The document summarizes the technical and project management challenges faced in developing the Tata Nano car for the emerging Indian market. Key challenges included developing an affordable car within a strict Rs. 1 lakh cost target, managing risks during the relocation of the project from Singur to Sanand due to political issues, and using agile and frugal engineering principles. Cross-functional collaboration and early supplier involvement were important to meeting cost goals. The project leader Ratan Tata played a critical role in setting the vision and strategy, building a strong project team, and ensuring the first car delivery was a success to boost morale despite challenges. Overall the document outlines how innovation in both product design and project processes were needed to deliver such

2. Project Management National Conference 2011 PMI India
Automotive Product Development
in an Emerging Market: Technical &
Project Management Challenges
Soumen De , PMP
EGM, Advance Vehicle Quality at General
Motors Tech Centre India
2|P a g e
Application of Select Tools of Psychology for Effective Project Management

3. Project Management National Conference 2011 PMI India
Contents
1 Abstract..............................................................................................................................4
2 Introduction........................................................................................................................4
3 The Leader as Change Agent.............................................................................................7
4 Develop Project Team - Bringing out the best in people..................................................8
5 Cost Management– Using innovation as a strategy to contain cost...................................9
6 Cross Functional Integration, Supplier Management – To meet the cost expectation.....10
7 Agile Methodology – How to maintain focus and motivation while having divergent
thinking.................................................................................................................................12
8 Managing Risks, Managing Negative Stakeholders – From Singur to Sanand...............12
9 Serving Indirect Project Need – Coping up with relocation............................................13
10 Importance of Packaging the First Delivery- Linking with recognition and rewards....14
11 Lesson Learnt – The jury is out…..................................................................................14
12 Disclaimer......................................................................................................................15
13 References......................................................................................................................15
14 Author’s Profile..............................................................................................................16
3|P a g e
Application of Select Tools of Psychology for Effective Project Management

4. 1 Abstract
Emerging markets such as India are becoming destination of choice for design
and manufacturing of small affordable cars. Different socio economic factors,
such as income, standards and regulations, driving conditions and car
penetration ratio justify the need to have car that may not have that technological
sophistication, premium branding and high price. A car typically has 10000 parts
and components that are either sourced or manufactured as per the cost, time
and quality specifications. Extent to which design is economical, functional and
easy to manufacture then drives the car’s revenue and costs. Hence any OEM
needs to relook and reinvent both the product and process development
processes to meet the emerging market and business needs. Nano, the small
car from Tata can be a case in point.
Innovation both in project management and product development processes
were the corner stone of Nano project. It popularized terms such as “Gandhian
Innovation” and “Frugal Manufacturing” and highlighted why an emerging
economy like India has been and will continue to attract the attention of almost all
automobile manufacturers in the world. While the jury is still undecided whether
the Nano will be commercial success or not, valuable insights can be drawn into
how the boundaries of project management were balanced to deliver “the
promise” within the triple constraints of cost, scope and time This paper will help
to understand how the challenges of producing a car in emerging market can be
efficiently tackled using the tenets of project and product management principles.
Key Words: Gandhian Innovation, Project Management, Frugal Engineering,
Agile Methodology
2 Introduction
“A Small Affordable Car” can serve as a strategic need for any car company
serving the emerging market. A competitive strategy based on cost leadership
and segmentation as defined by Porter’s model (fig. 1) can help OEM adopt the
right strategy [3].

