The Ways to New

Chapter 7Reverse Disruption

Around the year 2000, reporters and others started referring to Carlos Ghosn as “the Cost Killer.” Well, he undeniably is a cost killer. But what he aims at goes far beyond just a mere cost reduction goal. His main concern is to add value. Cost savings are reinvested in the finished vehicle. And the same goes for productivity gains. So Nissan cars contain ever more equipment, have more efficient engines and better safety features. All for the same price.

Jugaad: More for Less

It is hardly surprising to learn that the top adjective in Nissan's corporate glossary is the word frugal. Whenever I was in the elevator at Nissan Headquarters in Tokyo, I would always notice stickers posted left and right of the door that read BE FRUGAL.

Logically enough, Carlos Ghosn, an engineer by training, developed a concept called “frugal engineering.”¹ This drew on a philosophy outlined in a book titled Jugaad Innovation, by three Indian analysts and prefaced by Ghosn himself. Jugaad is the Hindi word for “making do” or “finding a smart solution.” The authors explain that in the developing world innovators are not after sophistication. They focus on whatever is “good enough.”

Because we live in an age of diminishing resources, says Carlos Ghosn, “we must all do more with less.”² In order to comply with this necessity, he decided to challenge the French and Japanese engineers on his staff to compete with Indians on their home ground of frugal innovation. He assigned ...