Harvard Business Review: “How Tesla Sets Itself Apart”
Harvard Business Review recently released a new article on how Tesla sets itself apart. This is something that many a Tesla fan, owner, and shareholder already know that Tesla sets itself apart from its competition. In an article by Harvard Business Review, the writer, a Tesla owner and shareholder, shares his thoughts as to how Tesla has set itself apart.
Tesla’s valuation now exceeds that of Ford and GM combined. https://t.co/k8c6S4ytYU
— Harvard Business Review (@HarvardBiz) February 29, 2020
Lou Shipley, the author of the article, states the obvious — obvious to Tesla supporters–about how Wall Street analysts and critics of Tesla were blindsided by the company’s recent success in the stock market. “I’m not,” he writes. “But it’s my experience as a three-time software company CEO that makes it increasingly clear to me that the company’s innovative business model represents an existential threat to the auto industry as a whole.”
Tesla sets itself apart with software at its core while traditional automakers are sluggish due to their bureaucratic nature and being culturally different from a software company. Back in the fall, the CEO of Volkswagen admitted that Tesla is the most serious competitor.
“The gap between VW and Tesla in terms of electrical mobility is still quite large, and above all, the German company must become significantly faster in order to be able to make itself known in the future.” —Herbert Diess, VW CEO
Automakers lack the knowledge to compete in the new age of the software vehicle. But how could this have happened? How did Tesla and Elon Musk flip an industry that is over a century old in just 16 years? Shipley asks and then answers this question, reminding us to see how the world’s traditional automakers got where they are today. Early in the 1920s, the auto industry of today was a fragmented market of around 200 car makers. “They gradually consolidated into a few behemoths who erected enormous, capital-intensive barriers to entry that they assumed to be unassailable,” he writes.
In other words, they became these huge industries that seemed impossible to break into. It would take something unique to break into this industry — something radically different that would not only break into it, but completely change it. That would be Tesla.
"Elon Musk have turned the more than a century old industry upside down in a mere 16 years."
How Tesla Sets Itself Apart?https://t.co/xO9NptliZH
— Tesla Club India® (@TeslaClubIN) March 8, 2020
Shipley lists four things that Tesla does better than all of the other automakers: It develops cars as it would a software product. It simplifies the buying process and puts consumers in control. It has the lead in battery technology and uses it to minimize the total cost of ownership of the vehicle. Tesla has also attached itself to a major trend in today’s market: going green to reduce global warming. In fact, that last sentence is Tesla’s core mission.
The challenge Tesla has issued to traditional automakers is that they need to change their strategy — but not just that. They need to change. Period. They need to evolve into entirely new companies — software companies especially — and they need to do it fast. Volkswagen’s Herbert Diess knows this and this is why VW is buying software companies while increasing investments in sustainable vehicles and batteries. This goes with Shipley’s last paragraph in his article which describes what companies do when there is a new startup disrupting their core market. “They buy competitors to consolidate the market.”
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My Thoughts
It takes a lot of work to change something. Whether it’s a small habit or an entire industry. The larger the thing you are changing, the more work. Elon and Tesla faced many challenges that many established businesses that have been around for a century may never face in our generation. Tesla not only faced challenges — ones that could have resulted in the company’s failure — but it faced them right in the limelight, with the mainstream media nitpicking at every tweet of Elon’s, every parking lot and every delivery. Every time Elon raised an eyebrow, an article was written about why that brow was raised. Okay — so not literally, but you get the idea.
Many people do not do well under pressure. I am one of them. (I have interesting conversations with inanimate objects if they don’t act right, for example.) For one to change an entire industry, you need to be able to do well under pressure consistently — and to keep functioning while the haters are literally in your face, screaming that you will fail while their breath smells like decaying teeth. You need to be able to breathe that not so fresh breath in order to establish a change of such magnitude — and Elon Musk has done this with Tesla and SpaceX, as have certain longtime employees.
Tesla sets itself apart by being able to take on the heat and still work in the kitchen. Not only does it take on the heat, it uses it. One has to have a special type of mentality in order to succeed in those situations, and this is how Tesla, as an automaker, has done it.
Photos by Kyle Field and Chanan Bos for CleanTechnica
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