tesla change management case study

Tesla Change Management Case Study

From smartphones to self-driving cars, technology is constantly changing and evolving the way we interact with the world. 

Tesla is a company that has become synonymous with innovation and disruption in the automotive industry.

Over the years, Tesla has undergone significant organisational changes and implemented effective change management strategies to drive growth and success.

From transitioning to electric cars to expanding into energy storage and solar power, Tesla’s approach to change management has been key to its ability to stay ahead of the curve and maintain a devoted fanbase.

Tesla change management case study examines Tesla’s approach and strategies that have enabled the company to successfully navigate organizational change and achieve long-term success.

So, buckle up and get ready to explore the exciting insights about Tesla’s change management.

Brief introduction to Tesla and its importance in the automotive industry

Tesla is an American electric vehicle and clean energy company founded in 2003 by Elon Musk. The company has quickly become a major player in the automotive industry, revolutionizing the market with its innovative approach to electric cars and sustainable energy.

Tesla’s mission is to accelerate the world’s transition to sustainable energy, and it has made significant strides in this regard.

Its electric cars, such as the Model S, Model 3, and Model X, are known for their long-range capabilities, cutting-edge technology, and sleek designs.

Additionally, Tesla is also heavily invested in renewable energy, with products such as solar panels and the Powerwall battery system for homes.

With its commitment to sustainable energy and cutting-edge technology, Tesla has cemented its place as a leader in the automotive industry and a driving force behind the shift towards a more sustainable future.

Need for change management at Tesla

Tesla’s shift from traditional gasoline-powered cars to electric cars was a significant change in the automotive industry. The company recognized early on that electric cars were the future and set out to develop a range of electric cars that would compete with traditional gasoline-powered cars in terms of performance, range, and price.

Tesla’s rapid growth and success can be attributed to its innovative approach to change management.

Change management is the process of implementing changes in an organization in a structured and efficient manner to minimize disruptions and ensure a smooth transition.

Tesla has had to implement several significant changes over the years, including shifting from traditional gasoline-powered cars to electric cars, expanding its product line to include energy storage and solar power, and maintaining a cult-like following of dedicated fans.

Change management approach used by Tesla

Tesla’s change management approach is centered around its mission to accelerate the world’s transition to sustainable energy.

The company approaches change with a long-term vision, focused on innovation and disruption rather than simply reacting to market trends.

Tesla’s change management strategy is built on several key principles, including:

1. Clear communication

Tesla’s leadership is committed to clear and transparent communication with employees, shareholders, and customers. This includes regular updates on company strategy, product development, and progress towards sustainability goals.

Tesla has a clear and well-communicated strategy for each change, including a detailed plan for implementation and execution. 

One example of Tesla’s communication strategy is its use of social media to engage with customers and fans. Tesla has a strong presence on social media platforms such as Twitter and Instagram, where it shares news, updates, and behind-the-scenes glimpses of the company’s operations.

Tesla’s CEO, Elon Musk, is also known for his active presence on social media, where he communicates directly with customers and fans and responds to their feedback and concerns. Musk’s personal Twitter account has millions of followers, and he often uses the platform to announce new products, share updates on the company’s operations, and engage with fans.

2. Data-driven decision-making

Tesla heavily relies on data to inform its decision-making processes, including product development, production processes, and marketing strategies. This means that the company is able to make informed decisions based on real-time information, rather than relying on guesswork or intuition.

When implementing changes within the organization, Tesla uses data to inform decision making, monitor progress, and identify areas for improvement. For example, when transitioning from gasoline-powered cars to electric cars, Tesla used data on consumer preferences, energy consumption patterns, and market trends to inform its product development and marketing strategies.

Tesla also uses data to monitor the success of its change management efforts. For instance, when introducing a new product or service, Tesla collects and analyzes data on customer adoption rates, usage patterns, and feedback to determine whether the change has been successful or needs further refinement.

3. Agile methodology

Tesla uses an agile approach to product development and project management, which allows for flexibility and quick adaptation to changing market conditions. Tesla has a strong culture of innovation and creativity, which allows it to develop and implement changes quickly and efficiently.

The company encourages employees to think outside the box and experiment with new ideas, which has led to several game-changing innovations such as the electric powertrain and the autonomous driving system

4. Employee empowerment

Tesla values its employees and believes in empowering them to contribute to the company’s success. This includes encouraging innovation, creativity, and collaboration, as well as providing opportunities for growth and development.

Tesla empowers its employees by providing them with opportunities to take on leadership roles, make decisions, and contribute to the company’s success. For example, Tesla’s production line workers are trained to identify and address potential production issues, giving them a sense of ownership and responsibility over the manufacturing process.

Additionally, Tesla encourages employees to speak up and share their ideas and feedback. The company has an open-door policy, which means that employees can approach their managers or executives with any concerns, suggestions, or feedback they may have.

Tesla also has a “no titles” policy, which means that employees are not restricted by traditional job titles or hierarchies. Instead, employees are encouraged to take on responsibilities and projects that align with their strengths and interests, giving them a sense of autonomy and ownership over their work.

