India’s Tata Group

India’s Tata Group is perhaps the most successful of its mega corporations.  It goes way back: It built the nation’s first steel mill, the first power plant, and the first airline.  Tata has been in the news recently for designing and building a car that costs only $2,000 (and no, I didn’t leave off a zero!)

Business Week magazine reports* that Tata has made innovation a priority almost ever since India’s economy was opened up in 1991.  Before that, Tata and other Indian companies had been protected from international competition, and Tata new they’d need to step up their game in the absence of this protection.  It’s worked; so what are they doing to innovate?

1. Senior leadership is committed to innovation.  Chairman Ratan Tata made it a personal priority for the company. Then, he created a 12-member panel of senior executives that’s called the Tata Group Innovation Forum (TGIF–not sure I like this particular acronym in this context!)

2. Tata established formal systems for collecting, evaluating, and harvesting ideas.  They created multiple channels; small ideas are funded by the business unit; bigger ideas go to one of the company’s 19 innovation labs (research centers that are each focused on one technology or one sector); some ideas are funded by an incubator fund out of the CTO’s office.

3. Innovation is built into the annual review process and professional development process: it’s one of 9 categories of evaluation, and employees receive training (in the leadership institute and in a four-day Technovator workshop, for example).

4. The all-important “slack time” is available: 5 hours a week are available for personal projects. This could be developing an idea, but it could also be learning a new skill.

5. Social networking supports the process: an internal Digg-like social network called IdeaMax lets anyone submit an idea, and everyone can comment on and vote on all of the ideas.  CTO Ananth Krishnan reviews the top 10 ideas every quarter.

All of this is working: ten percent of last year’s revenues came from innovation.  One half of their customers can describe something about their product that is innovative.

*Jessie Scanlon, “How to build a culture of innovation. ” August 19, 2009 Business Week

6 thoughts on “India’s Tata Group

  1. I’ve had to pitch against a particular division of Tata quite a bit in the past, won a few, lost a few. They were so unhibited with their ideas and designs, sometimes you had no chance, sometimes they had no chance.

    It might not be the case these days, as they have sharpened up on their porject management, but back then (late 90s) they were not much cheaper than us as a UK studio – all that inhibition comes at a price.

    Our client didn’t mind this as they were selecting more on grounds of cultural appropriateness than cost, so who won depended on who the audience for the project was (it was a huge multinational with a Western business school type management but a massive Indian workforce… ).

    Client’s Indian business was rethinking everything due to disruption by Tata 🙂

    Interstingly #5 sounds like something Tata might have copied from my client made more social – but that kind of thing works so why not.

  2. Maybe it was too good to be true: a car for $2,000. The Economist of 20 August 2011 (pp. 60-61) reports that the Tata Nano has been a disaster since it was launched in 2009. First, local opposition forced them to relocate the manufacturing plant, which didn’t open until Summer 2010. Some of the cars caught on fire, which didn’t help publicity! Rather than the predicted sales of 20,000 a month, they’re at 3,260 in July 2011. The biggest problem is with marketing: even at $2,000 the car is still a bit too expensive for the majority of Indians. But because the advertising campaign emphasized its cheapness, the middle-class consumers who could actually afford one preferred a more aspirational, more sophisticated car, which they could buy from Tata’s rival Maruti. The Economist article ends by saying: “Despite the cleverness of its frugal engineering, Tata Motors has not yet cracked frugal marketing.”

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