In his book “Deep Purpose,” Harvard Business School professor Ranjay Gulati highlights the significance of authentic purpose in driving exceptional performance and social impact. While many companies add purpose as an afterthought, Tesla, the California-based electric car manufacturer, stands out for its revolutionary approach to management. This article examines the nine steps taken by Tesla to realize deep purpose and reviews the transformative management practices that have contributed to its success.
1. Tesla Integrates Mission, Goal, And Workplace.
Unlike other firms, Tesla has seamlessly integrated its mission, business goals, and workplace. Under the leadership of CEO Elon Musk, Tesla’s mission of saving the planet through the mass adoption of electric cars is central to its operations. This integration allows Tesla to transcend the limitations of current management practices.
Since becoming CEO of Tesla in 2008, Elon Musk has worked to integrate Tesla’s mission, business goal, and its workplace. Instead of, like most firms, adding a supposedly deep purpose on top of their existing business, Tesla’s mission is explicit, and is central to everything Tesla does, in terms of both the goal and workplace. (Figure 1).
As a result, Tesla can dispense with much of the paraphernalia of management as currently practiced, such as firm structure, job descriptions, budgets, and performance reviews. The result is a cult-like enthusiasm among its customers, strong attraction of the best talent, exponential innovation, and massive financing,
2. Boldness And Courage Of Both Vision And Execution
Since Elon Musk became Tesla’s CEO in 2008, the firm has espoused a mission that initially appeared almost preposterous. It implied:
· That Tesla would from scratch take on and defeat the wealthy, entrenched firms of the powerful auto industry.
· That Tesla would invent and implement a whole set of new technologies that had yet to be discovered.
· That Tesla would create a giant global corporation in less than two decades.
While many risks still lie ahead, Tesla is well on the way to accomplishing these goals, as shown in Figure 2. It has become risky to bet against Tesla: in 2020, short sellers collectively lost $38 billion.
3. Exponential Innovation Through Innovative Management Practices
Imagine a firm where all managers and staff are expected to work as entrepreneurs, with power to spend budget on defined activities, using algorithms and AI communicated by apps and screens throughout the factory. CEO Musk himself puts in 100-hour weeks and actively participates in solving problems on the factory floor with the staff. As author Walter Isaacson comments, “building the product is hard, but [creating] the machine that builds the machine is harder.”
4. The Promise Of AI In The Workplace Is Being Realized
Just as Tesla is using AI to “teach” cars how to drive, Tesla is also using AI to “teach” its staff to make smart decisions. A constant flow of algorithmic information to staff enables them to decide where and how they can make the most contribution to Tesla’s mission and goal. The role for the manager shifts away from allocating, reviewing, and approving the work of staff, towards upgrading the information flows and AI-driven algorithms that enable the staff themselves to make smart decisions, as explained here. The result is a flatter, nimbler organization with minimal bureaucracy.
5. The Transformation Of Agile Management
Tesla has departed from traditional Agile practices in favor of impromptu teams and mobs facilitated by algorithms and AI. This flexible approach enables rapid adaptation to evolving challenges, fostering agility throughout the organization, as explained here.
6. An Excruciating Sense Of Urgency
CEO Musk is impatient with talk about problems. He only wants to hear about possible solutions to problems. As explained by Ashlee Vance in her book, Elon Musk (2017), there is an overriding sense that time is short. Musk’s thinking: if we have a good shot at reaching the impossible goal of X, why not 2X?
7. A Preoccupation With Modularity In Accelerating Innovation
Tesla’s emphasis on by modularity in design facilitates rapid innovation. Each part or software module can be replaced without disrupting the entire system. This modular approach enables parallel production lines and fosters innovation directly on the production floor.
8. The Power Of ‘Less’
Tesla exemplifies Musk’s obsession with radical simplification. Clarify the requirements. Reduce the number of lines of code. Cut the number of car parts. Reduce the amount of wiring needed. Keep teams as small as possible. Accelerate cycle time. “Possibly, most common error of a smart engineer,” Musk says, “is to optimize something that should not exist.”
9. The Central Role Of Design
Tesla’s success is not solely attributable to its technological prowess but also to its commitment to exceptional design. The company’s fast and visually appealing cars have garnered a passionate customer base. Already 1.5 million orders have been placed for Tesla’s upcoming CyberTruck. Tesla’s own employees, who are also avid customers, actively contribute insights for further improvement. The key challenge lies in scaling production with steadily higher quality and performance
Conclusion
Tesla serves as an example of a company that has effectively realized deep purpose. As shown in Figure 3, this has implications way beyond the auto industry.
Although Tesla has many vociferous critics of its obvious weaknesses, Tesla’s integration of mission, goal and workplace, its relentless pursuit of innovation, its empowerment of employees, and its focus on design, have solidified its position not only as an industry leader but also as the creator of a radically new pattern of management generally. Tesla has shown us the way: the question now is whether other companies will able to replicate Tesla’s strengths.
And read also:
How World Domination Is Within Tesla’s Grasp
Ranjay Gulati: How Deep Purpose Drives Extraordinary Performance
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