Tata's Nano: An Ingenious Coup

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Do U.S. and other Western companies feel threatened by Tata and other RDE challengers? In most cases, probably not. But perhaps they should.

The reason they should is because many RDE challengers seem to be bringing something extra to the game, and it's not just low wages. It's ingenuity, a key and often overlooked component of innovation. Western companies need to embrace ingenuity and throw away the calculator that calibrates innovative success simply with R&D expenditures.

No Need to Reinvent the Wheel Every Time

Random House Webster's Dictionary describes ingenuity as "the quality of being cleverly inventive or resourceful." As an adjective the word is "ingenious." Think of the word's root: "genius." It is widely recognized (only in retrospect, in many cases) that the most successful companies in the world have a certain genius about them. This will always be true, whether they are rapidly-growing RDE challengers or well-established incumbents.

Like successful entrepreneurs, these companies are cleverly inventive and resourceful. They are facile and fast. They know how to make do with less. They routinely do what others only talk about: think outside the box. And they understand that you don't have to reinvent the wheel all the time. You can be successful by borrowing and adapting somebody else's ideas (business models, technologies, and so forth).

We're not talking about pirating or intellectual-property theft, though that certainly takes place. We're talking about doing what somebody else is doing with a certain clever twist that makes the activity uniquely yours. As Bennett notes in his article about Tata, companies with that something extra in their genetic makeup also seem to be good listeners.

Embraer Listened to Its Customers

While designing its new E-170 regional jet, which incorporates a new "double bubble" configuration, Brazil's Embraer (ERJ) shared its design ideas with airline companies around the world, soliciting and incorporating their feedback. More than 40 airlines responded. The company listened. Not surprisingly, the new E-170, which combines the economy of a regional jet with the comfort of a larger commercial aircraft, has been a huge success.

Whether adapting or starting from scratch, the top RDE challengers also have other common traits: extraordinary curiosity, the willingness—even eagerness—to try new things, and the ability and creativity to change what they are doing at remarkable speed until they are confident they have it right. As Embraer President and CEO Frederico Curado told us, "The real issue is the ability to develop a product in a very short time in a very efficient way…that meets the customer's needs."

Today, when we think of innovation, we usually think of the great U.S., European and Japanese multinationals, with their huge R&D budgets and long lists of patents and successful products. And that may be as it should today. In the future, however, R&D success will not alone be enough. The future belongs to those who innovate with ingenuity.

To remain on top, today's global leaders will need to borrow a page from Tata, Embraer, and other challengers. They'll have to become faster, smarter, and more adaptable, in many cases more like their entrepreneurial former selves.

I'm also gaga over Tata. But to me, it's not about the Nano; it's about the extraordinary company that conceived and found a way to build such a car.

Harold Sirkin is the global leader of Boston Consulting Group's operations practice. He is co-author of Payback: Reaping the Rewards of Innovation, published by Harvard Business School Press. He holds an MBA from the University of Chicago and a BS in accounting and finance from the Wharton School of the University of Pennsylvania. Sirkin is a columnist for Asia Insight.