Sunday, August 23, 2009
What type of innovation is good during recession?
Spend good time in doing a proper market research before start spending in any new kind of innovation. It would be good to focus on areas where the cost of the service or product from an end user perspective is affordable to the customer segment you are going to serve. In principle one may look focus to doing disruptive innovations. For example- research as to what kind of car would India’s middle class family like to have? The result of the research was a car which is 50% lower in cost and with all the features of the most used lowest car in India. Tata Motors (Ratan Tata like Akio Morita from Sony walkman fame, is proposing the Nano car). The Nano car is a good technology example in terms of keeping the cost affordable. We need to see if this would also translate into a decent profit for Tata are an effort that supports social cause. In my opinion Tata Nano needs a business innovation now having pulled-off the technology innovation.
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A few observations:
- Typical market research is not an ideal place to get deep insights. Neither Nano nor walkman could have come out of a traditional market research. No market existed earlier.
- "Small car" project of Tata Motors started in 2003 when economy had come out of recession. And the product got launched during a recession. Similarly, an innovative idea which takes birth today is likely to come to the market during a non-recession.
- IMO Tata Nano is more of a business model innovation than technology innovation. I use following criteria to qualify an innovation "business model" innovation: (1) redefine customer (2) redefine a pricing model (3) redefine delivery channel. Tata Nano did (1). The story projects doing (3) by creating easy-to-assemble kits in future.
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