7. Return on Innovation
“Everyone wants to be successful, but I want to be looked back on as being very innovative, very trusted and ethical and ultimately making a big difference in the world.”
Nanovation is not just about experimentation and inventing things. It’s about sustainability—building the capability for ongoing innovations that offer a return. The return might be tangible, intangible, or in the case of Nano, both. It took six years, 500 talented people, and an investment of approximately $400 million to create the Nano. What did Tata Motors and the people of India get for this effort? Was it worth the long, arduous ride? You be the judge.
Nanoeconomics of the People’s Car
At the time of this writing the commercial success of the Nano—revenue growth, market share, customer satisfaction, and percentage of sales from new Nano customers—is yet to be proven. It’s simply too early to calculate the ultimate return on investment because we don’t have the data.
The potential market for Nano in India alone is about 14 to 15 million buyers, which would represent the top third of scooter drivers moving up to new car ownership. Now add the potential sales of Nano in other emerging markets such as Thailand, Indonesia, Africa, Brazil and Mexico. How about Nano’s distribution in Europe, the U.S. and Canada? The market opportunity and therefore the potential return on innovation becomes very big very fast.
The creation of a new innovation like the Nano means new factories in new places. And that means jobs. Jobs mean increased buying power, a stronger local economy, and a higher standard of living for the community. In the case of Tata Motors, return on innovation goes way beyond job creation. The success of their Nanovation in the Nano will lead to new breakthroughs down the road.
Brand Recognition Shoots Through the Roof
With the unveiling of Nano, the Tata Group leaped to number six on BusinessWeek’s “World’s 50 Most Innovative Companies” list. With Apple, Google, Toyota and General Electric, it was in good company. Within hours of unveiling the Nano at the New Delhi Auto Show in 2008, the Tata Group’s global brand recognition shot up by orders of magnitude. Experts estimate that the unpaid media coverage for the launch day alone would be worth approximately $21 million.
Return on Saving Lives
Remember that rainy afternoon in Bangalore, when Ratan Tata saw the family crash their scooter? Is there a greater return on innovation than saving lives?
Every time you move a family off a scooter and into a Nano—or any reasonably well-made auto—you reduce the chance that family will have a road-related injury by a factor of five. And when you move millions of people off of scooters and into Nano-class transportation, you start to save hundreds of thousands of lives.
Road deaths and injuries place a huge burden on the Indian people—nearly 3% of India’s GDP—and they also place a burden on her future. India is turning out very bright young people with some of the best educations in the world and we’ll need their fine minds to help us solve the problems of the future.
And that’s the best return of all.