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 / Summer 2010 / Issue 59(originally published by Booz & Company)


The Importance of Frugal Engineering

Often, a higher-level commitment from suppliers has required a mandate from supplier CEOs. For example, Bosch CEO Bernd Bohr took on the cost-target challenge for the Nano and made sure Bosch came through by adapting a motorcycle starter motor to save weight and by finding a way to trim several ounces from the generator.

3. Top-down support. Nothing is more important to frugal engineering than commitment from the top — and not just from suppliers. The best examples of frugal engineering were championed by company founders. Ratan Tata, chairman of Tata, said, “I will design a car for $2,200. Period.” (See “Too Good to Fail,” by Ann Graham, s+b, Spring 2010.) The same happened at Mahindra & Mahindra, when Anand Mahindra, the managing director, publicly backed the cost-control plans of Pawan Goenka, the company’s automotive chief. Mahindra’s personal support proved essential to keeping costs low. A new automobile platform in the U.S. might cost anywhere from $700 million to $1 billion. Mahindra’s Scorpio SUV was developed at a cost of $150 million. The car may lack the sophistication and status of other makers’ luxury models. But it’s right for its market.

Reprint No. 10201

Author Profiles:

  • Vikas Sehgal is a partner in Booz & Company’s global engineered products and services team based in Chicago. He specializes in emerging markets strategy, product strategy, engineering globalization, and policy formulation.
  • Kevin Dehoff is a partner with Booz & Company in Florham Park, N.J., and is the global leader of the firm’s innovation business. He has spent more than 15 years helping clients drive growth and improve performance through innovation.
  • Ganesh Panneer is a Booz & Company senior associate based in Chicago. He specializes in emerging markets product strategy and innovation for clients in the automotive and industrial sectors.
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