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  • Writer's pictureDebashish Sakunia

The Entrepreneur's Dilemma. (1 of many)

This article is my first article in the entrepreneur's dilemma series. I plan to write on real-life products that couldn't survive the market, although everything about the product seems perfect.

When industrialist and philanthropist Mr Ratan Tata started the Tata Nano Project, nobody expected it to fail.

I mean, what could have gone wrong. A 5 seater, 2300$ car with all perks of a high-end vehicle available with finance options. It was a solution to a strong-solid pain point. It was bound to be a success, but somehow, it failed.

What could have gone wrong?

The Tata Group Failed to conduct a market feasibility analysis. Although I am sure they must have done a market survey, the art of understanding the crowd was missing.

What I mean to say by the art of understanding the crowd is that they failed to understand the perception of the product in the customer's mind. The Car has always been a matter of pride to the Indians more than a transportation need.

People would buy BMW or Mercedes to have them standing outside their homes even though the operating costs of such cars were not affordable for the people who owned them. The societal pressure of owning a 'prestige vehicle' was not fulfilled by NANO.

Moreover, in a rush to make it affordable, Tata Motors group made significant changes such as

  • An aluminum body

  • Using just one windscreen wiper instead of two

  • Removing airbags altogether

  • Providing a thinner and lighter spare tire

  • Making the fuel inlet only accessible through the front hood

  • Adding only one wing mirror

The mission to make a 2300$ car influenced the use of cheap and inadequate materials, resulting in inferior built quality. Nano had poor ride comfort and stability issues due to the lightweight body. Several Tata Nano cars were reported to catch on fire due to faulty wiring.

These factors, in totality, positioned the Car as a 'cheap car' which did not work well with the Indian Crowd. They wanted their 'prestige car.'

What do we learn from this?

A billion-dollar idea with a billion-dollar investment capacity could lead to a billion-dollar loss.

Had the Tata Group done a feasibility check by aligning market feasibility with technology feasibility, they would have understood that the Car would face severe bottlenecks. The brand 'TATA' consumed the fear of failure.

A critical lesson from the billion-dollar loss project is that you

can love your idea but not fall in love with your idea. Feasibility checks are the starting point to any concept. It is recommended to conduct feasibility checks in regular intervals because an idea accepted today might not be relevant tomorrow.

An entrepreneur must overcome the dilemma of his product as a perfect fit to the customer's pain point. Failing to do so, the entrepreneur might face losses.

It is better to make no profits than to make losses. The art of identifying red flags is vital to a business.


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