Letter To Steve Rattner on Ousting GM's CEO Richard Wagoner--Look to India's Nano Car For Paradigm Change

Posted by: Bruce Nussbaum on March 30, 2009

I’ve know Steve Rattner for decades, from his early days at The New York Times through his years as an investment banker specializing in media mergers, his participation in the Council on Foreign Relations and now as President Obama’s “Car Czar.” He wasn’t the obvious choice for that job but he is a tremendously fast learner—and perhaps more important—a fast and tough decision-maker. Bouncing GM’s CEO Wagoner and most of the board before pouring more taxpayer money into GM is a smart and necessary move. Those folks have been around for nearly a decade—through the entire long decline of GM.

But what now? What should GM do?

Steve, here’s my advice to you from outside the Beltway and outside Detroit. Tata Motors has just launched an entirely new car, the Nano—with an entirely new car platform—in the middle of a huge global recession. In redesigning GM, look to the Nano for inspiration.

Steve, the US auto industry needs to do a lot more than just make hybrid cars to survive and prosper. Every car maker in the world is making hybrids. GM just can’t catch up. It must leapfrog ahead.

You, Washington and Detroit should rethink how cars are made, how they are assembled and how they are sold. What is the point of tens of thousands of dealerships when people can go online and design their own cars off basic platforms? What is the point of big assembly plants when you can make cars as kits and have them assembled in local garages (as the Nano does). Why mass produce cars when the market is fragmented into hundreds of micro-markets, each with its own price point and design culture? Why design anything in Detroit, when cultural trends develop outside that city? Tata understands and empathizes with its consumers—families of four or five riding on a single motorcycle wanting a small, inexpensive car for $2500. Detroit has been out of touch with Americans for decades.

Steve, these questions go beyond the conventional framework you are working within—union rules, management salaries, give-backs, bond-holders, CEO leadership and government financial help. But unless you go beyond convention and enter the design paradigm of redesigning the car process itself, Detroit won’t ever become a global leader again.

See you at the Council.

Bruce

Reader Comments

Rich

March 30, 2009 11:41 PM

While using Tata as a model or inspiration for GM makes for great talking points it's not possible and here is why. Tata has nowhere near the regulatory requirements that GM has. I find it frustrating that people that come from the ideology of more and more regulation now want to compare GM to an unregulated company and say "why can't GM do that?" The Tata vehicle won't be brought to the US becuase it can't pass government imposed mandates. If you want GM to build a Nano like vehicle give them a waiver from federal regulations and just require some type of disclosure that tells the consumer that the vehicle does not meet crash test standards, give GM a liability shield from the trial lawyers and let the American consumer decide if they want to drive a $2000 vehicle that is less safe in a collision.

Oh and allow auto manufactures to sell directly to the consumers. Let the manufacture decide if it wants to use dealers or not. Current law does not allow auto manufactures to sell direct.. Government law makers and regulators have much blame in killing this industry, nobody seems to be talking about de-regulating the industry. De-regulate and watch the industry thrive.

niti bhan

March 31, 2009 10:25 AM

Absolutely. Tata redesigned their entire value chain in order to innovatively reach the price point, not just cost cutting along the legacy structure. I see it as a trendsetter for emerging business models that more relevant in the context of the near future.

Mike Phipps

March 31, 2009 1:09 PM

This is a bunch of Bull. You writers and money changers know nothing about building anything. We should tax advertising for news organizations to save the economy. You guys have a brain fart and think it is a great idea. When's the last time you build anything. India's build cheap cars because they are POOOR. And by the time O'bummer is done we will all be POOOR too.
To use the example of a NANO and apply it to cars or anything is just stupid. But this is the decade of stupidity and you and Steven Rattner are its champions.

niti bhan

April 1, 2009 4:00 AM

I'm always left uplifted by the intelligent discourse available on America's leading business magazine

Mark

April 1, 2009 9:51 AM

Bruce I think your comparison is fair. We are not comparing an apple with an apple. Everyone knows US laws may not allow a Nano to get on US roads; in the same light the way Indian's use cars in India may not allow any of the US ones to be directly translated too.

Restrictions (Govt. or otherwise) are all opportunities for innovation and the main point Bruce is making is that the US needs to see what is rest of the world is doing, why they are doing it and how they are doing it ?

