Innovation and the development of Tata's Nano car

¶ … Tata Motor Inc.

What is innovation?

The business scenario

Innovation in Tata

Innovation at Tata through the TSC strategy

The culture of creative dissatisfaction

Leadership as the foundation of innovation

Hiring the right people.

The use of social media for tapping as well as encouraging collaboration

Scalon, J (2009). How to Build a Culture of Innovation

In this paper, we discuss the Tata Motor Inc. innovative process with a sharp focus on the new invention of the Nano Car (world's cheapest car).The case study addresses the leading and management of innovative change and creative processes. The following items are reviewed: the innovative process; the contribution of individuals; cross functionality; technical communication; organizational culture and characteristics; leadership; social responsiveness; and market changes.

Introduction

An overview of Tata Motor Inc.

Tata Motors Ltd. is a multinational corporation that has it's headquarter in Mumbai, India. The Company is part of the Tata Group which was formerly called TELCO (TATA Engineering and Locomotive Company). Tata Motors is the largest automobile company in India and had consolidated revenue of $20 billion in the period 2009 and 2010. The company is an industry leader in the commercial vehicles and forms part of ten top three manufacturer of passenger vehicles. The company also manufactures vehicles falling in the compact, utility and midsized vehicle segments. The firm is the global fourth largest manufacturer of trucks. It is also the second global largest manufacturer of buses. It also employs 24,000 people. Since its inception, the company has manufactured and produced more than four million vehicles in India alone (Imagin Mor Pty Ltd.,n.d). After its establishment in 1945 while majorly manufacturing locomotives, the firm proceeded to produce its first locomotive in 1954 in conjunction with Daimler-Benz AG ( Rodrigues,2010).

What is innovation?

According to Drucker (1985) "Innovation is the specific tool of entrepreneurs, the means by which they exploit changes as an opportunity for different business or a different service." Innovation at Tata is never recent phenomenon. It is however a form of a legacy. The corporation has a culture of perpetual quest for excellence which is very highly engraved in its ethos and efforts to encourage its employees in through the years to serve its clients through a process of continuous innovation in its processes as well as products. Through the years, Tata has effected innovation in three main areas. These are;

1. Processes

2. Products

3. People (Middleton,2008)

The business scenario

The automotive manufacturing sector is a very competitive one and there are multiple competitions on various areas. The current financial climate which is recessionary coupled with the poor performance of the automobile sector has led to a rise in global demand of better and fuel efficient vehicles that are affordable. The worldwide view of India as a lucrative automobile market made it to be considered a major production as well as export hub. This was coupled with a rise in competition in the segment for passage vehicles. In response to the increasing need of the customers the Tata Motor Limited (TML) launched Tata Nano which is an efficient car costing about $2,500.The Tata Nano which is also called the ' People's car' caused a buzz in India and globally. In order to promote the Nano as well as create publicity and awareness the TML needed a way of making the public know about the vehicle so as to dispel any fears and any misconceptions. They resorted to the use of a Web2.0 tool and made an interactive site for the Tata Nano. This enabled TML to make use of the social media networks in obtaining the necessary feedback that they got from the end-users to be used in dine tuning the manufacturing as well as the supply chain.

Innovation in Tata

Scanlon (2009) noted that cultural transformation is never possible without the good leadership of the top business executives. Tata group therefore came up with the Tata Group Innovation Forum (TGIF), which is a twelve member panel of very senior Tata Group executive as well as the CEOs of other subsidiary firms. Mr. Sinha, the CEO of Tata Quality Management Services as well as a key member of the forum pointed out that, "TGIF's main objective is to inspire and share best practices" (Business Week, n.d).The executives too came up with other strategies in order to spur culture of innovation within the Tata Consultancy Services (TCS) strategy.