5. Figure 1: Porter’s model for organizational strategy
A very general remark that Ratan Tata made about how he felt when he saw an
entire family on a scooter caught in rain and traffic and the debate thereafter
triggered the business need, even though the overall strategy had not been
evaluated and defined. Rather than rebutting the press following the Geneva
Auto show in 2003, Tata Motors took the challenge of building a Rs 1 lakh car.
While pricing is usually done based on the model shown in the figure 2, for Nano
the price was fixed first then the profit maximization was planned by reducing the
variable cost and increased sales. Tenets of frugal engineering and project
management principles were used to leverage this into a strategic advantage.
Figure 2: Contribution margin based pricing strategy
Though good project management principles advocates involving customers, and
other stakeholders during initiation phase of an project to enhance success by
shared ownership, in this case it could not be done as the scope of the project
was vague at the start. The scope was to develop “a car within a target price of
Rs 1 lakh and bring the comfort and safety of a car within the reach of
thousands of families, and meet all the regulatory and key customer
requirements. Nothing was clear, no benchmark, no fixed lines.
The project had plenty of risks which could tempt any project manager to
abandon the project. However, Tata’s adopted the concepts of Frugal
Engineering [2] to handle the technical risks. Frugal Engineering is the science of

6. breaking up complex engineering processes/products into basic components and
then rebuilding the product in the most economical manner possible while
Gandhian Innovation solves the stated problem by one of the following ways as
shown in fig. 3.
Figure 3: Principles of Gandhian innovation
Tata Motors focused on created new technology and modified existing capability
to create Nano as shown in fig. 4. Different phases of product development
lifecycle were tightly coupled to integrate different parts to deliver the car within
the constraints of cost, scope and time. Although it followed the well-known
product and project life cycle processes as shown in figure 4, operating in
emerging economy demanded adoption of stringent project cost management
principles.

7. Figure 4: Innovations in India
To get best deal, Tata went to Bosch, Germany for the new engine management
system, IDEA, Italy for styling and exterior design and Indian Sona Koyo for light
weight steering shapes.
Figure 5: Relationship of product and project life cycles
3 The Leader as Change Agent
Ratan Tata donning the role of Project sponsor and internal customer, played
a model project champion, and provided enormous leadership to the project.
While the project needed major changes in how the company wanted to do
business and carry our engineering design, bringing in major changes in a large
company like Tata Motors demands the leadership clearly understands the
interrelationship of the following factors
• Right strategy which the company believes in.

8. • Right people capable to drive the strategy, and
• Right operating mechanism to allow the team to select the path they need to
execute the strategy
With the strategy of making “a small affordable car” in place, the next thing was
to get the right people. It is known that early involvement of the team members
adds expertise during the planning process and strengthens commitment to the
project. A leader driving change has the get capable PM and put in place a
strong team on which he can rely on. As per PMBOK, “Pre-assignment” and
“Negotiations” are important tools to acquire project team. The leader knew that
to drive a complex project like Nano he has to depend on people who have
demonstrated significant technical and project management in similar projects.
Girish Wagh, a second generation Tata employee and a mechanical engineer
who was involved in similar “Indica” and “Ace” program” was “pulled” in as PM
and asked to lead the Nano project. The “Indica” project taught Tata Motors and
Wagh, a new product introduction process (NPI) from Warwick Manufacturing
group (WMG) [1]
Ravi Kant, the new MD who had demonstrated strategic leadership skill in Indica
and Ace project was selected to lead the project.
The team selection was done mostly by an internal talent search process where
young and high potential individuals were identified. To influence negotiation with
functional managers to relieve their “high potential” staff, suitable “hype” was
created, wherein getting included in the Nano project was considered to be an
honour.
4 Develop Project Team - Bringing out the
best in people
Kant started indentifying young talent and gave them an opportunity to be a part
of the Nano team. These people would often be called for an informal lunch and
dinner meeting organized by their MD. This process created the right
environment and passion for the team to become motivated to execute the Nano
vision laid out by their leader. It can be observed that the leader cared less about
flaunting his own IQ and more about fostering a culture of intelligence. Under his
leadership the employees did not just felt smarter, they actually got smarter. He
led like a multiplier [10], to ensure that he got much more from the team (even
twice as much) without adding resources or overheads, hence additional cost.

