Professor Vijay Govindarajan is the Earl C Daum 1924 Professor of International Business and director of Tuck's Center for Global Leadership. An expert on strategy and a renowned innovation guru, Govindarajan shares his views on the Tata Nano and explains to Saurabh Turakhia why it stands out in the world of innovation.
To me, Tata’s Nano is a landmark event for a variety of reasons. Its innovation points to a whole new set of consumers, who did not have access to the car earlier. In a way, I liken it to a revolution that the PC and Apple’s iPod sparked. It is as important an event as India winning its independence or India launching its first satellite.
I also like to think that it is going to fundamentally change the way the automobile sector functions. And here is why.
For the first time, thanks to Tata’s Nano, India has been established as an R&D leader, and not just a low-cost hub known for cheap labour. It has shown to the world that India can be a technology leader.
When we talk of Tata’s Nano, we are not just talking about low-cost, we are talking about high technology. Even a DVD player in some US cars are priced over $2,000--this just goes to explain the significance of the Tata Nano.
The Tata Nano will certainly find big takers in India. However, it can have a market in the US, as well. If the car is enriched with high technology functions to make it an intelligent car, many in the US will look forward to own it. An intelligent car at $3,000 would be a good bargain after all, for many Americans. Tata’s Nano shows that there is a huge opportunity for Indian companies to build profitable low-cost products and then take them to the US.
I also find that the Tata Nano has fundamentally followed the ‘Forget, borrow, learn' model of innovation. It forgot the way it made money or operated in its earlier businesses. It realised that to innovate it would have to embark on a completely new theme. Its borrow challenge was to put some of its effective capabilities to use – selectively use its current technology for the breakthrough project. Finally, it also learnt to test and resolve the many assumptions that go with such an ambitious project.
The Tatas realised that for a poor country like India, there was a need of an ultra-low cost product and they offered it by leveraging the power of technology. The volumes are all there in India, one only needed someone like Ratan Tata to overlook the thin margins but invest in world-class technologies to offer an affordable good product to the market.
Most of all, Tata’s Nano is a great innovation, because innovation is all about thinking of the next decade and not the next quarter.