affordable and high-quality) solutions can be developed (Chaturvedi and Pappu 2018; Chavali and Ramji 2018; Neal 2018). .

  3. 3.

    The terms “wind power” and “wind energy” are used in this study interchangeably. For an overview of the sectoral scope and boundaries, see Sect. 3.1.

  4. 4.

    It obviously remains possible to unbundle products and create leaner packages.

  5. 5.

    Ahuja and Chan (2020) differentiate between “digitalization” and “digitization”. While the latter term refers to the shifting from analog to digital form (e.g., creation of digital archives with scanned documents), the former term is much more encompassing and can enable entirely new products, services and business models (e.g., creation of online content offered worldwide with subscription options). Digitalization, thus, also co-opts additional socio-technical aspects with direct impact on the socio-economic context of the organization.

  6. 6.

    For the concept of “enabling technologies” (ETs) and their differentiation from “general purpose technologies” (GPTs), see Teece (2018).

  7. 7.

    For the concept of OGINs and their role as enabler of frugal innovations, see Tiwari and Herstatt (2012b).

  8. 8.

    Also see the case of Weathernews, a Japanese firm, for developing a successful affordability-focused business model that is based on crowdsourcing of weather report inputs with digital means (Lakhani and Kanno 2017).

  9. 9.

    For detailed discussions, also see, e.g., Ellenbogen et al. (2012), Mathew (2006), or Redlinger et al. (2002).

  10. 10.

    This case is constructed based on information available in public domain and primarily provided by the company itself (GE Renewable Energy 2019, 2020), unless specified otherwise.

  11. 11.

    For Senvion that was hit by an insolvency only an “Interim Report” was available only for the first quarter of 2018. That report contained little strategic deliberations beyond the legally mandated details.

  12. 12.

    For GE Renewable Energy, which is a business unit of General Electric Company, there were no sufficient information in the parent concern’s annual reports to allow comparisons with other wind turbine manufacturers’’ digital strategies. Enercon is a privately held company and does not publish detailed information related to its business beyond what is mandated by the law. .

  13. 13.

    This might have some interesting implications for our understanding of technology adaptation models. It is probable that the lack of legacy systems has resulted in fewer path-dependencies for them, allowing them to explore newer/unconventional innovation pathways. Furthermore, proactive use of the possibilities offered by digitalization likely enables these firms to catch up with the established global players technically and win customer trust while overcoming liability of foreignness and/or liability of newness in global markets.

  14. 14.

    Wind energy production has now turned into “a mature and cost-competitive technology” (REN21 2018, p. 19). Also refer to Sect. 3 for the progressively decreasing levelized cost of energy (LCOE).

  15. 15.

    For in-depth discussions of the frugality construct, see, e.g., Lastovicka et al (1999), Todd and Lawson (2003), Witkowski (2010), and Michaelis (2017). Especially, Michaelis (2017) introduces the concept of entrepreneurial frugality that has been so far dealt with only implicitly in the innovation management literature.

  16. 16.

    This point is especially important in the context of suggestive marketing of controversial (consumer) goods, such as skin-bleaching lotions, illicit drugs or weapons. For enlightening discussions in the specific context of the Bottom of the Pyramid markets, see, e.g., Karnani (2007), Banerjee and Duflo (2007), or Karnani (2009).

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Tiwari, R. (2021). Digital Transformation as Enabler of Affordable Green Excellence: An Investigation of Frugal Innovations in the Wind Energy Sector. In: Agarwal, N., Brem, A. (eds) Frugal Innovation and Its Implementation. Contributions to Management Science. Springer, Cham. https://doi.org/10.1007/978-3-030-67119-8_12

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