by Navi Radjou
June 4, 2008
I recently caught up with senior execs from various business units at the Tata Group, India’s leading conglomerate. They were all rightfully proud of the $2,500 Nano, the world’s cheapest car. We discussed how, before it has even been released, the Nano is already a disruptive product innovation. The Nano offers a safer alternative to families riding dangerously on bikes in big Indian cities like Mumbai. Similarly, Nanos converted into taxis will be more comfortable and environmental-friendly than the unstable and polluting autorickshaws (there are more than 60,000 autorickshaws in Bangalore alone). Finally, middle-class young couples can opt for two nanos instead of buying a single expensive midrange car.
Despite the fact it won’t hit the streets until October, 2008, Nano has forced two- and three-wheel autorickshaw makers like Bajaj Auto and midrange car makers like Maruti to rethink their strategies. Bajaj just launched the development of a Nano rival, and Maruti, seeing the writing on the wall, recently announced that it will abandon its “small car” image and focus more on high-end customers.
That’s disruptive innovation. But I believe it will also turn out to be a disruptive social innovation. At the bottom half of India’s socio-economic pyramid, the Nano flattens the market. Suddenly lower- and middle-class buyers can afford mobility. Shiny new Nanos will literally create opportunities for Indians who previously did not have access to safe, reliable transportation. Mobility will beget upward mobility. For the bottom of the market, the Nano is empowering.
This empowerment will in turn broaden the minds of India’s elite at the skewed top of that pyramid. Let me elaborate a bit.
In business terms, Nano doesn’t directly threaten Mercedes, Audi and Toyota Lexus that cater to the top-of-the-pyramid buyers. But it does affect them. I bet this powerful new product, is already creating insecurity among the users of those luxury cars. How come? Well, visualize this scenario: India’s business execs, politicians, and Bollywood stars, who all ride chauffeured Benzes and Lexuses, will soon see their premium cars surrounded by shiny Nanos (instead of decrepitautorickshaws or clumsy bikers) whenever they stop at traffic lights.
I bet members of this elite will suddenly feel like a bulky Gulliver encircled by tiny, nimble Lilliputians! But more startlingly, their own chauffeurs will show up in the morning at their house in a Nano, rather than taking the bus to work. Soon India’s elite will need to widen their garages to accommodate their chauffeurs’ Nanos and maybe even their cooks’ and personal assistants’ Nanos. And if they don’t? Well those chauffeurs and cooks and assistants will drive their little cars to an employer who will accomodate them. What a cultural shock that could be!
I brought up this notion when I met Dr. Mashelkar, an eminent scientist and the lead architect of India’s science and technology policies and its national innovation agenda. Dr. Mashelkar, who grew up as a poor boy on the streets of Bombay and went to school barefoot, insightfully pointed out: “The Nano will force the Indian elite to create not only more physical space, but also mental space.”
250,000 Nanos will hit the road in a few months; millions more will follow in the coming years. As Nanos proliferate, they will invariably put pressure on the Indian government to widen the roads, while forcing the Indian elite to widen their minds. Who would have thought that a tiny car could unleash a mega social revolution?
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