A look at the Top 5 lessons we think shaped the Ecosystem.
There is no doubt that Tesla has shifted the automobile industry towards innovation and disruption and also achieved consistently high growth. It was the highest performing automaker in terms of total return, sales growth, and long-term shareholder value. Let us have a look at the lessons we can learn from Tesla and understand the method behind the madness.
Lesson 1: Disrupt the Ecosystem, or be Disrupted
The first lesson every industry in the world can learn from Tesla is that disruptive competition is everywhere. No industry is exempt from this, and it is only a matter of time before an industry’s leading innovator turns the ecosystem around. The Automobile industry was a high-tech industry with a high barrier to entry, but that’s no longer true. Where everyone over the past 70 years focused on making a few stylistic changes and incremental performance improvements, Tesla was focused on changing the game itself. Tesla has taken this traditional industry and has used a single innovation (a powerful electric battery) to reinvent it. It’s about time companies adopted a more disruptive (or) 10X innovation approach rather than playing it safe with the incremental approach.
Lesson 2: Playing with Metallurgy & Materials
To be fair, every Automotive company’s R&D is very open to new materials, towards light-weighting especially. However, no one has been as aggressive in testings and investing in new materials as aggressively as Tesla. They had already previously made bold moves by switching quite a few of their performance & weight critical Aluminum parts into Magnesium Alloys, which resulted in the significant performance boost their product needed. They had also been in the news the past year for hiring Charles Kuehmann (Apple’s former alloy expert) to create a new customized aluminium alloy for die casting use.
Lesson 3: New Age of Conscious Capitalism & Products
Matters regarding the environment are of the highest consequence to the customer in today’s day and age. Tesla got its opening to the market because of the rising concern over climate change and the carbon footprint of cars. From Agriculture to Manufacturing, every industry is going to see the same green wave and can find themselves in trouble if they don’t tune their products to match those demands and behaviours. The Millenials and Gen Z, who are the next generation of consumers care not just about price points, they care where their products come from and what those products stand for. The Global Social Entrepreneurship wave is proof of that.
Lesson 4: Acquisitions for the Infinite Game
Thirdly, Tesla’s rise to prominence illustrates how important it is to buy out the competition, innovators and to buy them out quickly. A few years ago, any major automobile company could have bought Tesla for next to nothing in a knockout bid. However, it is too late for that now. This just shows how important it is to keep your eye out for disruptors and competitors and buy them out as early as possible. Tesla has especially used the power of acquisitions and investments well, with some noteworthy ones being Perbix, Maxwell Technologies, Grohmann, Deepscale, etc. What is interesting about these acquisitions, is that this allows Tesla not only to scale against competition more aggressively, but also create options for future disruptions in the automotive industry.
Lesson 5: Commercializing their Innovation Capital
The two-pronged strategy consists of making headline-grabbing news such as launching the Cybertruck or Roadster 2.0. Tesla announces such innovation with large claims such as “fastest acceleration ever” which help get Tesla the press it needs. This helps get them support from their stakeholders. Then they make large bets on their core vehicles such as the Models S, X 3 and Y. With this approach, they can win the resources to commercialise the ideas as well as commercialising it in actuality with their innovation capital. These two pillars unite to achieve Tesla’s main goal of bringing in radical innovation into the market.
They can position themselves uniquely at every level of the ecosystem they operate in from overturning central product architecture to positioning themselves in bottleneck components to resolving system-level limitations to enable faster adoption of their technology. Parallelly, they build their innovation capital so that they can garner resources to execute their vision. Tesla’s future only seems brighter each day as its company market value now exceeds the combined value of GM, Ford and Fiat Chrysler.
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