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To Understand the Future of Tesla, Look to the History of GM
- bagrow 8y agoGreat storytelling, but it concludes rather abruptly. An argument of analogy and anecdote. Further, Musk is not the founder of Tesla, Martin Eberhard and Marc Tarpenning are.
- Mononokay 8y agoWikipedia has five people listed, and says that while it was registered by those two, they consider the rest as co-founders. Now, Wikipedia isn't the greatest source, but it seems to be consistent with most media coverage.
- elvirs 8y agoin the Elon Musk book its mostly Martin Eberhard who was obsessed and created prototype of electric vehicle and started a company. Musk joined as an investor and then changed the company's direction
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- flyingcircus3 8y agoWell this is an advertisement for Harvard Business School, and it's namesake. I can do the same for my Alma Mater, Purdue University. First CS department in the US. More astronauts than any other university. Some of the greatest names in aviation history: Armstrong, Cernan, Sullenberger, etc. Tuition has been frozen for the last seven years, and they still print money. Students from every nation on Earth. It turns out, if you can last 150 years, good stuff eventually happens. If you can last 400 years, triply so.
- shanghaiaway 8y agoHBR articles are not advertisements for HBR. Sloan went to MIT.
- flyingcircus3 8y agoMy mistake. You know Boston, and it's odd layout. After a while those multi-billion dollar endowments kind of run together.
- ryanmarsh 8y agoFlying circus indeed
- thewopr 8y agoI am a huge Tesla fan (and Elon fan). I own stock (shortly after IPO). I have a model 3 reservation. I have been singing their praises for a long time. Elon is an incredible visionary and probably an incredible engineer. This is a great combination for making the impossible possible. And I totally agree with this article. If not a new CEO, Tesla needs a good COO. They need excellent, consistent execution, not novel, groundbreaking execution. They have 100's of thousands of reservations for the 3 (and I don't know how many powerwall and solar roof reservations). If they can just execute on this, the world is theirs. But if they continue to have delays and major, public mistakes like the model 3 ramp, my stock purchase may have been a poor choice.
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- shanghaiaway 8y agoMusk is not an engineer.
- aphextron 8y agoHe holds a BS in Engineering Physics.
- 35bge57dtjku 8y agoThat doesn't make him an engineer.
- MereInterest 8y agoThere seem to be two different senses of what an "engineer" is. In one sense, it is "someone who has trained as an engineer", and in the other it is "someone who does engineering". Elon Musk fits the first, because he has trained as an engineer, but does not fit the second, because he is currently employed as CEO. I fit the second, because I am currently employed as an engineer, but do not fit the first, because I was trained as a physicist. If you are arguing semantics, please take care to understand that not everybody has the same definitions of words as you do. Without the context of how you interpret words, your posts will fail to convey reasonable information.
- joobus 8y agoLook to the history of Delorean. https://en.m.wikipedia.org/wiki/DeLorean_Motor_Company https://en.m.wikipedia.org/wiki/DeLorean_Motor_Company
- Proven 8y agoThe gov bails them out?
- olivermarks 8y agoA better comparison to Durant's amazing entrepreneurship as auto manufacturing scaled would be Steve Jobs. Very similar situation to Durant, fired by Apple (who ironically were trying to impose sloan style metrics on everything) comes back and builds the biggest consumer brand on the planet. Look at Apple now, it's sliding back into mid management mediocrity... I'm not a Musk fan particularly but slowing down innovation and sizzle at this point in their scary journey would be a disaster IMO
- cs702 8y agoThis is an insightful, thought-provoking article. It mentions Billy Durant, the exciting, visionary entrepreneur who raised goads of money and built GM from a disruptive startup in 1906 into a company with $10 billion (in today's dollars) in annual car sales by the early 1920's... but who was nonetheless fired by GM's board because, despite the company's rapid growth, it was burning cash and remained dependent on continued capital-raising. The board concluded GM needed someone who could execute a business model, not someone with grand visions who would perpetually need fresh capital to turn them into reality. The parallels to Tesla's current situation are obvious. The person who replaced Durant, Alfred P. Sloan Jr., ran GM for three decades with incredible success, turning it into the world's largest automaker.[a] This is the same Sloan as in the Alfred P. Sloan Foundation, MIT's Sloan School of Management, Stanford's Sloan program, and Sloan/Kettering Memorial Cancer Center. (Durant died poor, managing a bowling alley in Flint, Michigan.) PS. The most interesting aspect of this article, for me, is the fact that it was written and published in the first place. It makes me wonder if the mindset of investors with regards to Tesla is changing from "show me an exciting vision" to "show me profitable execution of a business model." [a] https://en.wikipedia.org/wiki/Alfred_P._Sloan https://en.wikipedia.org/wiki/Alfred_P._Sloan
- dogma1138 8y agoThe only problem I have with the GM analogy is that GM benefited greatly from WW2, not to mention the reconstruction years after it. In fact GM has essentially even benefited form the German rearmament after the Nazi’s rose to power until essentially the US declaration of war or at least until the revenue payments from Opel stopped crossing the pond.
