“I am creating a product at a lower price than anyone else in the world with the hope that it impacts people’s lives and I make money out of it,” (1) said Suneet Singh Tuli (CEO of DataWind).
|Source: The New York Times, An Idea Promised the Sky, but is Still Waiting|
When developing a new product that seeks operational effectiveness it is very important to seek for the adequate manufacturer that will deliver a good quality product.
An article from The New York Times explains how a great innovative idea, soon became a technological failure. In 2011 two Indian entrepreneurs, from a company called DataWind, along with the Indian government were promoting the idea of building a $50 tablet computer (Aakash) which would help education throughout India. (1)
This promising idea had started in the same way that IKEA develops its products: by defining first its price tag. DataWind started out picking a price and then built up by choosing a manufacturer, designing the product, shipping it and finally selling it. Now, more than a year later, the manufacturers of the promising idea are having trouble, as they are feeling the pressure of delivering the innovative product with the correct specifications and meeting the expectations that the government has.
What went wrong?
One of the problems that DataWind faced was choosing a correct manufacturer. Their nationalistic fervor had made them look for manufacturers in India such as Quad Electronics. The problem was that this company didn't have experience in developing tablets, they are known for developing cash registers, electronic typewriter and printers. They should learn from IKEA that has delivered efficiently and effectively less expensive furniture without manufacturing “cheap” products. IKEA has done a good job when choosing the adequate manufacturer. They look for the most attractive production package along with a factory that has the suitable skills. (2). IKEA has transformed its high volumes into lower prices but this had been done along with choosing the correct manufacturing partner. As Per Carlsson, product developer at IKEA, emphasizes: “volume nurtures efficiency, and efficiency equals lower prices”, but DataWind had not been able to nurture efficiency with its partner.
If DataWind had established who the correct manufacturers were, none of the problems they are facing would have become a reality. They should have identified those manufacturers who had the know-how required to deliver the product with the correct specifications. The idea of delivering a world class product for $50 had turned into delivering a $50 deficient product. They haven’t been able to meet the high demand for their commercial model and people are complaining about the tablets’ functionalities.
DataWind learned from their mistake but at a very expensive price. They have now moved the production of the tablet to China where there is already a developed industry supply chain.
Is this the correct manufacturer for the $50 tablet?