This report will describe briefly about the company, Tata motors and their sustainable innovative result, the world’s cheapest car Nano. (Tata motors, 2013) Tata Motors being the largest Indian automobile manufacturer, had revenues of INR 1,65,654 crores (USD 32. 5 billion) in 2011-12. They have been the leading manufacturers of commercial vehicles. They also have award-winning products in the compact, midsize car and utility vehicle segments. They are also among the world’s top manufacturers of buses and trucks. The company was established in 1945, they do business in all states of India.
Over 75,00,000 Tata vehicles are on Indian roads, the first being, launched in 1954. Listed in the New York Stock Exchange (September 2004), the company emerged as an international player. They started establishing their name internationally through exports, in 1961. They have operations in many different countries through associate companies, acquisitions and subsidiaries. The most famous being, Jaguar Land Rover, acquired in 2008. The SIR Nano was launched in January 2008. When we look at the history of innovation, we see that great innovators brought the goods enjoyed by the elite to the masses.
The phrase stands true for Nano. Nano is the world’s cheapest car, targeted at the lower middle class of India but attracting people from all classes. The project took off under the vision of the company head, Ratan Tata, that, a family of four that can afford a two-wheeler, should be able to afford a car, which is much safer to use. In 2009, the first Nano rolled on the road to be part of history. The report describes the innovation management of Tata Motors with respect to their SIR, The People’s car, Nano.
The search for ideas for developing Nano had the main driving factor, the fixed price of INR 100,000. It had to be engineered from the bottom up. This gave the company the opportunity to develop a less expensive product by applying new skills of designing and cost reduction. The cost reductions had to be done by smart designing rather than cutting out the essentials. (Mahadevan B. , 2009) Nano’s development team had to meet three requirements for the new vehicle, it had to be (i) Less expensive (ii) Adhere to regulatory requirements and (iii) fuel efficient.
The final cost was set in stone as was the safety of the car. Nano, not only had to meet the regulatory norms but surpass them. They, could have added doors to golf carts and added bigger gasoline engines, the vehicles could have adhered to safety norms and lower emissions norms, but that’s not the way Tata does it. The selection process was also governed by the fixed price of the car, Nano. (Tellis Gerard J. , 2012) Nano has no radio, air-conditioning, power assisted steering and even power windows.
To further reduce costs, engineers reduced the weight of the car, to cut material costs. Aluminum parts replaced steel parts and plastics replaced sheet metal. Dashboard, panel and frame, follow a click mechanism thus eliminating screws and nuts. The chairman Mr. Ratan Tata himself suggested using a single windshield wiper instead of two thus reducing costs and giving the car an aesthetic appeal. The low cost of Nano not only comes from the exclusion of luxuries but also usage of lighter components like door handles, engine components etc.
Nano uses a much smaller wheelbase yet allowing for 15% more space. Three bolts instead of four hold the wheels. (Mahadevan B. , 2009) The maker of Rack and pinion steering system, Rane Group, worked towards reducing the weight of the materials, e. g. the steel tube of the steering replaced the steel rod. The, two piece product was redesigned into one piece to further reduce costs. For the components and systems designed by them, suppliers with strong process in place were chosen, as they could give valuable suggestions and improvements in the designs.
Nearly every component was locally sourced. The suppliers played an important role in the design and development process of Nano. Tata not only improved on its own processes and systems but also helped its suppliers give their best. The Implementation process began after a long, exhausting process of selection, India’s MRF was selected for stronger than normal rear tires, Bosch of Germany for the engine-management system, India’s Sona Koyo supplied the steering shafts, Italy’s I. D. E. A. Institute designed the exteriors and Johnson Controls of USA supplied the seating system.
The final product is a 624 CC, 2 cylinders, 38 BHP engine car capable of doing 105 kph. Returning an average of 23 kmpl or 47 mpg of gas. It could accommodate 4 persons easily and has enough space to make tall drivers feel at home. Thus, there came into being a low cost no frills car that people could buy with just a swipe of their credit cards. The car without the luxuries might not seem that appealing, but when we consider the amount, which could only buy scooters and motorcycles, suddenly thoughts start to change in the favor of Nano.