- cs702 8y agoWhen Sloan took over, GM was 3x smaller than Ford. When Sloan retired, GM was 2.3x bigger than Ford.
- dogma1138 8y agoI’m not saying that Sloan didn’t do wonders he clearly did what I’m saying is that it’s hard to estimate if without WW2 would he had the opportunity to achieve the same outcome. “During World War II, GM led the largest commercial-to-military war production effort in American history. In 1942, the company converted all of factories to produce $12 billion worth of airplanes, trucks, tanks, guns, and shells for the US military.” Before the US got into the war GM supplied a 3rd of the trucks used by the Wehrmacht. https://en.m.wikipedia.org/wiki/Opel_Blitz https://en.m.wikipedia.org/wiki/Opel_Blitz
- everdev 8y agoThere's a fine line between learning lessons from history and assuming that a lesson from history will inevitably happen again in the future. People, companies and life have elements of chaos and luck that have so far made consistent, accurate future predictions unreliable. People are good at identifying patterns, but we sometimes make the mistake of predicting the future based on past patterns. A classic example is the stock market where no one has reliably predicted the future without insider information. So, yeah it's good to know the history of GM, but let's be careful about projecting that onto Tesla.
- osteele 8y agoGM had inventory >> demand, Tesla has demand >> inventory. Durant micro-managed; Musk both has obvious tendencies there, but also just broadcast a memo directing employees communicate directly, without going up and down a chain of command. And, as noted in other comments, Musk took over the company from its founders — like Sloan, and unlike Durant. There’s ingredients here for a Tesla:GM and Musk:Durant story, or for its opposite. To make the argument compelling, I’d want a justification for including only the similarities while omitting these differences. Without this, the comparison seems ad hoc.
- bkjelden 8y agoMy biggest takeaway from this article is that Tesla's very aggressive, forward-looking growth plan could be absolutely destroyed by a recession in the US economy. Durant's companies ran fine with him as CEO until recession hit and he ran out of money. What happens to Tesla if a recession hits? All of their products, while undoubtedly groundbreaking, are luxury goods purchased with discretionary income. Even the Model 3 - reliable, commodity transportation can be had for far less than $35,000. How will Tesla handle the pool of buyers for a $75,000 sedan and $900/mo lessees shrinking dramatically? Of course all auto manufacturers face this problem. But a company run by an aggressive, visionary CEO like Musk faces far more risk.
- forkLding 8y agoMy takeaway building on yours is that Tesla could survive but Elon Musk would be booted out in a recession. Lets not forget that Tesla has impressive IPs wanted by generally most car companies and very well-trained staff, factories and huge customer demand (over-subscribing their orders) so if Tesla was to be sold for cheap in a recessionary period, any car company would raise money to buy Tesla.
- adanto6840 8y agoInteresting point, seems obvious but isn't something I had directly thought about when considering Tesla's value. I would wonder how long that demand holds, consumer "brand desire" if you will, if Elon is no longer at the helm. Maybe it wouldn't be affected much right away, but would it once they focused more on execution instead of innovation perhaps? Nonetheless, is an interesting line of thought.
- hsribei 8y ago_Can_ Elon Musk be booted if the board wanted to? I'd bet he still has a ton of control.
- forkLding 8y agoRanges from either a Steve Jobs booted out of Apple to Travis Kalanick from Uber. Based on those, if a board really wanted to boot you out, they will work hard to cut off any control as Steve Jobs had to wait quite a while and then get his company Next bought to come back.
- rmason 8y agoBilly Durant was a bad ass. My father told me a story he heard from someone who was in the room. Durant crashes a GM board meeting and is told he has no standing and must leave. He starts toward the door, says something and in file a series of Western Union boys who bring in bags of telegrams which at Durant's direction they empty on the board table. Durant announces to the stunned board that these telegrams give me voting control of General Motors and it is you who have to leave - and they did! I'm just surprised that no one has ever done a movie about him.
- csours 8y agoAnother parallel: Over-automation https://youtu.be/CpCrkO1x-Qo?t=3045 https://youtu.be/CpCrkO1x-Qo?t=3045 (the whole thing is worth watching if you are into this sort of thing)
- lucas_membrane 8y agoThis is conventional B-school wisdom (where B = biology or business): the most successful adaptations are enabled by new DNA. In business, firms that grow from one of many to leading firms must adapt because leading firms face different threats, of which, celebrity CEO may nowadays be the biggest.
- doomlaser 8y agoMusk should hire away executives from Toyota or Honda to manage the execution of vehicle assembly at scale.
- carlivar 8y agoHe has scoffed at the Toyota Production System, so while I agree with you, I find this unlikely to happen. He seems to be backing into it with comments like "humans are underrated" since I would imagine his ego can't allow a backtrack any faster.
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