5. Sustainability focus

Sustainability is at the core of Tesla’s change management strategy, with a focus on developing products and processes that are environmentally friendly and socially responsible.

Tesla has invested heavily in solar energy, with the acquisition of SolarCity, a company that produces solar panels for residential and commercial use. Tesla’s solar panels are designed to be efficient, durable, and sustainable, with a focus on reducing carbon emissions and promoting renewable energy.

In addition, Tesla’s electric vehicles are designed to be sustainable and environmentally friendly. By replacing traditional gasoline-powered cars with electric vehicles, Tesla is reducing carbon emissions and promoting sustainability in the transportation industry.

Furthermore, Tesla has made a commitment to reducing its own carbon footprint. The company has set ambitious goals to reduce its own greenhouse gas emissions, with a target of net-zero emissions by 2050. Tesla is working to achieve this goal by investing in renewable energy, improving production efficiency, and reducing waste.

6. Innovation and R&D

Innovation and research and development (R&D) are integral components of Tesla’s change management approach. The company places a strong emphasis on innovation to stay ahead of the competition and disrupt traditional industries.

One example of Tesla’s innovation and R&D efforts is the development of its Autopilot system, which uses advanced artificial intelligence and machine learning to enable self-driving capabilities in Tesla vehicles. Tesla’s Autopilot system has been a major differentiator for the company, and has helped to position Tesla as a leader in the autonomous vehicle market.

Tesla’s approach to innovation and R&D is characterized by its willingness to take risks and invest in new technologies. The company has made significant investments in battery technology, solar energy, and artificial intelligence, among other areas.

For instance, Tesla’s Gigafactory in Nevada is one of the largest battery production facilities in the world, with the capacity to produce over 35 GWh of lithium-ion batteries annually. Tesla’s investment in battery technology has helped to reduce the cost and increase the efficiency of its electric vehicles, making them more accessible and appealing to consumers.

Additionally, Tesla’s research and development efforts extend beyond its products and services. The company is also working on developing new technologies to improve its production processes and supply chain management, such as the use of automation and robotics.

7. Strategic acquisitions

Tesla has acquired several companies to help it expand into new areas, such as energy storage and solar power. One example of Tesla’s strategic acquisition is its purchase of SolarCity in 2016, a leading provider of solar energy solutions. The acquisition was a key part of Tesla’s strategy to expand into the renewable energy market and establish itself as a leader in sustainable energy solutions.

By acquiring SolarCity, Tesla was able to integrate solar energy technology into its product line and offer a more complete suite of energy solutions to its customers. This acquisition also allowed Tesla to leverage SolarCity’s extensive network of installers and service providers, which helped to accelerate the growth of Tesla’s energy business.

Another example of Tesla’s strategic acquisition is its purchase of Maxwell Technologies in 2019, a company that specializes in developing energy storage solutions. The acquisition was part of Tesla’s strategy to improve the performance and efficiency of its battery technology, and to reduce the cost of producing batteries for its electric vehicles.

By acquiring Maxwell Technologies, Tesla was able to integrate its patented ultra-capacitor technology into its battery production process, which helped to increase the energy density and lifespan of its batteries. This acquisition also allowed Tesla to streamline its battery production process and reduce its overall production costs, which helped to make its electric vehicles more affordable and accessible to consumers.

Tesla’s Cult-Like Following 

Tesla’s devoted fanbase, often referred to as “Tesla cultists,” has played a significant role in the company’s success. These fans are passionate about Tesla and its products, and their enthusiasm has helped to generate buzz and excitement around the brand.

To maintain this cult-like following, Tesla has used a range of change management strategies. These strategies include:

• Building a strong brand: Tesla has built a strong brand that resonates with its fans. The company’s focus on sustainability, innovation, and performance has helped to create a unique identity that sets it apart from other car companies.
• Creating a community: Tesla has created a community of fans who share a common passion for the brand. This community includes Tesla owners, fans, and investors, and the company has fostered this community through events, social media, and other channels.
• Continuous innovation: Tesla’s fans are attracted to the company’s constant innovation and its ability to push the boundaries of what is possible in the automotive industry. Tesla has used change management to maintain this innovation by investing in research and development, encouraging experimentation and creativity, and continuously improving its products based on customer feedback.
• Exceptional customer service: Tesla is known for its exceptional customer service, which includes personalized attention, customization options, and a focus on customer satisfaction. This has helped to create a loyal customer base that is willing to promote the brand to others.

Key takeaways for other companies looking to implement successful change management strategies

Tesla change management case study offers some key takeaways for other companies looking to implement successful change management strategies:

• Communicate clearly and consistently: It’s essential to communicate your vision and goals for the change clearly and consistently to build trust and credibility with stakeholders.
• Empower employees: Empowering employees to contribute to the change process can help to generate ideas and solutions, foster a culture of innovation, and create a sense of ownership.
• Focus on the customer: A customer-focused approach that prioritizes exceptional customer service, customization, and continuous improvement based on customer feedback can create a loyal customer base and drive sales.
• Build a strong brand: Developing a unique identity that resonates with your customers and sets you apart from competitors can help to create a loyal fanbase and generate buzz around your brand.
• Embrace innovation: Embracing innovation and encouraging experimentation and creativity can help to drive change and keep your brand fresh and exciting.