9. Attributes of leadership style who leads as a “multiplier” are given below
• The talent magnet – Attract talented people and uses them to their highest
potential
• The liberator – Creates an intense environment that requires people’s best
thinking and work
• The challenger – Defines an opportunity that causes people to stretch their
thinking and behaviours
• The debate maker – Drives sound decisions by cultivating rigorous debates
among team members
• The investor – Gives other people ownership in results and invests in their
success.
5 Cost Management– Using innovation as a
strategy to contain cost.
Obviously the project wanted to create a “unique product” as defined in PMBOK-
a product that was first constrained by cost, but by no means allowed the other
parameters such as scope and schedule to be free floating. The car has to still
meet the performance criteria, safety norms and emission norms of the industry
and my no means considered as “half-car”. Optimized design coupled with value
engineering concepts can be used to reduce cost and execution time and
improve the quality and performance of the project deliverable. Tata used
innovation as a strategy to carry out project cost management.

10. The Fredrik Innovation framework [6] in fig. 6 can be used to explain what was
used in this project. It can be considered as an example of “Architectural
innovation” where the components were rearranged to come out with a novel
architecture which met the vehicle specs. Few examples, the engine was placed
in the rear compartment, the battery was placed under the seat, the spare tire
was located under the front hood to free up cabin space to meet the specs while
meeting the cost target. The fuel filler cap is under the nose of the car, which
saved the cost to create an extra hole in the side. Similarly single wiper in the
front was another cost saver.
Figure 6: Henderson Clark model of innovation
6 Cross Functional Integration, Supplier
Management – To meet the cost expectation
To convert the architectural innovation of Nano into a successful operational
plan, efforts need to be coordinated across function and organizational
boundaries. In Nano the cross functional team comprised of design team, the
sales and marketing team, and more importantly suppliers. The OEM and
Supplier participation is usually 50-50 in architectural innovation as shown in fig.
7. Hence supplier selection and supplier contract management was crucial.

11. Figure 7: OEM and Supplier relation in different types of innovation
The innovation strategy demanded appropriate supplier selection strategy and
procurement management approach for the project. The Nano has about 2000
parts, much less than any standard car. Of these parts 80 % has to be developed
by suppliers. Tata considered suppliers to be vital for the success of the project.
Tata shared their vision with the suppliers. The “vendor park” concept where the
supplier will be collocated with the OEM was one of the innovation in the
procurement management plan. Suppliers needed to be competent, trustworthy
and involved from the start of the project. The idea was to limit the number of
suppliers to 100 and the rational was
 To demand the lowest possible cost, one has to guarantee maximum
business volume to suppliers.
 To foster the strongest possible partnership with suppliers and cultivate a
true sense of sharing of both business risk and long term profitability.
 Follow an open approach with suppliers to facilitate contribution to innovation
in design and manufacturing process.
Defying convention, Tata wanted the suppliers to give the best possible price
from day one rather than when production hits the peak. The cost–reduction
exercise was driven to a large extent by design. It went beyond the traditional
design approach and looked at integrating functions e.g. combination switches,
combined wiper etc. Integration and fine tuning of supply chain process was also
carried out to contain cost.
Cost and waste was driven down by reducing inventory, eliminating waiting
times, increasing the utilization of warehouses, truck and plants. Similarly on the
manufacturing front, all the frills and excess automation were removed. The team
had gone through 8000 plus ideas, bound together through three waves of cost-
reduction initiatives [1]. Early and intense engagement of the suppliers was the

