The Frugal Economy, Part 1:
Share Everything, Waste Nothing

In this first of a four-part series, we look at the three pillars of the frugal economy and their transformative impact on businesses, industries, communities and the environment.

Brand Provided | By Navi Radjou | Published 1 month ago | About a 12 minute read

Image: Levi Strauss

Building a better world with less

Our dysfunctional and wasteful capitalist economy needs a significant overhaul to become socially inclusive and ecologically virtuous. Sadly, most proposed strategies for ‘fixing’ capitalism — including a circular economy, stakeholder capitalism, ESG, decarbonization — while well-intended, have limited success in fundamentally shifting the mindset of businesses, reshaping cross-company interactions, and restructuring entire industry value chains.

To effectively address the triple urgency — exploding social inequalities, worsening climate change, and growing resource scarcity — facing our societies, we can’t rely on point solutions to fix our economy. To use a tech analogy: These point solutions are great apps — but they run on a clunky, resource-intensive operating system.

A brand-new operating system — which I call a “frugal economy” — is urgently needed to build and sustain revolutionary new business models and transformative industrial value networks that are truly beneficial for society, as well as the environment.

A frugal economy contributes to human development and creates more economic, social and ecological value synergistically, while optimizing the use of all available resources. The frugal economy uses ingenious ways to “do better with less” by maximizing the value for all stakeholders using minimum resources — in contrast to capitalism, which seeks to ‘do more with more’ by gobbling up ever more resources to create value for a select few.

A frugal economy addresses the needs and aspirations of thrifty and socially conscious consumers who seek simpler, healthier and eco-friendly lifestyles and strive to deepen their community ties through active local involvement.

But this frugal economy is no utopia. Drawing on more than 100 real-life examples from around the world, my upcoming book chronicles the rise of the multitrillion-dollar frugal economy, powered by three megatrends that will deeply reshape our societies in the next decades:

business-to-business (B2B) sharing
distributed (decentralized) manufacturing and hyper-local value networks, and
triple regeneration.

The three core qualities stimulated in a frugal economy — sharing, distributing and regenerating — are diametrically opposed to the three flaws of a capitalist economy known for hoarding (assets and profits), centralizing (operations), and depleting (nature and communities).

In this series of four articles, I will examine these three megatrends — which form the three pillars of the frugal economy — and show their transformative impact on businesses, industries, communities and the environment.

Share everything, waste nothing

Digital platforms including Uber, Airbnb, BlaBlaCar and SpotHero already enable millions of individuals to share their underused cars, homes and parking space with others — thus, earning additional income while boosting the value and usefulness of their assets. According to PwC, this peer-to-peer or consumer-to-consumer (C2C) sharing economy is poised to grow from $15 billion in 2015 to a whopping $335 billion by 2025.

We don’t associate “sharing” with the business world, where companies compete ferociously and amass and hoard resources. Yet, progressive firms are starting to share their physical and intangible resources with one another — hence, maximizing the value of their assets and reducing waste. In doing so, these vanguards are giving rise to the business-to-business (B2B) sharing market — which could be worth trillions of dollars, dwarfing the C2C sharing economy.[^1]

B2B sharing could dwarf the C2C sharing economy in volume and value. | Image credit: Navi Radjou

B2B sharing boosts efficiency, agility, innovation, curbs waste

Let’s examine the big business benefits of B2B sharing. By sharing resources, business can:

Reduce capital expenditure

Instead of wasting valuable capital to build new factories and warehouses, manufacturers can quickly and affordably expand their supply chain capabilities by utilizing on-demand industrial marketplaces such as, Fictiv, Protolabs Network and Xometry. These digital platforms virtually connect hundreds of highly specialized machine shops with global companies, which helps small firms stay in full production — especially during recessions or pandemics.

Cut operating costs

Instead of committing to a costly long-term lease, businesses can get extra office space on demand from workplace sharing services such as Deskpass and LiquidSpace. Having flexible office space satisfies freedom-seeking employees who want to be able to work from anywhere. Likewise, hospitals in the US, Canada and the Netherlands rely on Floow2 and Rheaply platforms to share their underused medical equipment, materials and services — thus, keeping these assets fully used, cutting operating expenses and improving patient care.

Make additional revenue (and save the planet)

In the US, heavy-duty trucks represent 25 percent of all greenhouse gas emissions from transportation — a sector that accounts for nearly 30 percent of all emissions in the country. Yet, the trucks on US roads run empty up to 35 percent of the time as drivers can’t find sufficient shipments to fill their trucks. These “empty miles” represent tens of millions of tons of CO2 each year. AI-based freight networks such as Convoy, Sennder, Trella, TruggHub and Vahak connect shippers with carriers to maximize truck fill rates by aggregating several shipments into a single task for a driver — reducing freight cost for shippers, creating more revenue for truck operators and significantly reducing emissions related to empty miles.

Although the world’s top companies spent a whopping €1.3 trillion ($1.42 trillion) in R&D in 2022 alone, only 5 percent of all patented inventions are successfully commercialized or licensed — meaning, intellectual property (IP) worth hundreds of billions of dollars goes to waste each year. Thankfully, online brokering services such as NineSigma and yet2.com enable firms to better monetize and make more profit from their unexploited IP such as patents by licensing them to innovation-seeking businesses.

Increase agility and resilience

When customer demand plummets due to recessions, pandemics and other disruptive events, small businesses are stuck with underemployed workforces. Talent-sharing platforms including Hydres, Hyver and Teambix enable companies to temporary “lend” underused workers to other businesses seeking extra human resources. These digital platforms also ease the professional mobility of workers who wish to leave their existing employers to pursue a career elsewhere.