Final Words 

Tesla change management case study offers insights that how Tesla successfully applied change management strategies and have become one the leading world company. The company has successfully navigated significant shifts in its business model, from transitioning to electric cars to expanding into energy storage and solar power. Tesla has also maintained a devoted fanbase through a range of change management strategies, including building a strong brand, creating a community, embracing innovation, and focusing on exceptional customer service.

About The Author

Tahir Abbas

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How Tesla Sets Itself Apart

• Lou Shipley

It’s ushering in the age of the software car.

Tesla and its flamboyant, and sometimes erratic , innovator Elon Musk have turned the more than a century old industry upside down in a mere 16 years. T raditional automakers are ill prepared to compete in today’s software-centered world. Unlike nimble Tesla, they are big, bureaucratic, slow to respond to customers, dependent on providing customer financing for unit sales growth, and culturally different from a software company. Tesla’s speed in innovation in the market for high-end vehicles is more like a Google or an Amazon than an automaker. And its soaring market valuation is a clear sign to all automakers that they’ll need to develop more innovative, Tesla-like business models in order to survive.

Tesla’s recent breakout market performance is proving some of its  skeptics  wrong. By mid-January, Tesla’s market capitalization had reached $107 billion, and it surged past the giant German automaker Volkswagen to become the world’s second most valuable auto company behind Toyota. Tesla’s valuation now  exceeds that of Ford and GM combined. The Wall Street doubters may be in shock, but I’m not. Full disclosure, I own two Teslas and I own stock in the company. 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.How so?“Software is eating the world,” Marc Andreessen, co-founder and general partner of venture capital firm Andreessen Horowitz, wrote in a memorable 2011 essay. And software is a big part of Tesla’s advantage.

• Lou Shipley is a Senior Lecturer in Entrepreneurial Management at Harvard Business School. He serves on the boards of six early-stage technology companies.

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Ideas Made to Matter

New case study takes up Tesla’s entry into the auto industry

Dylan Walsh

May 13, 2019

Within three years of Tesla’s founding in 2003, Elon Musk had invested $55 million of his own money in the company. And yet things were not going as planned. CEOs were leaving after short tenures. The company’s first model, the Roadster, was experiencing cost overruns. In response, in October of 2008, Musk appointed himself CEO. “I have so many chips on the table,” he explained. “I need to steer the boat completely.”

How has he done at the helm? A new case study  on MIT Sloan’s LearningEdge website considers the question with in-depth context about the U.S. automobile market and Tesla’s position within it.

“Prior to Tesla, no domestic manufacturer had entered the U.S. automotive market at scale since the Second World War,” said Donald Sull , a senior lecturer in innovation and entrepreneurship at MIT Sloan and one of the case study’s co-authors. “This case, which includes rich data on the industry, customers’ willingness to pay for electric vehicles, and Tesla’s financial situation, explores whether Tesla’s strategy of establishing a beachhead in the luxury segment and out-innovating its competitors can trump the challenging fundamentals of the auto industry.”

Tesla went public in June 2010 at a price of $17 per share. Eight years later, the stock was trading at $335, making Tesla the most valuable car manufacturer in the U.S. But the company had only posted two profitable quarters by that point. Investors were skeptical of its long-term viability, and media coverage wasn’t helping: the mass-market Model 3 was woefully behind schedule, lost in “production hell,” while a series of errant tweets by Musk brought SEC scrutiny and an eventual fine. The company has continued along a bumpy road, with a record $312 million of profit between July and September of 2018, followed by a plunge in stock prices, followed by a slump in sales, followed by promises of a driverless taxi fleet by 2020.

Given this wild variability in Tesla’s performance — sometimes a shining example of Silicon Valley potential, sometimes appearing to be on the brink of collapse — investors and industry experts are split on the company’s future. Where does the company stand? What are its prospects in a broader car market experiencing seismic changes?The case study explores these questions, beginning with a broad overview of how automakers, their suppliers, and their customers define one of America’s most fundamental industries. It then provides detailed background on four modern and connected forces powerfully reshaping this market:

Electrification.  In 2017, 200,000 electric vehicles were sold in the United States, a 25% increase over 2016 sales. The trend is continuing, and new business opportunities are emerging.

• Autonomous driving.  Self-driving cars are drawing investment from many giant companies, and the implications are striking. As one industry observer put it: “In the past, cars were primarily about driving and secondarily about content consumption. With autonomous cars, that prioritization will be reversed. Fully automatic cars will be battery-powered living rooms on wheels.”
• Connectivity.  As cars increasingly connect to the internet, old automotive business models are coming into question. The CEO of one Chinese conglomerate suggested that he would eventually be able to offer his company’s electric car for free, earning money instead from services the company sold to customers.
• Alternatives to car ownership.  A 2017 transportation study out of Stanford University predicts that by 2030, 95% of U.S. passenger miles will be served by on-demand autonomous electric vehicles and there will be an 80% drop in private car ownership in the United States.