12. way costs were controlled. Cost reduction ideas were generated with the entire
vendor base rather than just the selected suppliers. The entire vendor base was
integrated through IT to have just-in-sequence and this helped to reduce
inventory. Concurrent engineering practices (project fast tracking approach) were
followed to meet the schedule constraint, wherein car, suspension, engine
programs were running on parallel track while the design of Nano body shape
was taking place.
7 Agile Methodology – How to maintain focus
and motivation while having divergent thinking
Nano did not follow the traditional linear or waterfall model. It followed “Agile
methodology”, where with every sprint or iteration more and more clarity was
added to the project scope. Agile meant adding clarity or change in the scope
rather than adding more to the scope. E.g. the hatchback option was discarded
to save on cost and weight. To reduce weight, plastic lost out to sheet metal but
not before 100 product prototypes had been developed and tested. Three
supplier companies and seven plastic raw materials manufacturer helped Tata
go beyond traditional thinking and carry experiments to provide clarity into which
sheet metal should be preferred over plastic [1]. Scope was definitely changed
but it added lots of business value to the project. The team learned about the
capabilities and limitation of plastic and more importantly this learning resulted in
further reduction of sheet metal costs.
8 Managing Risks, Managing Negative
Stakeholders – From Singur to Sanand
Singur in West Bengal was chosen for production of Nano. An initial agreement
was signed in March 2006 and the foundation stone was laid in January 2007.
An inappropriate stakeholder expectation management strategy turned the land
losers and opposition into a hostile lot [4] and the timeline to roll out the car from
factory by July 2008 was threatened. While work of the project continued with a
great amount of effort by the leadership to keep them motivated and stakeholder
management continued simultaneously, all efforts to become operational had to
be abandoned on 03 Oct 2008.
After 18 months and, ` 15 billion (INR) of expenditure the project seemingly got
“derailed”. Tata’s faced what can be described as a Low probability high
impact event or “Black Swan” event [8].Black Swan events have catastrophic
consequences that have the potential to take the business down under.
Identification of Black Swan events as a part of risk management plan is always
difficult for any PM. Having failed to identify this as a potential risk, appropriate
mitigation to handle the crisis was not in place.
Conventional project management thinking would have tagged the project as a
“failed project”, document the lesson learnt, and formally close the project. Tata’s

13. “Risk Response Plan” was created “on-demand “ and the decision was to “move
out” from Singur not “phase out “ the project Nano.
The project leadership team started negotiating with different states and in
double quick time identified Sanand in Gujrat as the new home for Nano. On
October 7, a mere 4 days after the pull out, the deal was sealed. The “lessons
learned” from Singur helped to take quick and sound decisions. Sanand was
chosen because of favourable political climate, land being not too low as
compared to Singur and situated just 500 meters from the highway. Tata took
possession of the land in Nov 5 2008 and started erecting the factory a day later.
To manage “revised time schedule”, parts from Singur plant were taken down,
tagged and photographed, then packed and loaded in trucks in a predefined
manner before shipping them to Sanand. To avoid damage of parts and
associated consequences, transportation was done on the golden quadrilateral,
a longer route, but better quality roads. The engine manufacturing machinery
was first transported to Pune, so that engine can be produced concurrently while
the Sanand facility was getting prepared . In little more than a year (February
2010), the plant was fully operational, and the first Nano was ready to be rolled
out from Sanand plant.
9 Serving Indirect Project Need – Coping up
with relocation
A change in project trajectory necessitated taking care of many “indirect” project
needs, like relocating the employees and their families etc. This was amply
demonstrated during the relocation. Tata acknowledged and emphasized with
people and provided all possible support to those who were forced to uproot
themselves and their families and start afresh with new life and unfamiliar place.

