the
innovative LEDGER
An e-Newsletter from The Innovative Edge™ Inc.
Vol.
9, No. 4 - April 2009
* * * * * * * * * * * * * * * * * * * *
Hello, Goodbye
By Jeff Govendo
For
most westerners, the word "tata", if it means anything at
all, is a cute way of saying goodbye.
But
soon, we'll all know the word as one of the most rapidly rising global
brands in the automotive world.
Tata
Motors of India has just unveiled its new Nano microcar - its "people's
car" for Indians who until now have been unable to afford even
the least expensive car on the market, which was $5000. The Nano sells
for $2000-$2500.
As
its name suggests, the car is small - very small. But in India's crowded
cities, small is entirely appropriate. And, compared with the $14,000
Smart for Two car which is gaining a bit of popularity in some urban
areas in the U.S., the Nano is downright spacious, seating a family
of four (no suitcases, please, and leave the German shepherd at home).
Early tests have reported the Nano drives surprisingly well.
What's
exciting in the context of this newsletter is the innovation that
went into producing the Nano. As reported recently in Business
Week, it really is a people's car, having taken as its starting
point a price which its target customer could afford, and building
the car entirely around that. This meant bringing key suppliers into
every stage of planning rather than designing the car and demanding
that they manufacture components to fit after the fact. It meant understanding
just how large an engine is really needed for navigating the busy
streets of Mumbai or Kolkata, where traffic rarely moves faster than
20-30 mph.
But
the most groundbreaking innovation is this: the Nano is not built
on a factory assembly line. It is shipped as a kit - like the
models I bought incessantly as a kid - and put together locally, close
to where they are sold. (Presumbly they use more than a tube of glue
for this.) Gone are the huge costs of running a large manufacturing
plant, of shipping whole cars across the subcontinent, and of keeping
inventory on large tracts of real estate.
The
Nano represents a major (buzzword alert...!) paradigm shift in auto
production and distribution. The kind that always causes me to
wonder: where did the idea come from, and what was the reaction in
the room the very first time it was brought up? Was the proposer
a childhood model car nut like me? Were colleagues immediately receptive
to this new concept, or did eyes roll? If the latter, how did the
idea survive, given that such initial closed-mindedness is probably
the single most devastating moment in the life of a new idea, and
a killer of innovation?
Skeptics
have warned that with so many less experienced hands involved in final
assembly, quality may be a major issue. They could be right. But
apparently Tata has viewed this as a challenge requiring continuous
innovation throughout every aspect of the chain, and not a reason
to abandon the concept. Over the next couple years, we'll see
how they do.
As
I write this, two of Detroit's Big Three carmakers are faced with
the greatest crisis since their inception. GM's CEO has been forced
to resign. Demands are being made for them to "restructure"
as never before, and do it fast. Tweaks and incremental changes -
for decades what has passed for major progress in the Motor City -
simply won't do.
As
one who frankly believes in the necessity of a viable domestic auto
industry for the well-being of our country, I hope they might take
a lesson from their Indian counterparts, as well as other auto companies
around the world who have demonstrated a willingness to think and
act differently in the face of unprecedented economic and environmental
realities. They need to fully harness the creativity of invested
parties both within and outside their ranks, and learn to explore
where some of those "eye roll" ideas might take them. They
must become world-class innovators.
Failure
to do this, and I fear it's ta-ta for them.