Against this backdrop, the case study positions the emergence of Tesla — how the company has both driven and responded to these radical evolutions in the automobile market.

According to Sull: “This case is perfect for analyzing an industry in flux, the financial and operational risks of a disruptive strategy, and how to create value by driving up willingness to pay in an industry with limited product differentiation.”

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Tesla’s unique leader - is it time to change.

This case is set in the last quarter of 2022. Tesla Inc. (NASDAQ: TSLA), the renowned global supplier of electric vehicles (EV), was one of the most talked about companies in the media, partly because the company’s cofounder, director, and CEO, Elon Musk, took over Twitter for USD44bn in October 2022. Aiming to turn around Twitter’s profitability, Musk carried a bathroom sink to Twitter’s headquarters and let the management and staff members “sink in” the idea of massive layoffs. However, his reform plans and public vote result of Twitter’s users resulted in a backlash. On 20 December 2022, Musk tweeted he would resign as CEO of Twitter once a replacement was found.  

On 24 December 2022, Tesla suspended its EV production in its Gigafactory Shanghai, its second largest plant, without providing an explanation to the public. It was believed the suspension was due to the surge in COVID-19 cases, and the slower demand for Tesla vehicles in the Chinese market.

Musk and his companies had a few turbulent years, dramatic success and painful failures, as well as inspiring vision and self-inflicted wounds. Now, even some of his most enthusiastic supporters were beginning to question his leadership. For the 12 months of 2022, the NASDAQ Composite Index experienced a 33.89% drop, and Tesla’s share price fell by 69.2% after closing at USD123.18 on 30 December 2022.

Whether Musk’s leadership performance was related to his recently revealed diagnosis of Asperger syndrome was being questioned. Could his Asperger’s partly explain both his visionary genius and his irrational behavior? Did Musk’s Asperger personality features contribute to his interest in Twitter, thus distracting him from Tesla? Did his unique personality profile affect his questionable management decisions? Musk’s lack of focus on Tesla was blamed for a dramatic stock value downturn, and questions about his future fit as the primary steward of Tesla was becoming an issue for the Tesla board and Tesla’s investors.

Learning Objectives

After studying the case, students will be able to:

1.    Recognize the significance of a senior manager’s personality in predicting their effectiveness as a leader.

2.    Learn how personality traits that are perceived to be abnormal, such as extreme persistence and obsession seen in individuals with Asperger’s, can also contribute to a leader’s achievement.

3.    Understand the trait theory in leadership and how unique personality factors can accelerate success and also lead to downturns.

4.    Gain insight into investors’ behavior and its correlation with the actions of a personality-driven CEO, thus influencing the value of the company.

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Case study: How Tesla changed the auto industry

Tesla is experiencing growing pains, but has willingly invited more criticism than other young companies because the automaker is brazen enough to pronounce ambitious goals and, most boldly, insist that its vision of the future of the automotive industry is the definitive one.

But Tesla is forcing the auto industry to rapidly change. Large, established automakers now are making fully electric and hybrid electric cars. Automakers are starting to explore and include artificial intelligence (AI) in their cars, and now major automakers and U.S. Congressmen are discussing autonomous vehicles (AVs) and how best to innovate and regulate them.

Not only that, but Tesla's software design is state-of-the-art: the fact that Tesla can update vehicle software over-the-air (OTA) as if it were Apple updating an iPhone is unprecedented. As cars become more tech-savvy, Tesla is in the lead. But Tesla struggles to meet deadlines and frequently delivers flawed vehicles, and profitability remains elusive. Many use Tesla's failings to argue that the company shouldn't be followed as an innovator or even as a true automaker.

It turns out Tesla's story is far more complicated and nuanced than often portrayed, but the roots of its challenges come down to the company's finances and supply chain.

Tesla is forcing the auto industry to change rapidly

Tesla didn't invent the electric car (Scottish inventor Robert Anderson did, in 1832), but it was Tesla who popularized, pioneered and promoted the electric car ever since the company's founding in 2003. None of the major automotive manufacturers were making electric cars until Tesla made it cool in 2008 with its bombastic announcement of the first luxury electric car: the Tesla Roadster.

Since then, big automakers with lots of capital, solid supplier bases and seasoned supply chains went to work in rapidly developing and churning out their own electric cars, as consumers and governments pursue eco-friendly, low-emissions transit options. The next electric car, released in 2010, was made by Mitsubishi Motors.

According to the Bureau of Transportation Statistics data , the number of hybrid EVs sold in the U.S. didn't break 100,000 until 2005. The bureau doesn't have data on the number of EVs sold until 2011, which was 9,750.

Since then, the EV market has exploded. By 2015, 71,044 EVs were sold in the U.S., and 384,404 hybrid EVs. Between January and September 2017, Tesla led the pack by selling 73,227 EVs, followed by Chinese automaker BYD, selling 69,094.