Innovation at Tata through the TSC strategy

The initial move was for the leaders to approach the innovative problem from top down as well as bottom up approach. Ananth Krishnan, the TCS Chief Technology Officer pointed out that this involved the establishment of formal systems aimed at encouraging the thinking as well as the processing of creative and innovative ideas. The TCS then came up with multiple channels and managers were trained on techniques of directing the ideas of the employees. There are various forms of innovation according the TCS strategy.

The incremental innovations

These are handled as well as funded by the relevant business units from which the ideas emanated.

Platform-level innovations

These are innovations that might extend the currently existing innovation's offerings to become one of the corporations' nineteen innovations hubs.

Leading-edge research centers

These are centers that are focused on the research and development of key specific technology domains as well as business sectors. There are disruptive ideas that might emanate from the labs. Should one emanate from the business units, then it would be effectively directed to the laboratory and then funded via an incubator fund that is operated from the office of the Chief technology Officer.

The method through which the ideas are effectively evaluated and then subsequent funded is not as important as the fact that the employees of the TSC are aware that their ideas are highly welcome. In order to encourage innovation, the TSC has incorporated the concept of innovation into its core review process in their annual reports. This therefore makes innovation to be one of the 9 categories on which TSC employees are evaluated. Should an employee be a winner of the firms Young Innovator Award, they will witness an increase in their salary.

Reframing

Ghosh (2010) pointed out that the ability to view things in a different angle is the critical aspect of the innovative process. This is referred to by Senge (2006) as the changing of one's mental model. The process of reframing is well illustrated in the case of Tata Nano car concept. The reframers question themselves in an attempt to answer the question "why not." Tata for instant broke a century old paradigm for car manufacture by distributing the component kits for the manufacture of the Tata nano to a number of entrapreneural smaller firms could assemble closer to their customer base. This was as opposed to complete production of the car in their factories. They questioned the conventional wisdom in order to aid the firm in navigating the increasingly complex corporate environment.

The culture of creative dissatisfaction

Other than the formal system of the TSC the company has taken certain key steps that are aimed at the stimulation of creative thinking. The company trains its employees so as to think about improving its products at all times. They refer to this as the culture of creative dissatisfaction. Innovation has therefore been made a key component of the training programs. This is provided at its leadership institute (fifty senior administrators are sent here every year ) up to the "Technovator" workshop, a four-day programme in which the employees are taught on how to think creatively.

Social responsiveness and technical communication

The company encourages employee to take about 5 hours of their forty five hour week in doing their personal projects such as the development of a new idea or the learning of a new skill. So as to best capture the nascent ideas, the firm launched a social network called IdeaMax which is more like Digg for employees to place and comment as well as vote on their ideas. The IdeaMax platform has collected more than 12,000 ideas a large number of which have been developed into projects.

Leadership as the foundation of innovation

Samson (2010) pointed out that the keys to innovation are strategy and leadership. The CEO of a given firm marks the cornerstone of any attempts to spur a culture of innovation. The Tata case study indicates that it is important for the CEO to communicate the need as well as the importance of innovation to the managers as well as to encourage innovative efforts that include even the failed ones.

Hiring the right people.

In order to ensure that the capacity for making breakthrough innovations is achieved by Tata, only the Phd graduates were hired .

Building a culture of organization in the corporation

It is important to point out that a culture of innovation cannot be instilled without a clear system that is aimed at approving a s well as funding the ideas. These would include the employee review process as part of the innovation criteria.

The use of social media for tapping as well as encouraging collaboration

The use of the IdeaMax platform by the Tata group has aided the company it creating a platform that allows the workers to internally post as well as answer questions and exchange ideas. As Gosh (2010) put it innovation involves going though the steps of; mental model innovation to business model innovation, then to industry innovation and subsequently social innovation.

Conclusion

Innovation is a process that involves people, products and processes via the application of appropriate leadership skills. Organization should therefore embrace innovation in order to maintain profitability in this competitive business atmosphere. Innovation is therefore a tool for acquiring and maintaining a competitive advantage