Tata Motors - The New Ryanair

Friday, March 27, 2009 | Posted by: Brian Maguire
| Tags: car industry, india, sir roger bone, boeing uk, nano, ryanair, biofuels, aerodynamics, tata, federal reserve

Small, is the new big. Tata Motors is combusting old car industry models with the launch of its petite Nano – a car so small you can put it on your credit card. News of the Nano got analysts engines running a little faster, which was a surprise, given that the Nano is to be made in India. Its tiny price point, at about $2000, is the spark set to revolutionise our concept of value – this will be the most important product pitch in a generation.

As engaging as a million new cars on chaotic Mumbai roads must seem to someone, somewhere; it is the prospect of a million new cars on the United Kingdom’s roads that has really captured imaginations.

Tata has become the Ryanair of the car industry and a soon to be icon of innovation. In a single step, the car market has been out-manoeuvred by a big idea and chutzpah. Almost nobody reading this blog has affection for Ryanair, and how we love to complain about the less than mellow yellow, but we wouldn’t be without them. Ryanair, like Tata, understands the allure of affordable pricing, to a degree which many longer established companies never will.

Over breakfast last year I asked Michael O’Leary, Ryanair’s CEO, why people complain so much about Ryanair, and yet their sales figures are usually improving consistently. O’Leary wryly observed that the executive with a company account will maybe use a big carrier for his business travel, but when he books a flight for his wife or kids, and it comes out of his own pocket, he’ll be straight on to the Ryanair site. Market segmentation is born of such rational behaviour, and as technology delivers more versatile and efficient materials, the gap between the Nano, and the Mercedes GL will become wider.

This week, Ryanair took delivery of its 200th brand new Boeing 737-800 Next Generation aircraft. At the handover event, Ryanair’s Stephen McNamara said: “The total value of the Ryanair fleet is now over $12billion. “It is,” he added “the youngest, greenest and most fuel efficient fleet of any major European airline.”

$12billion worth of planes – can you imagine how competitive the aerospace market is? Of course you can. It’s a face-off with executives of steel like O’Leary, the pugilist in the mellow yellow corner, and Sir Roger Bone, the knight in the blue-sky thinking corner. Sir Roger, President of Boeing UK, spoke recently with Grant Thornton – you can watch the interview online – he was asked how corporations can continue to innovate in difficult markets.

Sir Roger explained that Boeing is: “always trying to ensure that we make our products as environmentally user-friendly as possible, this means all sorts of exciting research in aerodynamics, biofuels, and air traffic management for example, we are producing the kind of product which fits the bill.” And therein is the seed of a revolution – producing a product which fits the bill.

The future of innovation in the UK is not just about great science, it is about meeting the needs of a generation who never dreamed of what they now have – it really is a vision thing. Tata and Ryanair succeed only because of technological innovation, foresight, and an intensity of self-belief.