Brian Loh, a partner at McKinsey&Company, said innovation is at an "all-time high" in the auto industry right now, which is significant because historically, the auto industry is very slow to evolve.

" There's so much change happening that the automakers are trying to make sure they’re as successful in the next era as they were in the past," Loh said.

The auto industry is not resistant to innovation and change, but does tend to adapt slowly. Lately however, that's changed dramatically, and largely because of Tesla's disruption in the market. Tesla has that "cool factor," something established automakers do not have, and has created hype around Tesla's EVs that other brands — like the Nissan Leaf, for example — do not get.

"The electronics innovation trend with the industry has been going on for a while, but I think it’s accelerating," Loh said. "The mega trends we read about in the papers every day of automotive driving, electrification, connectivity, shared mobility — these are huge industry sharping trends and they are really having a big impact in the industry at the OEM level and the supplier level, and it’s leading to a lot of big investment."

Then there's the AV discussion. Tesla's Autopilot, which uses AI to drive a Tesla vehicle for you with some minor assistance, has been the subject of hot debate, with some consumers misusing the technology and crashing the cars while using Autopilot. Other automakers are following Tesla's lead and looking to create semi-autonomous or fully AVs, and that has sparked contention in Washington as lawmakers try to reconcile safety concerns with innovation-hungry automakers.

U.S. senators and industry leaders — including automakers, manufacturers , 3PLs and supply chain leaders — now believe AVs are the definitive future of the auto industry, largely because Tesla is driving the conversation.

Tesla is one of the key drivers of innovation as the auto industry is forced to evolve, but Tesla also shows how difficult it is to succeed in the auto industry at all, and how there is still room for improvement within the hotly competitive, tight margin business. In fact, Tesla is a good example of how critical stable supply chains are to the success of an automotive company.

Tesla's supply chain is it's Achilles' Heel

Tesla doesn't meet deadlines. Tesla doesn't meet market expectations. Tesla delivers cars riddled with defects.

Last fall, Tesla missed Model 3 production goals in Q3 2017 due to supplier issues , and ended up having to redesign a key part of the Model 3 . What CEO Elon Musk called "production bottlenecks" continued through Q4 2017, although by then Tesla was no longer blaming suppliers, and told investors in February that the company would produce 5,000 Model 3s a week by the end of Q2 2018 .

Almost all of these problems can be attributed to lack of funding and the fact that Tesla is still a small company, compared to the rest of the auto industry, and so ramping up production for a new car is much harder for Tesla than it is for landed companies like Ford or General Motors.

Tesla's supply chain is still in the development phase, and right now Tesla doesn't have the capital and supplier relationships that other big automakers have.

" For better or worse, Tesla makes its own batteries, so it's heavily dependent on its own sources," said Michelle Anderson, a partner with Boston Consulting Group. "If that went down, batteries are heavily commoditized, so there wouldn’t be too much of a hiccup, but there would be some down time."

Because Tesla's supply chain often relies on single source suppliers, one can quickly fit the puzzle pieces together to see how and why Tesla has struggled. According to a Tesla statement provided by CSIMarket , the electric car manufacturer does have more supply chain volatility than other automakers.

"While we obtain components from multiple sources whenever possible, similar to other automobile manufacturers, many of the components used in our vehicles are purchased by us from a single source," the statement reads. "To date, we have not qualified alternative sources for most of the single sourced components used in our vehicles and we generally do not maintain long-term agreements with our suppliers. While we believe that we may be able to establish alternate supply relationships and can obtain or engineer replacement components for our single source components, we may be unable to do so in the short term or at all at prices or costs that are favorable to us."

That's essentially the story of the company's struggle: Tesla tries to scale high and fast, but gets bogged down by a faulty supply chain.

Tesla suffers from a lack of funding and a narrow supplier base

Supply chains are critical to an automaker's success, but the most critical part of the automaker's supply chain is its relationship with suppliers — and that might be where Tesla is weakest.

Loh told Supply Chain Dive that in general, the auto industry doesn't single source, and described the average auto supply chain as being far more efficient and effective than Tesla's.

"Typically an OEM will have a supplier panel or a collection of a few suppliers, anywhere from 2-5 suppliers they source from for that commodity," Loh said. "Oftentimes for a particular vehicle, they might be single sourced on that vehicle, like one supplier would have all of a certain part for a Honda Accord or something like that, but it’s extremely rare for a supplier to be single sourced across an entire commodity for all their vehicles."

Then there's the funding problem. Tesla is technically still in the red — the company isn't profitable yet, and many critics use that fact as their main reason for arguing that Tesla isn't worth investment or even worth paying attention to.

But when it comes to suppliers, Tesla's lack of funding is a huge issue. For example, Tesla is trying to ramp up production of the Model 3, necessitating a high volume of parts and components from its suppliers. Because of that capital outlay, Tesla might hold off on paying upfront costs for the parts and wait until the car starts selling before paying suppliers.

