Tesla's innovation strategy

Exploiting Innovation Elon Musk's companies rely heavily on innovation for their success. They take industries that are struggling to evolve, such as electric cars and space travel, and seek to enter those businesses with innovative strategies to bring fresh products to market. Because of this, these companies have significant competitive advantages. Tesla has introduced several major innovations that are transforming the automotive industry. At a high level, Musk overpromises, but supports this with a desire to innovate using unconventional methodologies.

He will set out an impossible task, then challenge his teams to find ways to make it happen. Sometimes these teams are put together for the express goal of tackling the challenge. Musk does not put limits or constraints on how these teams solve the problem, and this gives those teams the freedom to find their own innovative solutions. Typically, major challenges will run into a number of different problems, but tackling those problems is something at which Musk excels.

Musk also utilizes direct, personal oversight into the most major challenges. This allows him to provide support, as in servant leadership style. His personal investment in the major challenges is essential to keep the team motivated – if the boss cares enough to roll up his sleeves and get his hands dirty, then the rest of the team can derive motivation to work harder as well (Dyer & Gregersen, 2016). So Musk supports innovation at his companies on a structural level, but also makes innovation a core part of the strategy.

At the high level, everybody involved with Tesla or SpaceX understands that innovation is critical to the company's success. But "relentless innovation" has been specifically identified as being critical to being disruptive. A company like Tesla does not rely on one or two innovations, which would of course mean that competitors catch up to them quickly, but it relies on a continuous flow of innovations to build up technological leadership that maintains the competitive advantage.

Musk makes it clear that whatever the challenge is, an innovative solution is a reasonable one, and he does not rest on conventions in order to achieve stated objectives. Musk himself is therefore the face of this innovation, and the innovation is thus baked into the organizational culture (Cox, 2017). Tesla is particular is driven by a long-range vision for the automotive industry, one that sees a shift towards electric vehicles.

While at this point the cost of fossil fuels and the way our society has been built to create automobile dependence, the current structure of the fossil fuel burning car is dominant and will remain so. But the younger generation is less interested in being dependent on fossil fuels, as they recognize that they and their children and grandchildren will bear much of the cost of this pollution. But we are not going to entirely reorganize society away from cars and trucks just yet.

So Tesla sees an increasing role for the electric car. Knowing that it is easier for other automobile companies to roll with the status quo, Tesla was the response, a company that could take leadership in the development and adoption of this technology. The most forward-thinking countries in the world are moving towards electric car dominance, and that is the position that Tesla sees being adopted increasingly around the world.

If it can maintain technological leadership, it will be the company that defines how transportation works for most of the 21st century (Ann, 2018). Tesla is driving the innovation curve, but many other manufacturers are producing vehicles that are successful as well. They might have shorter ranges, but they often come in at lower price points, because larger automakers have advantages in economies of scale that Tesla as yet does not enjoy.

However, Tesla is well-positioned as the technological leader in its space, and if it can maintain that leadership it will be the industry leader, a position it will take over time. The intensifying competition in the space will, however, drive innovation and put pressure on Tesla to maintain its position as the technological leader.

For the industry, this competition will be transformative and will be one of the reasons that electric cars will become dominant in the next ten years or so – Tesla cannot do this alone but its leadership in the space provides a target for larger automakers, who must fear the loss of market share. The obvious strategies for Tesla to utilize are the ones it uses already, or plans to use.

Innovations in manufacturing will allow it to produce at scale, something that will see rapid sales gains and rapid share gains. Tesla's leadership position will continue to put pressure on the incumbent automakers to innovate, but having established clear leadership, Tesla needs to market that and retain control of the messaging with respect to its technological leadership. Further, Tesla can leverage its innovations by celebrating them, and highlighting how those innovations contribute to its success.

This will help ensure that the culture of innovation never dies, no matter how large the company eventually becomes. The reality is that Tesla can and should do all three of these. There are no particular downsides to building a culture of innovation,.