Q & A: Tesla’s Musk Question 1

The leadership example chosen for this analysis is the case of Elon Musk, CEO of Tesla, and his tweeting out in 2018 that he “funding secured” to take the company private at $420 per share. The stock price was well below that at the time and it shot up exuberantly to around $380 on the news even as most analysts wondered whether Musk really had funding secured as he promised. Notorious for over-promising and under-delivering (the Tesla Model 3 had been “coming” for years with consumers who had already placed down payments still waiting more than 2 years later for delivery), Musk’s promise to take the company private seemed even more far-fetched than most of his promises. True enough, over the following days and weeks a sordid story emerged in which drugs, a desire to “burn the shorts,” and serious SEC violations all played a part in the narrative. After facing immense pressure to prove his statement about funding, Musk retreated with a great deal of egg on his face and announced that Tesla would remain private. Share prices collapsed. As respected short-seller Jim Chanos pointed out, it was a corporate governance disaster and Musk was to blame. His leadership was taking Tesla into the gutter (Decambre, 2018). Because Musk is such a good example of what not to do as a leader, he has been selected for this leadership analysis paper.

Question 2

As Winchester (2018) points out, one can be a good leader without being ethical. He gives the example of Hitler, who helped bring Germany out of depression; however, in the business world one can look to numerous more relevant examples: Skilling, Lay and Fastow at Enron; Madoff on Wall Street; Strzok and Comey at the FBI. Leaders abound who help to make an impact both within their organizations and in the world—and yet they are not known for being particularly ethical—and eventually their lack of ethics catches up with them. Enron, Madoff, Strzok and Comey all have the same thing in common: at the end of the day, their lies caught up with them and they lost their jobs and their organizations’ reputations fell apart.

The same thing is currently happening to Tesla under Musk’s unethical leadership practices. While Musk has always been recognized as a great innovative leader, bringing new ideas to the company and using his celebrity to promote the company’s goals, his lack of ethics has put him in the crosshairs of short-sellers and the SEC, both of whom have issues with his Wild West style of leadership, which often contravenes the rules and regulations. For example, since his settlement with the SEC over his “funding secured” debacle, Musk has been ordered to have all his tweets internally reviewed before being published—yet now the SEC has issued a contempt order, saying that none of his tweets have been internally reviewed (Liberto, 2019). On Feb. 19th, 2019, for example, Musk tweeted out market-moving news that was not vetted...

Musk was clearly in violation of his agreement with the SEC, which is why he is now being held in contempt. His excuse is that the SEC seeks to prevent him from having a voice—however, the agreement merely insists that his public announces be overseen by an internal disclosure counsel—and Musk has not been willing to subject his claims on Twitter to review (Krisher, 2019). Since Musk is the head of a Fortune 500 company, it stands to reason that he would be keen to be forthright and honest in his dealings with investors, but he often comes across as a penny-stock pumping CEO who is more interested in getting the share price to move than in getting the actual facts of the company into the hands of investors and stakeholders.
Two ethical concepts drawn from Block 5 that relate to this case are moral myopia, which is “a way of understanding how individuals might miss...…making process. The first bit of advice pertains to the need to “see the ethical” (Winchester, 2018, p. 57). This requires taking a good hard look at oneself and seeing how one responded to ethical issues brought up by critics. Musk should take time to examine his own conduct and to look at it objectively, not from his own sense of being a victim of short sellers but rather to try to see the argument from the opposite side and separate himself from the issues he is trying to fix. In order to see the ethics issues, one has to maintain a sense of objectivity; otherwise one’s subjective self will dominate, which is what is happening for Musk. He sees everything from his own perspective and does not think anyone else has a valid perspective. Because in his view the only ethical rule that matters is that Tesla succeed (which is not even an ethical rule), he judges all other ethics complaints as insignificant. He needs to stop doing this and the Board needs to help him to realize that it is in his and the company’s best interest to put the glasses on moral myopia.

Secondly, Musk needs to improve the culture at Tesla and end moral muteness. The Board must take an active role in assisting this process as well. Tesla’s culture is suffering from moral muteness, which can end up hurting consumers and investors. If Tripp’s claims are true, Tesla is engaging in wrong-doing frequently and this can make its automobiles unsafe. Consumers should know about this and so too should investors, because if Tesla is not operating according to proper safety standards their investment could take a serious hit when the company finally comes under sanctions. Thus, the culture of moral muteness has to end and a culture of transparency and accountability has to be initiated at Tesla so that Musk can get the feedback needed to make the right ethical decisions about how to communicate with the public and how to produce cares in a safe and…