How Tata is making the world's cheapest auto

Fitting the parts of the car together required lots of little, head-breaking details, recalls Wagh. The engine, for instance, was designed three times. Initially, Wagh thought they'd buy an off-the-shelf engine and so studied all the small-capacity engines available. They were unsuitable, so in early 2005, he decided to build his own. The first was a 540 cubic-centimenter engine that, when fitted on the prototype, lacked the necessary power. So its capacity was increased by 9%, then by another 9%, before Wagh finally settled on a 623 cc engine. Then the foot pedal had to be realigned to create more legroom.

The body had to be changed because Ratan Tata, over six feet tall himself, wanted it to be easy for tall people to get in and out of the car. "Imagine the plight of the body designer—he went through hundreds of iterations, then at the last minute the car length was increased by 100 millimeters!" Wagh says. The attention to detail paid off: When the car rolled onto the dais at the Auto Show in New Delhi in January, and Ratan Tata stepped out of the driver's seat with ease, it made an immediate impact.

What shook the automobile world most was the fact that the designers seem to have done the impossible: The sleek, sophisticated Nano doesn't look flimsy or inexpensive. If it had been an upgraded scooter on four wheels, Tata still would have been applauded for making a family of four safer on Indian roads. The Nano, however, affords both safety and status. "The innovation wasn't in technology," Kant recalls. "It was in a mindset change." The Nano, he adds, has put an end to all discussions of having variants of scooters or quadricycles as passenger vehicles on India's roads.

Organizational innovation
Still, the story of the Nano is not confined to its impact on the auto industry. It's a tale that illuminates the India of today — an eager, ambitious nation with a combination of engineering talent, a desire for low costs and value, and the hunger of young managers looking to break from a hidebound corporate environment. Indeed, the team that worked on the Nano — on average aged between 25 and 30 — has helped to flatten Tata Motors' stodgy, multilayered management structure, which has resulted in an unexpected side-benefit Wagh calls "organizational innovation".

The factory in Singur, Bengal, is still being built, and machinery is being installed. Wagh now spends most of his time away from his Pune home, supervising the work at Singur leading up to the launch date in the fall. Tata Motors is determined to succeed in its mission, Ravi Kant says. "We are hungry for growth — and innovation is a by-product of that."

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