That compounds the problem; now Tesla has to produce and sell as many cars as possible in order to pay suppliers and maintain strong supplier relationships. But because Tesla is still learning how to mass produce electric cars — relatively speaking, Tesla is still new to the auto industry — production problems still arise, making it increasingly difficult to sell and deliver quality cars at an efficient rate.

"In some cases, a vehicle program might be really big and the OEM might say, I’m not going to pay the supplier any upfront funding, you need to handle that cost yourself because you’ll get a big volume down the road," Loh said. "The other extreme is low volume with very little return (for the supplier) down the road, and the OEM might need to pay for more of the engineering upfront."

While that paints a bleak picture for any startup trying to break into the auto industry, there's some silver lining: if you've got a solid vision and can sell that vision — like Tesla — suppliers just might take a risk on you.

"If you have a combination of small budget and low volumes, then it’s trickier to get enough interest from a supplier, especially if it’s an OEM with cutting edge technology and known for leading the market," Loh said. "Even though the pure economics of the program isn’t normal, a supplier might say, the technology might be worth it."

Tesla delivers on its promises, just not always on time

For all of the problems Tesla is now experiencing with the Model 3, the company already experienced with the Model S. At this point, most of the wrinkles in Model S production have been ironed out. That may instill some hope in investors, but the fact remains that Tesla still has inroads to make as a trusted automaker.

What Tesla has proved is that it takes a tremendous amount of funding, grit and hard work, star power and a strong vision in order to succeed in the auto industry and launch a radical new product — especially if you're trying to do both those things at the same time. The fact that Tesla is still around 15 years after its commencement is impressive all by itself.

"On one hand, ramping up a car company from scratch is really hard," said Greg Kefer, vice president of marketing at GT Nexus. "There’s a lot of basic tackling. An assembly line that produces 10,000 cars a week? That’s really hard."

Tesla shows how crucial it is for an automaker — or any company, really — to have all the kinks worked out of its supply chain before pursuing such big goals, like skipping the prototype stage and rushing to produce 5,000 cars a week right away, which is how Tesla approached the Model 3.

While Tesla can be seen as an inspiration to the industry, it also serves as an example of what happens when you lack capital, sufficient cash flow and an unstable supply chain. But if Tesla can keep investors hooked on its vision of a future filled with electric cars, it may just be a matter of time before it becomes an industry bedrock.

"Once they work out the supply chain issues, watch out," Kefer said. "The big three better be looking over their shoulder."

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Financing change, changing finance: Should Triodos invest in Tesla?

In 2020, Triodos Investment Management had approximately EUR 4.9 billion in assets under its management (impact investment). Triodos motto was “Financing for change. Change Finance” and understood sustainable finance as a driving force in the transition to a more inclusive and sustainable world. Triodos took a comprehensive view of the companies following the “4P” approach: Product, People, Process, and Planet. Tesla, a clean energy company that produced electric cars, batteries and renewable energy generation, could be part of Triodos’s investment. Henk Jonker, Triodos´s Senior Investment Analyst needed to evaluate Tesla’s inclusion in the investment universe. He decided to pose the challenge to Clarissa Diaz, a high potential Triodos’ researcher. Having in mind Tesla´s mission, “to accelerate the world’s transition to sustainable energy,” Diaz had to evaluate Tesla´s impact on people and planet. She must review the ESG data along with a financial analysis of the company. Diaz was aware that Elon Musk was a visionary promising to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy. Still, she was aware that Tesla and Musk were publicly involved in governance, labour, and human rights controversies. Diaz had to weigh the ESG controversial issues that merited the exclusion of Tesla. The case challenges the students to evaluate a company that do not fully meet all ESG standards and to reflect on the responsible leadership role of financial institutions.

• Recognize the role played by financial institutions to build a more sustainable society.
• Describe different ESG investment methodologies.
• Evaluate how to integrate ESG factors in portfolio investment decisions.
• Implement the ESG integration´s process in an investment decision.
• Value a company using a market multiples valuation method and critically reflect on the values-based and responsible leadership role of financial institutions.

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Tesla’s Operations Management: 10 Decision Areas, Productivity

Tesla, Inc. (formerly Tesla Motors, Inc.) applies operations management (OM) practices that address the objectives in the 10 strategic decision areas for optimal productivity in the automotive and energy solutions business. These 10 strategic decision areas require operations managers to maintain best practices to ensure streamlining, operational effectiveness, and high productivity in the organization. In this business analysis case, Tesla’s global expansion plans depend on the success of these practices in optimizing productivity and overall performance. Also, the company’s technological innovation goals support and depend on OM performance. For example, the productivity of Tesla’s automobile manufacturing depends on operations management effectiveness, such as in inventory management and supply chain management. Operations management procedures depend on Tesla’s vision statement and mission statement , which define much of the company’s strategies and tactics. Operations management prowess contributes to high productivity and the growth of the automotive business.

As a popular manufacturer of electric vehicles, Tesla keeps improving its practices for operational competence against competing automakers, such as Toyota , General Motors , Ford , Honda, Volkswagen, BMW, and Nissan. Tesla uses operations management (OM) best practices to maximize productivity while minimizing costs, based on the 10 strategic decision areas. This optimal operational condition contributes to the ability to sell automotive and energy products competitively, despite the challenges linked to competition illustrated in the Five Forces analysis of Tesla, Inc .

