A very interesting article by Innosight's Josh Suskewicz on Tata Motor's new car - Tata Nano, explains how this could potentialy disrupt other car variants and also motor vehicles - VA
------------------------------------------------------------------------------
We here at Innosight have followed the development of Tata Motors’ one-lakh “people's car” with great excitement for the last few years (we’ve written about the development of the car numerous times in Strategy and Innovation and elsewhere, and interviewed the Tata Motors management team a year and a half ago in preparation for a feature presentation at a conference on business model innovation). The car, now dubbed the “nano,” was officially unveiled yesterday to great fanfare.Do we buy into the fanfare? Well, Tata’s peoples’ car matches the pattern of disruptive innovation to a T. It uses an ingenious new business model – the supply chain has been thoroughly reconfigured, to the point where risk is distributed among suppliers and dispersed dealerships will participate in final vehicle assembly – combined with clever and unorthodox product innovations, such as a hollow steering wheel shaft, reimagined body, and plastic panels. Furthermore, Tata Motors engineers made critical tradeoffs, sacrificing many of the performance characteristics that most drivers take for granted – the trunk is in the front of the car and holds just a briefcase, the instrument panel features only a speedometer, odometer, and fuel gauge, there is no radio – in order to deliver a basic but critical value proposition to a new customer set: safe and affordable transportation for the emerging middle class in the developing world that is still priced out of the automotive market. This vision is at the core of the development of the Nano. Since first unveiling the idea and challenging his engineers to realize it, Tata Group Chairman Ratan Tata has been firmly focused on the goal of serving the underserved, of giving the families that crowd onto motorbikes in India’s crowded cities a better, safer, and more comfortable transportation option. He is competing against motorbikes and the non-consumption of cars, rather than any segment in the auto world that already exists. This is brought home in competitors’ reactions, as captured by The New York Times:Jagdish Khattar, a former head of Maruti 800 manufacturer Maruti Udyog Ltd., says it’s too early to say whether the Nano will overtake the original.“It’s a good product but it’s still too early to say whether it will overtake the 800 because it caters to a totally new market segment,” he said while watching a live telecast of Tata’s press conference after unveiling of the Nano.But clearly, at least one other manufacturer was worried.An official of Hyundai Motors, which unveiled an LPG version of its Santro Thursday, was more circumspect.“We definitely see it as impacting our sales,” he said in halting English, preferring to maintain anonymity. Anand Mahindra, managing director for Mahindra & Mahindra, Tata Motors’ primary competitor, said before the unveiling, “I think it’s a moment of history and I’m delighted an Indian company is leading the way.”The impact of the car figures to be enormous, in India and throughout the developing world. But what about its impact on the businesses and society in the developed world? The Times puts forth a compelling theory:Some analysts are predicting that just as the Japanese popularized kanban (just in time) and kaizen (continuous improvement), Indians could export a kind of “Gandhian engineering,” combining irreverence for conventional ways of thinking with a frugality born of scarcity. Or, as Indian auto executive Ashok K. Taneja describes the philosophy, “When I need silver, why am I investing in gold?”Gandhian engineering, or appropriate design, could be a terrific mechanism for forcing product and business model development to cleave to the need profile of a target segment. After all, there is no greater predictor of disruptive success than products and business models that are designed around important and unsatisfied jobs to be done.
We here at Innosight have followed the development of Tata Motors’ one-lakh “people's car” with great excitement for the last few years (we’ve written about the development of the car numerous times in Strategy and Innovation and elsewhere, and interviewed the Tata Motors management team a year and a half ago in preparation for a feature presentation at a conference on business model innovation). The car, now dubbed the “nano,” was officially unveiled yesterday to great fanfare.Do we buy into the fanfare? Well, Tata’s peoples’ car matches the pattern of disruptive innovation to a T. It uses an ingenious new business model – the supply chain has been thoroughly reconfigured, to the point where risk is distributed among suppliers and dispersed dealerships will participate in final vehicle assembly – combined with clever and unorthodox product innovations, such as a hollow steering wheel shaft, reimagined body, and plastic panels. Furthermore, Tata Motors engineers made critical tradeoffs, sacrificing many of the performance characteristics that most drivers take for granted – the trunk is in the front of the car and holds just a briefcase, the instrument panel features only a speedometer, odometer, and fuel gauge, there is no radio – in order to deliver a basic but critical value proposition to a new customer set: safe and affordable transportation for the emerging middle class in the developing world that is still priced out of the automotive market. This vision is at the core of the development of the Nano. Since first unveiling the idea and challenging his engineers to realize it, Tata Group Chairman Ratan Tata has been firmly focused on the goal of serving the underserved, of giving the families that crowd onto motorbikes in India’s crowded cities a better, safer, and more comfortable transportation option. He is competing against motorbikes and the non-consumption of cars, rather than any segment in the auto world that already exists. This is brought home in competitors’ reactions, as captured by The New York Times:Jagdish Khattar, a former head of Maruti 800 manufacturer Maruti Udyog Ltd., says it’s too early to say whether the Nano will overtake the original.“It’s a good product but it’s still too early to say whether it will overtake the 800 because it caters to a totally new market segment,” he said while watching a live telecast of Tata’s press conference after unveiling of the Nano.But clearly, at least one other manufacturer was worried.An official of Hyundai Motors, which unveiled an LPG version of its Santro Thursday, was more circumspect.“We definitely see it as impacting our sales,” he said in halting English, preferring to maintain anonymity. Anand Mahindra, managing director for Mahindra & Mahindra, Tata Motors’ primary competitor, said before the unveiling, “I think it’s a moment of history and I’m delighted an Indian company is leading the way.”The impact of the car figures to be enormous, in India and throughout the developing world. But what about its impact on the businesses and society in the developed world? The Times puts forth a compelling theory:Some analysts are predicting that just as the Japanese popularized kanban (just in time) and kaizen (continuous improvement), Indians could export a kind of “Gandhian engineering,” combining irreverence for conventional ways of thinking with a frugality born of scarcity. Or, as Indian auto executive Ashok K. Taneja describes the philosophy, “When I need silver, why am I investing in gold?”Gandhian engineering, or appropriate design, could be a terrific mechanism for forcing product and business model development to cleave to the need profile of a target segment. After all, there is no greater predictor of disruptive success than products and business models that are designed around important and unsatisfied jobs to be done.
No comments:
Post a Comment