Sunday, September 27, 2009

A look at Tata Nano through “Dynamic Innovation Sandbox” lens

Earlier this year we looked at a structure called “Dynamic Innovation Sandbox” which creates a platform for systematic innovation. In this article let’s look at Tata Nano innovation through the sandbox lens and see how the sandbox evolved over the years.

Innovation Sandbox has 3 key elements:

  1. The walls: A set of constraints each corresponding to the wall of the sandbox.
  2. The sand: A lab for rapid prototyping and systematic experimentation
  3. The kids: A diverse set of passionate people doing the exploration

Let’s look at each element in the context of Tata Nano:

  1. The walls: As Jai Bolar, senior manager (development) at Engineering Research Centre (ERC) and a member of the initial team says, “What was defined was cost: Rs. 1 lakh, without compromising on aesthetics, value to the customer or safety and environment requirements”. Soon the “transport” changed to “Rural car” and eventually to a “full-fledged car” as good as or better than Maruti-800. The safety requirements evolved into “Euro-II” compliance.

  1. The sand: As Ratan Tata said in an interview, “I think more than anything else the vendors disbelieved that the project was real. They didn’t respond because they thought it was a hypothetical project.” And how did vendors begin to believe and participate? By seeing the rapidly evolving prototypes. As Ratan Tata says, “I should say that more of this car has been made under rapid prototyping by us than you would find in standard cars”. Girish Wagh, head of the Nano project since 2005 says, “Nearly everything went through continuous nips and tucks. The floor panel changed 10 times to meet noise, vibration and stiffness requirements. The dashboard and seat went through equal number of modifications.”

  1. The kids: Nano team had a nice mix of people: some industrial designers like Nikhil Jadhav from INCAT, some gasoline geeks, styling experts from Institute of Development in Automotive Engineering, Italy. Wagh credits the team with both passion and resilience, two qualities helped the team cut the mental fatigue of redoing something over and over gain. What made a big difference was Ratan Tata’s personal involvement and checking the prototypes minutely.

Now, let’s ask a question: What kind of investment was it to create such a sandbox? Overall the project cost Tata Motors close to $400 million over 6 years. Let’s assume a pessimistic scenario and say that the total cost was double the original estimate and the project was delayed by 2 years. This means Tata Motors thought it would spend $200 million over say 4 years. Considering annual revenue of $2 billion in FY2003 Nano project meant significant investment. It was also perhaps the last chance for Ratan Tata to hit a sixer before his retirement. And that helped. Not every company has a Ratan Tata or a Steve Jobs who have deep insights and willing to put such bets. How are they to create innovation sandboxes? Let’s address this question soon.

(source: Tata Nano compiled end edited by Pradeep Thakur, 2009).

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