The Mahindra Shaan: Gambling: on a Radical Innovation Mahindra Tractors, the Farm Equipment Sector of the Mahindra & Mahindra Group in lndia is one of the world’s largest producers of tractors. In the late 1990’s, over 20 percent of Indian’s gross domestic product came from agriculture and nearly 70 percent of lndian workers were involved in agriculture in some way. However, seasonal rainfall meant that lndian farmers only used tractors for farming purposes about one-third of the year. The rest of the year they would use the tractors for personal transportation and to haul goods to earn extra income. Many farmers made modifications to their tractors to make them more useful as transporters. Furthermore, a large number of farmers had plots so small-perhaps 1-3 hectares-that it was difficult to raise enough funds to buy any tractor at all, Managers at Mahindra & Mahindra sensed that there might be an opportunity for a new kind of tractor that better served this market.

R.N. Nayak, R&D Manager at Mahindra & Mahindra (and a person well-known as a maverick that tended to break with company norms) began developing a prototype for a radical product concept he called the “Sactor”-a hybrid between a transporter and a tractor that farmers could use on and off the farm.

Nayak believed that innovators should always start out with an attempt to gain deep insight into a customer problem through extensive observation rather than financial or technical analysis-too much analysis would stifle innovation. As he stated it, “start with the pictures not with the numbers.”

In just over a year, he had developed a prototype of the futuristic looking vehicle. it had smaller tires than a typical tractor that would be better for driving on roads. It also drew from the aesthetics of the Jeeps Mahindra & Mahindra made in their automotive division. No marketing studies had been conducted and sales people were reluctant to support the new vehicle, particularly since lndian farm equipment market was in a deep downturn due to repeated droughts and excess tractor inventory. Nayak himself was unsure of how customers would react to the trade-offs that had been required to produce the economically priced hybrid-after all, it would have lower farming performance than Mahindra 

Mahindra’s other tractors. To make matters worse, even after 15 production prototypes had been built, the Sactor had technical problems that needed to be resolved. Frustrated with the project's slow progress, Nayak left Mahindra Mahindra.

Nayak's departure could have meant the death of the project, however Sanjeev Goyle, Head of Mahindra & Mahindra's Farm Equipment Sector was intrigued by the project, deeming it the “perfect confluence of M&M’s two core strengths: Jeeps and tractors." His prior experience at American Home Products (healthcare) and Piaggio (motor scooters) made him realize how important dra- matic innovation could be for a company. He felt that the company’s existing farm equipment lines were too similar to those of competitors; innovation had been too incremental and the products appealed primarily to older farmers. He wanted a way to invigorate the product line up and the brand. As he noted, ”My background in fast-moving consumer goods and motor scooters makes me a firm believer that new products and innovation can create a new aura in brands and make the brands appear to be on the move." Goyle decided to send Sactor prototypes out to 14 dealers so that they could be used in customer trials. Feedback from the trails revealed that customers were primarily using the hybrid for hauling materials. Goyle also believed that the aesthetics of the Sactor needed some work. He overhauled the exterior of the vehicle to make it more “macho” and Jeep-like. The new vehicle, renamed the Shaan” (Hindi for “pride"), had a 23.5 horsepower engine and a built in trolley capable of lifting up to 750 kilograms. it could run standard farm implements such as cultivators, rotators, and harrows, but it was also capable of traveling at about 40 kilometers per hour on the road. Its small turning radius (3.2 meters) made it especially maneuverable. To make the vehicle more comfortable for personal transportation, it had a spring leaf suspension (for fewer bumps and a more comfortable ride), a soft top canopy, and a windscreen with wipers.

The target market would include lower income farmers and semi-urban youth. Producing the vehicle would require building a new assembly line, and engineering that turned out to be necessary to increase its reliability led to higher production costs-this meant that the Shaan would have to be priced at 2.95 lakh (295,000) rupees to be profitable (a price that would buy a conven-tional 35 horsepower tractor). There was great uncertainty about how many of the vehicles could be sold at that price. Mahindra & Mahindra’s management, however, was swayed by Goyle’s argument that “ even if we made small margins, we would be pioneers, be distinctive: innovative.”

Shaan was launched in mid-2006 and won an award from the American Society of Agricultural and Biological Engineers as one of the 50 outstanding innovations of the year. Though many consumers were perplexed by its "funny looks” The Shaan turned out to be extremely useful for several specialty applications. For example, in the brick kiln industry, its small turning radius was a huge advantage (before the Shaan, workers were reliant on donkeys for moving the bricks due to the small spaces in which they had to work). By 2008,

Mahindra & Mahindra’s senior management considered the Shaan a "runaway success.” Please use your own words and answer the following questions in detail. 3 to 4 sentences if possible to each question 

1. What are the summary of this case. What is the case about?

2. Why does Nayak say it's important to "start with the pictures not with the numbers"?

3. What are the challenges with doing a quantitative analysis of the value of the Shaan project?

4. What are the different sources of value that Mahindra's management appears to think will arise from developing the Shaan?

5. After reading the case, and answered the questions above. What are the ideas that you learned from this case?

Answer rating: 100% (QA)

Solution 1 This case study is about the innovation of a new kind of tractor Shaan which changed the sphere of farming manufactured by the Indian company Mahindra Manhindras Group The tractor targeted ... View the full answer