In March 2020, as COVID-19 swept over France, Kolmi-Hopen — the country’s biggest producer of face masks — was urged to increase mask production at its factory near Angers, yet it lacked the necessary in-house expertise to do so. It used an employee-sharing platform to promptly identify and borrow experts in industrial processes from Scania — a heavy-vehicle manufacturer nearby. Thanks to this talent sharing, Kolmi-Hopen was able to quickly reconfigure its manufacturing processes and double its mask production in record time.

Innovate faster, better, cheaper

95 percent of new consumer products fail right after they hit the market, because they don’t fulfill real customer needs. The result? Brands are stuck with expensive unsold inventory. Rather than speculate on what consumers want and mass-produce the wrong products faster, brands could use retail-space-sharing platforms such as Appear Here and The Storefront to establish pop-up stores in several key locations. In these temporary micro-retail sites, brands can test a large variety of new product concepts with customers and gather their feedback. Brands can then selectively ramp up production of those concepts that customers highly favor — hence, launching maximum-viable products that yield greater profit and less waste.

As these examples demonstrate, by sharing physical resources (equipment, facilities, vehicles) and intangible assets (employees, IP), businesses can do better with less — boosting revenue, agility and innovation capacity while slashing operating costs and waste.

Major social, ecological benefits

Beyond turbocharging companies’ economic performance, B2B sharing can also generate positive societal value — especially in underdeveloped communities — for several reasons.

First, B2B sharing networks and platforms catalyze new employment opportunities while also safeguarding local jobs and critical expertise in regional economies. For instance, industrial symbiosis (IS) is a system in which multiple nearby companies partner to share materials, waste and energy in a mutually beneficial way. IS projects (such as FE21 in northeastern France, NISP in the UK and Canada, WISP in South Africa, and Washington State’s Industrial Symbiosis program hire hundreds of individuals, often from marginalized groups, to recycle their waste — revitalizing local communities both economically and socially.

Second, B2B sharing allows artisans, small farmers and SMEs — some of the most important and at-risk players in our economy — to enhance their resilience, flexibility and efficiency by accessing resources and expertise from other businesses at reduced cost. For example, in Africa, Hello Tractor functions as an “Uber for small farmers” — offering them access to tractors and farm equipment with pay-per-use options. This cost-effective, customized tractor-rental service allows financially struggling African farmers to do better with less: They can plant 40 times quicker and 2.5 times more affordably with a tractor than manually, resulting in 63 percent savings and a triple growth in crop yield.

Third, B2B sharing can enhance the wellbeing of all citizens. Tired of drug shortages and price gouging from the pharmaceutical industry, 55 health systems representing over 1,550 US hospitals came together in 2018 to create Civica Rx — a nonprofit ensuring affordable, reliable drug supply across the US. Civica pools the buying power of its 55 members to strike a long-term deal with specialty pharmaceutical firms such as Xellia and generic drugmakers including Hikma to manufacture over 80 crucial drugs in the US at a consistent and equitable price, and ensure uninterrupted supply for many years. Civica’s frugal medications have been used to treat over 60 million patients in the US; the company is now building its own manufacturing facility in Petersburg, Virginia to produce insulin in large volume and slash its cost from $300 to $30 per vial.

B2B sharing could also considerably benefit the environment. If all companies could just share their waste and recycle it collectively — a pillar of the circular economy — we could cut global greenhouse emissions by nearly 40 percent. If companies were to also share their underused physical assets — inventory, machines, buildings, vehicles — the ecological benefits could be humongous. For instance, B2B carpooling and ride-sharing services including BlaBlaCar Daily, OpenFleet, Free2move and Socar can help businesses drastically shrink their vehicle fleet size, provide flexible and cost-effective transportation options for employees, and massively curtail their carbon emissions.

Broadminded firms are boldly sharing their sustainability-focused proprietary technologies even with rivals to boost the environmental performance of entire industries. For instance, Unilever’s R&D teams developed “compressed deodorants” that require 25 percent less aluminum and half the propellant — resulting in a 25 percent decrease in the carbon footprint of each aerosol. Unilever’s scientists also reformulated its ice cream so they stay stable at a warmer freezer temperature. Likewise, Levi Strauss invented 20 techniques to reduce the water used during denim finishing by up to 96 percent. Once these two companies effectively implemented these changes within their own supply chains, they made the inventions open source to improve the overall environmental impact of their industry.

Innovative initiatives leverage the power of B2B sharing to generate simultaneously more economic, social and ecological value that benefit both corporations and underserved communities. For example, online marketplace Solar Stewards enables companies to purchase solar energy directly from historically excluded communities where they do business. The company aggregates modest solar projects set up at local schools, universities, parishes and townhalls into portfolios of scale that appeal to corporate buyers of clean energy. Holistic B2B sharing programs such as Solar Stewards’ can foster an equitable energy transition in each of the 3,143 counties across the US.

In capitalist systems, companies function with a scarcity mentality and compete aggressively in a zero-sum game governed by the formula 1 + 1 = 0. As we enter into a VUCA world, however, businesses must avoid rivalry and learn to cooperate. As Indians say “ek aur ek gyarah,” — meaning, 1 + 1 equals 11.

By sharing physical and immaterial resources, companies can co-create far greater economic, social and ecological value than they can on their own. B2B sharing is a core pillar of a frugal economy that can help build inclusive and sustainable societies in the 21st century.