A simple concept like organic food through retailers is something which is the US is now looking towards. An Indian would consider this a joke. Its too elementary. You have standardized and in the process forgotten the basics and killed the nuances of the people.

kumar

April 1, 2009 11:18 AM

I don't think the point is to replicate what the Tatas have done with the Nano. The Nano is a product for a certain ecosystem. The point is to get under the skin of the consumers and re-build a model that works for them. Horses for courses as they say; but understand the course first. And as for the comment about regulatory requirements that GM has to face, understand that the bureaucracy that Tata Motors has to face in India could daunt the most persistent character. For goodness sake, they've had to change the location of their plant in face of farmer protests and re-locate the entire plant to a location at the other end of the country.

Frank

April 3, 2009 9:50 AM

@Rich,Mike and Mark

Err...Why exactly would the US govt. prevent TATA from launching the NANO?

If it were for the safety concern,the European version of NANO,set to be launched by 2011,is equipped with every safety aid like ABS,airbags etc.
The car would also clear the Euro emission levels easily,not to mention being the most fuel efficient car.

If the car can be sold in Europe,what exactly stops it from going to the US?

Even an electric version and an engine that runs on air(i don't exactly know how it works either) is undergoing development.

PS:At the end of the day,TATA is highly unlikely to sell the car outside Asia,Europe and Africa.

Chuwa

April 4, 2009 12:56 AM

Bruce, thanks for posting the question. But I believe your suggestion is pointing from one dead end to another.
The fundamental issues is:

Does automotive make sense?

All forms of car are intrincisly too heavy, too fast, too dangerous and demand constant attention from the driver.
Even if the hybrid car can achieve 100% energy efficient, the man-car system is only about 5% efficient, consider the driver, the person who need to move from A to B, is 5% of the total weight. In additon, the electric power still need to be generated from somewhere, most likely by burning oil. The amount of pollution into the atmosphere will be more, in somewhere else.
The Nano may be a wonderful cost breakthrough. But think of the congestion and pollution in Mambai or many other cities, now add another 20% of cheap cars. What will it like?
If the thinking is trap into finding a "car solution", you are not likely to get a real breakthrough.

Think bicycle:
It's energy efficient, no pollution, not dangerous, and improve the rider's fitness.

Look to the growing list of "pro-bicycle" countries instead; Holland, Denmark, Francis, UK. Taiwan.. These countries all introduce systems that flavor bicycle as urban transport.
A lot has to be done to make bicycle practical in US. Such challenge is a perfect opportunity for big companies like GM. And I am sure such effort will be more worthwhile and meaningful than looking for the best innovation in another car.

Paul T.

April 4, 2009 1:25 AM

And why are we still "married" to the internal combustion engine? Or, combustion at all...Surely we have some really smart folks out there that can come up with some entirely different source of power.

Chuwa

April 4, 2009 1:41 PM

Referring to Paul's "entirely different source of power":

How about human power? the best solution that many almost forgotten?

Think about it, human power is awesome: it forces the designer to come up with really clever design, because it is limited. If you design for human power you can't count on the excessive horse power from the combustion engine and by default it will have to be lean, mean and clean.

In addition, the power is always there where it is needed, the person is the engine and the power source!

Another bonus: the more you use the (human) engine, the more powerful it become. It will help to eliminate most of the chronic diseases and reduce the obesity rate.

Can anyone come up with another energy source that have so many advantages, all at the same time?

Rob

April 5, 2009 4:13 AM

Typical, just deride the Nano and the Indians as incapable and poor, so they build the cheapest car in the world that does not meet US standards. It would, just add $2000 to the price. Tata made the decision to stay out of the US market based on potential; this is a tough, competitive market with serious overcapacity and most Americans can't afford their next mortgage, let alone new cars. Tata incidentally has been selling cars in Europe for decades, often rebadged as Rovers, where standards are equally tough. India incidentally has developed a sophisticated nuclear weapons/power program on its own ( No 3 Mile island there), has its own satellites launched indigenously and writes software for most of the world; a typical poor third world country that can't hold a candle to the US.

Keep going with the attitude guys that you are the best, and we will see you guys looking for jobs in India and China soon, if you're not already there.

Armando

April 6, 2009 1:00 AM

Chuwa, please do not forget that in order to make the bicycle viable, a lot of urban planning and redesign must be accomplished. Think neo-urbanism. Otherwise, travel distances will still make your excellent recommendation unfeasible/not viable.

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Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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