The company has come up with new variants to the original model, probably done to survive the current market competition, attract new customers and widen its product offering. The new variants namely Nano CX and LX models are basically the upgraded versions of the original model, the engine and basic specifications remaining the same, the luxury part has been amped up. Features like power steering, fog lamps, body coloured bumpers, power windows, air-conditioner, music system etc. as been added to the upgraded versions. The innovation strategy of Tata motors relating to their sustainable innovative result, the Nano is both problem solving and continuous innovation.
Tata motors problem solving approach became evident when The Nano, when initially launched had some major and minor problems, the minor ones being that of a fault in the accelerator wire of some cars and the major ones being the car engines catching fire, and on two occasions the cars being completely burnt. Forbes, 2010) Tata motors dealt with the minor problems by recalling the sold cars and replacing the faulty parts and the five major ones by repairing the fault. The two major fire incidents were given compensation. The company when investigated found that there were some faulty switches that were causing the problem of fire, thus all the 7500 cars that the company suspected had the problem were recalled and their faulty parts, changed.
Tata motors has been doing continuous innovation, evident from their approach of continuously upgrading their originally launched Nano, which was, due to price constraints, a basic model with just the essentials and no luxuries. (Tata motors, 2013) The upgraded models offer customers a wider range of options via two models namely the CX and LX versions. The original model lacked basic amenities, common in todays’ cars, like air-conditioning, power windows, body coloured bumpers etc. have been looked after in the upgraded models leading to higher prices.
Tata motors does both Radical and Incremental innovation. Nano is a radical innovation, because the company’s approach towards building it was completely different from the conventional process, they had to completely unlearn and relearn the whole process. The company had a huge challenge in front of it because the price of the car was already fixed. The company brought in the suppliers into the designing process of the car and instructed them to look at the conventional processes they were following from a different viewpoint, thus producing simple solutions that were logical.
Some examples that prove that Nano is a radical innovation are, it is rear engined, something that is new to cars manufactured in India, the intelligent use of space has enabled the car to be small but spacious, the intelligent use of materials like plastics, has enabled the car to be light thus returning better fuel efficiency. Tata motors are also doing incremental innovations, as (Tata motors, 2013) they are planning to launch a hybrid version of Nano, which runs on CNG as well as gas. (Times of India, 2013) Tata motors have plans for launching the CNG version in near future.
Although, their diesel model of Nano is ready, launch dates are being finalized. Tata utilized a group of 32 people as its R&D department for developing Nano. (Mahadevan B. , 2009) The three requirements had to be met by the product development team at Tata motors, with help from their suppliers and vendors. The organizational structure at the Tata motors is mechanistic. The company follows a formal structure of well-defined hierarchy and extensive procedures. The employees’ work in teams, the team members are answerable to the team lead, who then reports to his manager.
The chairman, Mr. Ratan Tata, heads the company. The team, which was involved in Nano project, was similar, comprising 32 members with Mr. Girish Wagh as the head. Tata motors workshop is innovative in the way it is built, different teams have their separate workspaces providing privacy to the teams, team members do not have access to other projects workspaces maintaining secrecy of projects involving well awaited and upcoming models like Nano. Nano is built in a plant located in the state of Gujrat in India. The well-equipped Sanand plant in Gujrat, builds exclusively Nanos. It has a capacity of 25,00,000 units per year.
Nano was the result of highly talented and motivated individuals working on an innovation that would change the way people look at their company. Tata recruits the best people fitting their recruitment criteria. They go to good educational institutions and look for individuals who are good in their field of work and are open to change. (Tata motors, 2013) The Tata group firmly believes that talented professionals are among its most vital resources, thus attracting and retaining the best of talents. The group does this through proven leadership-development systems that help make leaders.
The company believes in bringing out the best in each individual it hires, it spends a lot of money on training the individuals in specific fields. Thus, before firing an individual the company would try to help him improve his performance, firing would always be the last resort. The rewarding system in the company includes incentives like verbal appreciations and certificates, bonuses, yearly appraisal, promotions and discounts on other Tata products. (Tata motors, 2013) The reward mechanisms in Tata are among the best in the corporate world.
The report described about the SIR Nano, the innovation management which brought the concept from paper to the road. The innovation process was described using the four-episode model of searching of ideas, the circumstances and the driving factors, the selection and implementation of useful ideas. The steps the company is taking to increase the demand of Nano. The innovation context answers the three questions showing the strategies behind the development of Nano. The report further described about the organization, the reward system and the people.