Tesla’s Operations Management, 10 Decision Areas

1. Design of Goods and Services . In this strategic decision area, operations managers focus on how the organization’s products influence costs, quality objectives, and resources. In this company analysis case, Tesla addresses these concerns through concurrent innovation, which involves simultaneous innovation in various parts of the automotive, battery, and solar panel business. For example, to ensure productivity in manufacturing advanced electric vehicles, the company continuously innovates its products and supply chain systems. This decision area of operations management links to Tesla’s generic competitive strategy and intensive growth strategies , which emphasize product differentiation and product development as approaches to grow the global business. As a result of strategic focus on the automotive market, Tesla’s operations management emphasizes innovation in manufacturing and the optimization of organizational capacity for innovating electric vehicles and car parts.

2. Quality Management . Satisfying customers’ quality expectations is the main objective in this strategic decision area of operations management. Tesla addresses this strategic objective through regular quality checks, quality improvement initiatives, and research on the automotive/transportation and energy solutions market. In addition, the company continues to enhance its products and processes to satisfy high standards for quality and productivity. For example, Tesla’s operations managers regularly conduct quality reviews of, and implement enhancements to manufacturing processes. Moreover, in response to quality issues with suppliers of automobile parts, Elon Musk shifted the company toward manufacturing more of its own vehicle parts instead of sourcing from parts manufacturers. This shift increases managerial workload but improves quality control and overall product quality. Such control is among the strengths shown in the SWOT analysis of Tesla, Inc .

3. Process and Capacity Design . This operations management decision area focuses on business processes, along with related investments, resources, and standards. Tesla integrates automation for this concern. For example, the company automates manufacturing processes combined with human intervention. This condition helps Tesla achieve high productivity through operational efficiency in the automotive and energy solutions business. Also, Tesla’s organizational structure (business structure) influences and is influenced by this area of operations management. For instance, some parts of the corporate structure depend on relevant process and capacity requirements in the business.

4. Location Strategy . Logistics and nearness to markets, resources, and suppliers are considered in this strategic decision area of operations management. In terms of resources, Tesla’s operations managers utilize its global reach. For example, suppliers in the United States, Europe, and Asia provide some of the basic components for the company’s electric automobiles and other products. Tesla’s marketing mix or 4P also involves company-owned stores and galleries in malls and other key locations to maximize sales personnel productivity and access to the target market. This operations management approach involves high-density areas for displays and sales transactions, considering the company’s relatively high prices and specialization in electric vehicles and energy products.

5. Layout Design and Strategy . In this strategic decision area, operations management is concerned with achieving optimal flow of resources and information. In Tesla’s case, layouts are designed to maximize capacity utilization of facilities, especially buildings used for manufacturing electric vehicles. Also, the company employs advanced computing and networking technologies for internal communications. These approaches increase productivity in Tesla’s operations. The company also minimizes distances among intermediary processes in its manufacturing operations. An example of such minimization is the Nevada Gigafactory, which helps reduce production costs along with vertical integration.

6. Job Design and Human Resources . Adequacy of effective human resources is the objective in this strategic decision area of operations management. Tesla satisfies this objective through a competitive compensation strategy to attract effective and competent workers. This approach is especially important in the market, where many companies compete for high-quality workers. Tesla’s organizational culture (company culture) focuses on innovation and problem-solving and contributes to the definition of this OM decision area. Also, the company’s operations management ensures effectiveness and high productivity of personnel through regular training, as well as leadership development programs. For example, leadership development is used to fulfill Tesla’s leadership needs to grow its automotive business.

7. Supply Chain Management . In this strategic decision area, operations managers focus on adequate supply and an effective and efficient supply chain. Tesla has a global supply chain aimed at supporting its manufacturing processes. For example, the high productivity of the company’s manufacturing plants in the U.S. benefits from timely shipment of materials from overseas. Tesla’s corporate social responsibility, governance, and corporate citizenship ideals are applied in this OM area, in considering the effects of the business on suppliers and associated communities. As an automaker that prioritizes manufacturing in the United States, Tesla’s operations management automates major areas of the supply chain, while constantly looking for strategic partners in the U.S. market.

8. Inventory Management . Inventory decisions, costs, and support for production are considered in this strategic decision area. At Tesla, inventory decisions are based on operations management principles that emphasize quality. For example, managers require that inventory holding does not affect the quality of materials used for the company’s electric vehicles. On the other hand, for high productivity and minimized inventory costs, Tesla’s operations management approach involves just-in-time inventory for some materials. Some materials for automobile production are used as soon as they arrive at the company’s manufacturing facilities. Automation is also applied, partly in response to the trends shown in the PESTLE analysis (PESTEL analysis) of Tesla, Inc . This approach helps minimize the company’s inventory costs.

