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Note that the "we cannot do it" quote is not referring to the technology itself, but rather to the fact that to adopt Tesla's pattern, the legacy auto companies

Note that the "we cannot do it" quote is not referring to the technology itself, but rather to the fact that to adopt Tesla's pattern, the legacy auto companies would need to ditch their supply chains. That's not something they can do without pissing off a lot of people.

James_Henry 7y ago
The answer to this, I would think, would be to have a small part of the company whose soul purpose is to disrupt the larger company. Then Toyota and VW might have built Tesla in house without supply chain worries. When their in-house Tesla-like company proved a success, they could reasonably afford to upend their old supply chain: self-disruption.
- prawn 7y ago
  This is often referred to as a "skunkworks" - https://en.wikipedia.org/wiki/Skunk_Works https://en.wikipedia.org/wiki/Skunk_Works
- dmix 7y ago
  It’s still a big deal to the wider auto industry to have an entire supply chain disrupted. Even if that doesn’t mean much to the end consumer when the big car companies switch to off the shelf computing.
- norswap 7y ago
  Considering how much money went into the making of the real Tesla, is that really something these big auto-makers could have afforded?
  - bcrosby95 7y ago
    Most of that money went into things the big auto makers already had rather than anything particularly unique to Tesla.
    - norswap 7y ago
      On the whole, fair point. In particular, the article talk about supply line disruption. Rebuilding your supply lines means you can't use the existing ones, and that's certain not to be cheap either.
- michaelbuckbee 7y ago
  Maybe worth noting that GM tried this with it's Saturn brand - https://en.wikipedia.org/wiki/Saturn_Corporation https://en.wikipedia.org/wiki/Saturn_Corporation
- paramk 7y ago
  So Tesla is doing what Clayton predicted twenty years back.
  - James_Henry 7y ago
    I don't know if he predicted that electric cars would follow the disruption pattern, but yes Clayton's theory seems to apply here in some sense.
- earthboundkid 7y ago
  When companies try to do this, the other divisions attempt to smoother the new division in the crib and typically succeed. If you had good internal politics, they wouldn't do this, but if you had good internal politics, you wouldn't need a new division either.
  - James_Henry 7y ago
    > but if you had good internal politics, you wouldn't need a new division either. I don't know if I agree with this unless you mean to define "good internal politics" as internal politics that drives a company to self-disrupt. As shown by the article, self-disruption isn't possible as a big company because the friction of changing things like supply chains and other capital. You really need to start another company that, in a sense, competes (and sometimes at least for a time complements) the larger company. Good internal politics would help to not squash internal competition, but it isn't, I think, enough to purposefully set up that competition.
- jungturk 7y ago
  Toyota has this with Toyota Connected, a wholly-owned subsidiary that's pushing software/mobility/advanced applications across the Toyota product lines. They make it quite clear in their public conversations that Tesla-style innovation rates are the goal, but in private conversations lament that they're stuck working in a 3-year product cycle due to the innovation rates in their supply chains (as most of the specs and hardware are generated in collaboration with external suppliers). As a sibling comment mentions, this structure also creates lots of resentment in some of the traditional Toyota departments who are being disrupted by this.
BurningFrog 7y ago
I think they could easily piss off a lot of people, if it was important for the company. What they can't do is become another kind of organization. If new nimble competitors working in a new way appear, old companies, with vastly more money but a settled bureaucracy, just slowly die, rather than adapt.
- pier25 7y ago
  > What they can't do is become another kind of organization. That's a big problem many companies are facing in this day and age. For example traditional newspapers companies are transitioning to digital publishing. This not only impacts how content is published but also how content is produced for a different medium. I heard a podcast a couple fo years ago with (I believe) the CTO of the NYT. He said that the digital part of the NYT was almost a different company altogether. In the past years I worked at a paper publishing/education company and that was my experience as well. I was in charge of the digital product dept and we were like a black box inside the company. Nobody there really understood how we worked.
- Ambele 7y ago
  They're not going to want to piss people off because it's viewed as an inherently destructive act. Instead they'd look for more positive resolutions. I can only speak for one Big Japanese Car Company having worked in their corporate office in the decision-making department. - They'll use Microsoft Sharepoint and Microsoft OneDrive for file and document management, not because they're better products but because Microsoft wishes that they don't use a competitor's products and Big Japanese Car Co respects the desires of their partners. - After a demo between a new company with superior in-car tech and an old partner with inferior in-car tech, BJCC chooses the old in-car tech because once you're a partner with BJCC, BJCC takes care of you through the good and the bad. - If you direct a meeting, whether small or large and you say something incorrect, the one person in the crowd that noticed your mistake won't say anything and will actually nod their head in agreement and respect. This is due to the saving-face aspect of the culture. - Bringing others on board with a decision when you don't have access to the primary data or analytics is much easier when it involves copying a competitor. It also diffuses responsibility if things go south. Saying we did secret teardowns of a Tesla model 3s and are basing our design decisions off these teardowns means you can say it was Tesla's decision, not "my" decision. On the other hand, BJCC has historically cared a lot more about not pissing off car owners by making more reliable vehicles at fair prices that are less likely to break down. For that reason, at the end of the day, I buy a BJCC car. It's the old argument of individualism vs. collectivism. The right balance is probably some amount of both.
rblatz 7y ago
For these sorts of problems I love to break out a comparison of Netflix vs Blockbuster. Blockbuster was incapable of competing with Netflix because of competing internal and external pressure. Blockbuster at its heart was a franchise, and to compete with Netflix they’d have to abandon their franchisees, and cut them out of deal. Toyota is too dependent on their supply chain to piss them off by bringing too much in-house. Eventually they will get there but it’s going to be a slow delicate transition, because I don’t see Toyota taking a massive leap and reshaping the way they do things from top to bottom.

