Tuesday, October 11, 2011

Book Review: Nanovation

I've come today to write a short review of a large book about a small innovation.  And if that seems interesting and convoluted all at the same time, then you'll have just an inkling of what Nanovation is all about.  Winston Churchill once suggested that Russia was a riddle wrapped in a mystery inside an enigma.  Nanovation, the new book about the Nano, the "People's Car" in India, can be as intricate and involved as Winston's description, but given time and patience there's a lot to learn from the experience.

The challenge that the authors faced with writing Nanovation is that there are at least three different kinds of stories embedded in the Nano story.  One is the tale of India itself, bursting with possibility yet still striving to enter the first world.  The second is the innovation tale of the Nano, an almost unimaginable product offering which has made automotive transportation much more affordable and practical than ever before.  The third story are the management lessons we can glean from the first two stories.  At over 500 pages, the authors might have been a bit more judicious in their story-telling, or have created a book about the creation of the Nano and extracted the management lessons separately.  But if you are a dedicated reader, you'll enjoy the whole thing.

The story of the Nano is really a story of asking "why not".  Ratan Tata, head of one of the largest conglomerates in India, wondered why there were no affordable automobiles for the vast majority of India's population.  Far too many people were left in the dangerous and often humiliating position of riding on a scooter, exposed to traffic, weather and other conditions.  He wondered why India, with its technology capabilities and large market, couldn't solve this problem, and put his engineers to work.  What made this project somewhat unique was his personal belief that the car must be seen by consumers as more than a scooter with a windshield, that it must be affordable and practical, and his personal commitment to the project.  Oh, and the fact that he placed an almost impossible price on the car in public to a journalist before the engineering had been started.

When Arthur Lafley stated he wanted P&G to attract 50% of its ideas from external sources, he shocked the marketplace but I am relatively certain he had already put the mechanisms in place to achieve that. Tata, on the other hand, speaking to a journalist at a trade show, suggested he could create a people's car in India that cost $2000.  He said this in an off-hand way, but the journalist published a paper with his statement.  Tata could either backtrack from his statement or use it as a stretch goal for the team.  He chose the latter.  To give you some perspective on what a $2000 car means, consider just the tires.  On a regular automobile in the US, tires comprise approximately 1% of the cost of the car - say $300 for a $30,000 car.  If the costs are scalable, that means the tires for the Nano had to cost approximately $20 - all four of them.  To many people, it seemed impossible to create a car for $2000, much less one that was safe, practical and could seat four people.  Further, everyone was sure the car would be dangerous and would pollute.  Tata and his engineers did the unthinkable, creating a car that the average consumer saw as valuable and respectable, that meets safety requirements and offers great value.  The signal that the car was seen as valuable was in the pre-orders, over 200,000 preorders - and each order had to be accompanied by an 80% deposit. 

And, oh, by the way, just as the firm was starting production, after years of engineering and innovation to achieve a great car in an impossible price point, social and political unrest caused Tata to move its primary production facility from one end of India, to the other.  Yet Tata, and the Nano, have accomplished great things.

The authors draw a lot of management lessons about innovation out of the story of the Nano.  Much of what I take away is based on the executives and their commitment.  Ratan Tata and other executives saw a need, felt strongly about the need, and committed themselves to filling the need at the price point necessary.  Once they had done that, they gave the team the resources necessary and asked them to do the near impossible.  When they ran into obstacles, like suppliers who didn't want or couldn't believe the price points, they found others who were hungry for business and recognized the opportunity in the volumes of Nanos to be made.

The book is divided into three parts.  If you are interested in the story of the Nano, read parts one and two.  If you are a management theory junkie and want to gain insights on what Tata learned from the Nano in regards to innovation, read section three, where eight "Rules" of Nanovation are listed.  These rules reflect learning that are evident in other big innovation efforts, including consistent executive support, really creative thinking, close observation of customer needs, a culture of innovation and many more.  None of these rules are unique to the Nano, but how they intertwine with a story that is almost as good as Slumdog Millionaire for its twists and turns makes them all the more readable.

I wish I could simply write that this book is for everyone, and perhaps in some ways it is.  There's a compelling drama of an almost impossible task, with the backdrop of all the change and drama that is India.  There's an engineering feat almost unduplicated in the automotive industry, which is taken on not by the large manufacturers but by an Indian firm for Indian needs.  There is a passionate executive who is politely told his vision is impossible by everyone who is an expert, and finally realized by those who decided to try.  Which book do you want to read? The drama, the Indian history lesson, the management tome about innovation in emerging economies?  Because they are all here.  And all worth reading.
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posted by Jeffrey Phillips at 3:48 AM


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