The Nano and Innovation

In a gloomy economy and in an environment which finds the best automobile companies on their knees the Tata’s achievement in ensuring that the Nano was launched at the promised price of ~$2,500 is particularly commendable.

In terms of India’s business environment- the Nano could well represent a turning point for innovation. India has not really been known for producing innovative products and I cannot think of too many products that have caught the global attention. (although Indians have been working on cutting technology in the west and Indian engineers work on the R&D value chain in India). Here is a product that has been conceptualized and designed in India and by the looks of it will prove to be a disruptive product in the automotive industry.

Design and Innovation:

Achieving a price point of $2,500 takes so much more than just frugal engineering and by using one less wiper. Two things impress me the most – a) the continued focus on the customer:  for example, despite its low price- the Nano is large and roomy (to probably accommodate the quintessential dadima) and b) Tata’s efforts in working with global suppliers such as Bosch at a much earlier stage and challenging them to rethink their designs.

Interestingly, the big three in Detroit (Ford, GM and Chrysler) have been getting a lot of criticism for a) not focusing on the customer and b) not being more flexible with the supply chain. The Nano’s effort also truly puts the emphasis on design and not on say manufacturing – something that the auto companies in Detroit have been guilty of. Going forward its going to be very interesting to see the sales breakup for the Nano – between first time car buyers v/s Nano being the second car and of course the sales in rural areas.

Ultimately, the Nano might not have a big impact on Tata’s revenues considering that Tata needs to sell 5 million cars by 2015. It is the idea that this might just be the first step in a completely different global automotive industry that makes it more interesting. (some thing that the Economist fails to grasp spectacularly)

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About P

Doing my best to achieve personal and work balance. I have a lot of interests and I need to find the right balance to spend time doing them all!
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5 Responses to The Nano and Innovation

  1. vishnu says:

    As much I believe this is something we should all be incredibly proud of, I still can’t shake the feeling that traffic and emission levels are gonna become more unbearable than they are now.

    Still, though – fantastic to see how they’ve teamed up with their suppliers. I mean, they’re practically backward integrating without making any sort of significant capital investment. (I may or may not be talking through my hat here)

  2. Sukanya says:

    I’m with Vishnu on this – a couple of months ago, we had a very engaging discussion in my class on this case as part of our strategy class. While this really is a well executed piece of strategy, innovation and marketing all rolled into one – hence the harvard business case – I can’t help thinking that this is going to be the one disruptive technology India is going to wish it never thought of. Currently, it doesn’t seem as though we’re big on carbon footprint and having that sort of conversation in India, but I’d be curious to see what we’re going to do once eco-consciousness catches on in India.

  3. Sukanya says:

    Oh and on a totally unrelated note : I just saw this tweet on the side about Jamie Dimon. This is such a coincidence because Mark Settles (Diversity Recruitment at JPMC) was in school today to talk to us – we had a case on him as part of our Leadership class and so they invited him to shed more insights into the case.

  4. P says:

    I can completely understand the traffic congestion but I am not too sure about the emission levels- according to Tata, the Nano is going to pollute less than motorbikes and the mileage of the Nano is excellent! But I agree- soon we might have these Nanos everywhere on the road.

    And Sukanya, thats awesome!

  5. Aruni says:

    Every time I see this car, I remember the tragic way in which Bengal couldn’t hold on to this project, how many lives it could have saved there, and the increased speed with which that state is hurtling towards hell. That’s what happens when you have to choose between communists and Mamata Banerjee.

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