14. 10 Importance of Packaging the First Delivery-
Linking with recognition and rewards
Project leaders recognized how media was going to play a critical part to
reinforce the sentiment of pride of working on the Nano project, which was
scheduled to be launched at the Delhi Auto Expo in January 2008. Seven Nanos
were crafted with discipline at Engineering Research Center (ERC) Pune and
transported under secrecy to Delhi.. Ratan Tata, personally checked every detail
of the show cars at ERC and went over the presentation he has to make 2 weeks
before the D-day [1]. Tata generated interest in the media when he explained
how Nano tag got selected from a variety of choices such as Nio, Inca etc.
Everything was carefully examined and planned. The ‘unveiling’ opened with a
pre-recorded 11 minutes presentation , covering a variety of subjects on
innovation, the progress from bicycles to motorized vehicles and of course the
famous , the-family-of-the-scooter story. Enough hype around the “launch” made
a record participation of 1,80,000 people visiting the stall by noon. Tata told they
delivered, and highlighted that a “promise is a promise”. The importance of
creating the “first impact” with a long awaited deliverable could not have been
highlighted better
One of the many positive press coverage was provided by Gavin Rabinowitz of
the Associate press who compared Nano bringing a kind of transportation
revolution that Ford’s Model T brought in US long time ago. It was tagged as the
world’s cheapest car. To reward the team for the excellent work done, Tata
adopted a unique way to reward the team. The PM was asked to select 10 team
members from the team of 500 to join the Chairman during the Nano launch on
the stage. Wagh selected the members in such a way that every group of the
project was represented. What better recognition for the team than sharing the
moment of glory with the Chairman, with the entire world as an audience. Wagh
noted “I was overwhelmed. It certainly was the greatest recognition I have ever
received”. It was a unique way of recognizing and rewarding people. The team
got good dose of intrinsic rewards and the associated motivation.
11 Lesson Learnt – The jury is out…
“Nano journey from vision to launch” as shown in fig. 8 beacons an aspiring PM
to look back and appreciate the amazing power of innovation, project
management, team work, and inspirational leadership. Despite all the hurdles,
the team was united and tied to the common vision of the chairman, “Deliver
the car as per the promise” . Call it in response to external threat for producing
small car in emerging market or trying to address a social cause to put Indians
on the wheel, the Nano delivered. There are still some challenges in Nano’s
journey. The volume needs to exceed 400,000 per annum for profits to
materialize [9].

15. Figure 8: Nano’s journey from vision to launch [1]
The distributed manufacturing concept that Nano will be assembled by
franchised local entrepreneurs, presently on hold, needs to be tried out too. For
Tata the launch of the Nano is a landmark in transport comparable to the first
powered flight by the Wright brothers, or the first moon-shot. Like a modern-day
version of Henry Ford, Tata's idea of an affordable car that is light and simple,
yet made from high-quality materials is a red letter day for all Indians. For any
PM, it is also landmark in terms of how the product and project management
boundaries were stretched to deliver “the promise”.
12 Disclaimer
The ideas and thoughts mentioned in this paper are solely my personal opinion
and in no way represent the opinion of either Tata Motor’s or any other
organization.
13 References
[1] Chacko Philip, Noronha Christabelle, Agarwal Sujata, Small Wonder, 2010
[2] http://en.wikipedia.org/wiki/Frugal_engineering
[3] http://en.wikipedia.org/wiki/Porter_generic_strategies
[4] http://en.wikipedia.org/wiki/Singur_Tata_Nano_controversy

16. [5] http://en.wikipedia.org/wiki/Tata_Nano
[6] http://innovationzen.com/blog/2006/08/11/innovation-management-theory-
part-3
[7] Prahalad C K and Marshelkar R A, Innovations Holy Grail-II, Business
Today, Jun 12, 2011
[8] Taleb Nassim, Goldstein Daniel, Sitznagel Mark, The six mistakes
executives make in risk management, Harvard Business Review,
December 2009
[9] Talgeri Kunal N, Srinivasan Sriram, “The Countdown begins Now.”,
www.outlookbusiness.com, Feb 2009
[10] Wiseman L & McKeown G, Bringing out the best in people, Harvard
Business Review, June 2010
14 Author’s Profile
Soumen De, PMP, presently is the EGM, Advance Vehicle Quality at
General Motors Tech Centre India. He has a diversified experience of
18+ years in managing plant floor, R&D and advanced engineering
functions in reputed companies like Tata Motors and General Electric. He
is six sigma green belt, has presented technical papers at different
national and international conference and has 14 patents to his credit.