James_Henry 7y ago

The answer to this, I would think, would be to have a small part of the company whose soul purpose is to disrupt the larger company. Then Toyota and VW might have built Tesla in house without supply chain worries. When their in-house Tesla-like company proved a success, they could reasonably afford to upend their old supply chain: self-disruption.

prawn 7y ago
This is often referred to as a "skunkworks" - https://en.wikipedia.org/wiki/Skunk_Works https://en.wikipedia.org/wiki/Skunk_Works
dmix 7y ago
It’s still a big deal to the wider auto industry to have an entire supply chain disrupted. Even if that doesn’t mean much to the end consumer when the big car companies switch to off the shelf computing.
norswap 7y ago
Considering how much money went into the making of the real Tesla, is that really something these big auto-makers could have afforded?
- bcrosby95 7y ago
  Most of that money went into things the big auto makers already had rather than anything particularly unique to Tesla.
  - norswap 7y ago
    On the whole, fair point. In particular, the article talk about supply line disruption. Rebuilding your supply lines means you can't use the existing ones, and that's certain not to be cheap either.
michaelbuckbee 7y ago
Maybe worth noting that GM tried this with it's Saturn brand - https://en.wikipedia.org/wiki/Saturn_Corporation https://en.wikipedia.org/wiki/Saturn_Corporation
paramk 7y ago
So Tesla is doing what Clayton predicted twenty years back.
- James_Henry 7y ago
  I don't know if he predicted that electric cars would follow the disruption pattern, but yes Clayton's theory seems to apply here in some sense.
earthboundkid 7y ago
When companies try to do this, the other divisions attempt to smoother the new division in the crib and typically succeed. If you had good internal politics, they wouldn't do this, but if you had good internal politics, you wouldn't need a new division either.
- James_Henry 7y ago
  > but if you had good internal politics, you wouldn't need a new division either. I don't know if I agree with this unless you mean to define "good internal politics" as internal politics that drives a company to self-disrupt. As shown by the article, self-disruption isn't possible as a big company because the friction of changing things like supply chains and other capital. You really need to start another company that, in a sense, competes (and sometimes at least for a time complements) the larger company. Good internal politics would help to not squash internal competition, but it isn't, I think, enough to purposefully set up that competition.
jungturk 7y ago
Toyota has this with Toyota Connected, a wholly-owned subsidiary that's pushing software/mobility/advanced applications across the Toyota product lines. They make it quite clear in their public conversations that Tesla-style innovation rates are the goal, but in private conversations lament that they're stuck working in a 3-year product cycle due to the innovation rates in their supply chains (as most of the specs and hardware are generated in collaboration with external suppliers). As a sibling comment mentions, this structure also creates lots of resentment in some of the traditional Toyota departments who are being disrupted by this.

BurningFrog 7y ago

I think they could easily piss off a lot of people, if it was important for the company. What they can't do is become another kind of organization. If new nimble competitors working in a new way appear, old companies, with vastly more money but a settled bureaucracy, just slowly die, rather than adapt.

pier25 7y ago
> What they can't do is become another kind of organization. That's a big problem many companies are facing in this day and age. For example traditional newspapers companies are transitioning to digital publishing. This not only impacts how content is published but also how content is produced for a different medium. I heard a podcast a couple fo years ago with (I believe) the CTO of the NYT. He said that the digital part of the NYT was almost a different company altogether. In the past years I worked at a paper publishing/education company and that was my experience as well. I was in charge of the digital product dept and we were like a black box inside the company. Nobody there really understood how we worked.
Ambele 7y ago
They're not going to want to piss people off because it's viewed as an inherently destructive act. Instead they'd look for more positive resolutions. I can only speak for one Big Japanese Car Company having worked in their corporate office in the decision-making department. - They'll use Microsoft Sharepoint and Microsoft OneDrive for file and document management, not because they're better products but because Microsoft wishes that they don't use a competitor's products and Big Japanese Car Co respects the desires of their partners. - After a demo between a new company with superior in-car tech and an old partner with inferior in-car tech, BJCC chooses the old in-car tech because once you're a partner with BJCC, BJCC takes care of you through the good and the bad. - If you direct a meeting, whether small or large and you say something incorrect, the one person in the crowd that noticed your mistake won't say anything and will actually nod their head in agreement and respect. This is due to the saving-face aspect of the culture. - Bringing others on board with a decision when you don't have access to the primary data or analytics is much easier when it involves copying a competitor. It also diffuses responsibility if things go south. Saying we did secret teardowns of a Tesla model 3s and are basing our design decisions off these teardowns means you can say it was Tesla's decision, not "my" decision. On the other hand, BJCC has historically cared a lot more about not pissing off car owners by making more reliable vehicles at fair prices that are less likely to break down. For that reason, at the end of the day, I buy a BJCC car. It's the old argument of individualism vs. collectivism. The right balance is probably some amount of both.

rblatz 7y ago

For these sorts of problems I love to break out a comparison of Netflix vs Blockbuster. Blockbuster was incapable of competing with Netflix because of competing internal and external pressure. Blockbuster at its heart was a franchise, and to compete with Netflix they’d have to abandon their franchisees, and cut them out of deal. Toyota is too dependent on their supply chain to piss them off by bringing too much in-house. Eventually they will get there but it’s going to be a slow delicate transition, because I don’t see Toyota taking a massive leap and reshaping the way they do things from top to bottom.