Friday, March 14, 2008

Reva and Nano: 2 approaches of innovation

These days I am doing a lot of reading on innovation. In fact, I hope to write a survey of my favorite innovation literature soon. I am quite intrigued by the 2 approaches to “know the future” Peter Drucker talks about in his book Managing for Results (I read it in the compilation of his work called “The Daily Drucker”):

  • Finding and exploiting the time lag between the appearance of a discontinuity in economy and society and its full impact – Peter calls this anticipation of a future that has already happened.
  • Imposing on the yet unborn future a new idea that tries to give direction and shape to what is to come. Peter calls this making the future happen.

The discontinuity that Peter talks about could be a change in society, knowledge, culture, industry or economic structure. However, when you recognize the pattern, it introduces a new perception of the world. The challenge lies in recognizing the pattern. Both types of innovation are essential, latter is perhaps a riskier approach. Let’s see if we can identify these approaches in what we know.

I feel that Nano (Tata Motors’ Rs. 1 Lakh car) belongs to the first category (anticipation of future that has already happened) while Reva (a leading electric car) belongs to the second category (making the future happen). Let me elaborate.

Reva is the leading electric car in the world. It has been in production for since 2001 and around 2000 cars have been sold worldwide (see news). In 2006 it went through another round of funding for its expansion. Deputy Chairman of Reva, Mr. Chetan Maini says that they are hoping to sell 30,000 cars in 2008. It is priced more than three times Nano and is appealing to people who are environment conscious. Reva has won a number of innovation awards and I was myself thoroughly impressed by the talk Chetan gave at Innovation Summit in 2005. Having said that I see it as an uphill task to “cross the chasm”. Where are the electric charging stations? It takes 2.5 hrs to charge upto 80%. However, innovations like these do play a role in shaping the future.

Nano, on the other hand, is trying to capitalize on the discontinuity which has already occurred. There are a bunch of 2 and 3 wheeler owners who would love to buy a car if it is priced around Rs.1 Lakh. Observing this segment (which is non-car market) and creating a product which fulfils their need at an attractive price is where the beauty of Nano lies.

The objective is not to say one innovation is better than the other. It is to share an observation that these two innovations are of different kind.

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