Strategic Leadership at Tesla: A New CEO's Action Plan

Background: Tesla in a Competitive EV Market

Tesla was founded in 2003 in California and specializes in manufacturing luxury electric vehicles (EVs). Its most popular products to date are the highly praised but expensive Model S and the Model 3, which is intended to be the more affordable, everyday version of the Model S. Tesla is a forward-looking company and has attracted considerable attention as the foremost EV manufacturer, driven by its aim to advance sustainability through green technology (Tesla, 2013).

Tesla was the first major brand to bring wide visibility to the EV, but in recent years numerous other major automakers have entered the space: Chevrolet, Porsche, BMW, Volkswagen, Jaguar, and more. The EV is a specialized type of vehicle that comes with its own unique requirements: it must plug in to the electric grid to recharge its battery cells, and it can be expensive and difficult to find qualified mechanics to service. EV consumers weigh a variety of concerns before buying (Simsekoglu, 2018), but there are ways for dealers and governments to promote EV sales. Incentivizing buyers has been one such approach (Diamond, 2009). However, the question remains: which demographics outside of Tesla's current target market are likely to be most motivated by incentives?

Tesla needs to find ways to reach more consumers in order to stay relevant in an increasingly competitive EV market in which it was previously the lone major player. Currently, most of its market is within the United States, but the company is looking to expand its footprint in Europe and Asia and must find ways to appeal to other cultures and consumer profiles.

Strategy Overview: As the new CEO, my strategy is to grow global sales so that the company can meet rising competition. This depends on creating a revitalized marketing strategy. My first order of business is a directive to the Director of Marketing and Communications. This will be followed by a directive to the Director of Human Resources, addressing the recruitment, retention, training, and motivation of top talent. The Chief Operating Officer will receive a set of data-driven questions to guide our use of metrics. The Chief Technology Officer will receive a letter outlining my concerns about innovation and product safety. Finally, the Board of Trustees will receive a letter regarding the company's corporate social responsibility platform and its ethical obligations to the public.

Directive to the Director of Marketing and Communications

Thank you for stepping up to take on this role. The job ahead is truly enormous and important, and I want you to know you have my full support. I will make sure you have everything you need to execute your directives.

As you know, Tesla is working to expand beyond the confines of the U.S. market. Competitors are arriving to attempt to capture our market share. We need to maintain our hold on public opinion, keep our loyal consumers satisfied, and win new ones across multiple cultures and nationalities.

External Public Response: Notify the public that we are still growing and on track to complete our build-out in China next year. We also have the Tesla truck in development and exciting new features planned for the Model 3. We are currently targeting a fully autonomous vehicle within the next two years, meaning Tesla will remain well ahead of the competition in terms of innovation.

Short-Term Strategy: We must focus on what is driving our market. We know that tax incentives are expiring in various countries. Consumers previously sought a tax credit when purchasing an EV — but that benefit is diminishing. What we need to understand now is who is still choosing to buy a Model 3 and why. The short-term strategy should be to connect with drivers from various demographics. We want to know whether consumers are interested in EVs and, if not, what is holding them back. If they are interested, what motivates them? We need to apply Hofstede's cultural dimensions model to markets in North America, Europe, and Asia in order to better understand consumer needs and wants.

Long-Term Strategy: The world is changing. Climate change is recognized as a pressing issue globally. The United Kingdom has already committed to transitioning its vehicle fleet to EVs — a trend that will not stop with England, and Tesla must lead the way in this transformation just as Ford led the way with the first automotive assembly line. Up to now, Tesla has largely relied on Elon Musk's social media presence to market the firm. Going forward, we are going to let others do our talking for us. We will partner with influencers on YouTube, Twitter, and Instagram to share authentic stories and generate word-of-mouth momentum. Tesla will then be positioned to enter the mainstream with a Super Bowl commercial. It is time to take our marketing strategy to the next level and broaden our brand appeal in the process.

Directive to the Director of Human Resources

Human Resources is a vital part of what we do here at Tesla, and I want to personally thank you for your leadership in this area. The main challenge going forward will be recruiting and retaining the talent we need to carry this company to the next level. As you are aware, Tesla has experienced difficulty retaining executives in recent years. With new leadership at the helm, however, I believe Tesla is ready to turn a new leaf.

Recruitment: Tesla is looking to reduce costs in the coming years, but we are not willing to compromise on talent. That means we will offer competitive rates for top-tier candidates — not only in terms of salary and benefits, but also through stock options. We need innovative leaders who will bring fresh ideas to the company, and they will need to be genuinely incentivized to join, given the reputation Tesla developed under prior leadership. You will need to demonstrate that our culture has changed and that we are now committed to a philosophy of servant leadership — one that empowers innovative minds to do their best work.

Retention: Retention has been a significant challenge. In 2018 alone, we lost 41 executives to turnover. Recent losses have included Sanjay Shah, our senior VP of Energy Operations, and Chief Technology Officer J.B. Straubel, who stepped down in July. These departures were difficult, and we are determined to ensure the cultural conditions that led to these turnovers are not repeated. To retain our people, culture must be our top priority. From me, our employees will see servant leadership at every level. From you, we need a focused vision for building a culture of respect and innovation.

Motivation: Tesla's employees have long been motivated by a sense of purpose — the belief that they are helping to transform the world for the better. We want to reaffirm that mission and ensure our workers have the intrinsic motivation they need to be part of a company that will lead the automotive industry through the 21st century. Our vision has motivated them in the past, and we must now use that vision to shape the culture we wish to create. We will build relationships grounded in trust and demonstrate transparency and supportiveness at the highest levels of leadership.

I am always available to take your calls and questions, and I encourage you to stop by at any time. I am at your service and will do everything in my power to ensure you have the tools required to lead our HR office with excellence.