Thursday, January 05, 2012

Bajaj Innovates with RE60

On Jan 4th 2012, Bajaj Auto unveiled Bajaj RE60 - a four wheel Auto. Bajaj will not call this vehicle as a car, and it should not be. RE60 is not a car - but it is a 4 wheel contraception designed to supplement/replace their current 3 wheeled autos.

The final product is not a break through innovation, but an evolutionary design change from a 3 wheel auto to a 4 wheel auto, powered by Bajaj's proven 200CC DTSi engine which can run on a range of fuels: Petrol (Gasoline), LPG & CNG. Having a wider fuel options makes this vehicle very attractive for short haul commercial passenger carrier - max range of 30-40 kms.

The design is unique and it is interesting to know how Bajaj will promote RE60 along with their current three wheel autos.

An interesting positionig of RE60 is that, Bajaj has refrained from calling RE60 as a 'car' and is positioned it as an passenger carrier. The primary markets from this will be South Asia and Africa.

By positioning RE60 as a 4-wheel auto and not as a car, Bajaj has managed not to get into direct competition with Tata Nano and has also pre-emptied any move by Tata to push Nano into the 'short haul commercial passenger carrier' - a.k.a 'Auto' space.

Evolutionary Innovation

RE60 represents an evolutionary innovation - a move towards 4 wheels instead of three. A similar move happened in 0.5 Tonne goods carrier market, when Tata Introduced Ace. Competitors in the urban goods carrier makers - Mahindra, Force, Piaggio all moved to a four wheel version from the earlier 3 wheel version of goods carriers.

The evolutionary innovation is not to be taken lightly, it represents significant improvements. Most of the products we use today have evolutionary innovations - where the best of the previous versions are retainedd while adding new or improved features.

Such evolutionary innovations are stable and offer low risk options. In case of Bajaj, company could save Rs 350 Crores by reusing existing facilities. By opting for an evolutionary innovation, Bajaj could lower the cost of product development and develop products that are more likely to be accepted by customers. In the past Bajaj had tried out radical ideas with Bajaj Sunny - which failed miserably in the market. Later Bajaj found success with imitation as innovation Bajaj M80.

Closing Thoughts

Evolutionary Innovation is like kaizen - continious development. The ultimate goal os evolutionay innovation is business success. i.e., maximize returns on investments. It is a low risk approach to product innovation and it is a relentless pursuit towards a better product.

Companies that embrace continious innovation will succeed far better than companies that hope for a breakthrough innovation - which is akin to a lottery ticket. For existing businesses, evolutionary innovation is the way to go. But if one wants to make a big splash and enter a new market then radical innovation provides the best option.

In India both the approaches has been tested. Tata tried with radical innovation with Tata Ace and Tata Nano. While Bajaj is talking the path of evolutionary innovation.


Anuradha Goyal said...

Radical innovations are not as predictable,as evolutionary ones. There is a play of destiny involved in radical innovations while evolutionary are sheer hard work.

I think companies need to work on both to an extent.

Anand J said...

Bajaj well known for their 3 wheeler manufacturing's!