9. Scheduling . This strategic decision area focuses on short-term and intermediate schedules for resource utilization. Operations managers at Tesla address these concerns through market-based scheduling, combined with automated processes for maximum efficiency. In market-based scheduling, the company monitors actual market demand and uses the resulting data as a basis for scheduling automobile production. On the other hand, Tesla’s operations management supports scheduling activities with automation to minimize errors and delays, thereby enhancing productivity.

10. Maintenance . Adequacy of resources and production capacity are the objectives in this strategic decision area of operations management. Tesla ensures resource adequacy through regular inventory monitoring that readily responds to shifts in market demand. The company addresses the objective of adequate production capacity through a small but significant degree of redundant processes and production resources. For example, Tesla maintains excess production capacity in some of its facilities. Such redundancy allows the company to rapidly increase its production in response to spikes in market demand for energy products. These operations management approaches create resilience and responsiveness in Tesla’s productivity.

Productivity Metrics at Tesla

Tesla uses metrics of productivity based on the production of automobiles, batteries, and solar panels. The company also uses productivity criteria for its services and corporate office operations management. In managing the multinational vehicle and energy business, these criteria and metrics are used to evaluate performance and strategic effectiveness. The following are some of these metrics used to determine Tesla’s productivity:

• Powertrain units per day (Automotive production facility productivity)
• Automobiles per day (Tesla car production facility productivity)
• Inquiries addressed per day (Customer service productivity)
• Chan, F. T., & Ding, K. (2023). Industrial intelligence-driven production and operations management. International Journal of Production Research, 61 (13), 4215-4219.
• Jin, T. (2023). Bridging reliability and operations management for superior system availability: Challenges and opportunities. Frontiers of Engineering Management , 1-15.
• Tesla, Inc. – Form 10-K .
• Tesla, Inc. – Product Impact .
• Tesla, Inc. – Supply Chain .
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• February 17, 2023
• Change Management , Trending Blogs
• Reading Time: 13 minutes

Twitter vs Tesla Change Management Strategies: The Good, The Bad, and The Ugly

Table of contents.

In an era of remote workers, mass layoffs, and an economic downturn, we are tasked to do more with less. With a changing workplace, transparent employee communication and change management strategies become the forefront of enterprise priorities. Although Twitter & Tesla are both led by Elon Musk, the change management styles differ. What’s working and what’s not?    Today’s fast-paced business environment requires strong change management skills, which are essential for effective leadership. Over the last few years, about 99% of enterprises have made significant organizational changes. Organizations continuously evaluate and evolve their change management strategy while helping project managers implement said change using various tactics like the DICE methodology–duration, integrity, commitment, and effort. All this is to keep up with the competition, technology, and the world’s economic ebb and flow. As a result, specific strategies and resources are carefully used to maintain and advance different areas of an organization. 

Change Management Models

The change management model is a system for managing changes within an organization. From providing a framework to identify, communicate, and accept change at different levels of an organization. The model defines roles and responsibilities for individuals, groups, and organizations involved in the change process. 

The first step is identifying the need for change and its impact on the organization, considering the reasons behind the need, and deciding on an appropriate implementation strategy. Then implement all the changes identified to ensure that all stakeholders are aware of them so they can participate in their implementation and be part of it. Below are the top 5 change management model used in the tech industry:  

• Lewin’s Change Management Model : Lewin (1986) created the Change Management Model, which consists of three stages: unfreezing, changing, and refreezing. The unfreezing stage involves creating a sense of urgency and readiness for change; the changing stage consists in implementing the difference, and the refreezing stage involves consolidating the change and making it a new normal.  
• Action Research Change Management Model: Action research is a cyclical process of planning, taking action, observing the results, and reflecting on the process. We can use this model when the desired outcome is uncertain, or the problem is complex. 
• ADKAR Change Management Model : It is a five-stage model that focuses on personal change. It consists of awareness of the need for change, desire to participate and support the change, knowledge of how to change, ability to implement the difference, and reinforcement to sustain the change. 
• Prosci Change Management Model: It consists of three phases: preparation, implementation, and reinforcement. A structured approach is necessary to evaluate the impact of change and develop a plan to manage the change. 
•   Kotter’s 8-Step Change Model : This model consists of the following steps: creating a sense of urgency, forming a powerful coalition, creating a vision for change, communicating the vision, empowering others to act on the vision, creating short-term wins, consolidating gains and producing more change, and anchoring new approaches in the company’s culture.

Change Management Leadership Styles

Some also argue that his leadership style is transformational .  

There is not one “right” process or leadership style for change management; it depends on your organization’s goals and needs. But employee engagement is necessary and integral to its success. 

Finding ways to stay competitive as advancing technologies emerge and disrupt is imperative. Enterprises are focusing on and studying different change management strategies to avoid some of the pitfalls seen in Twitter and Tesla’s recent events.

Twitter vs Tesla Culture & Change Management Approach

Twitter, renowned for its iterative and rapid approach to product development, pushes a culture of constant experimentation and digitalization. This keeps the tech conglomerate agile and adaptable. Implementing new ideas swiftly has been paramount to the company’s success. This ambitious goal to innovate does come with potential risks and difficulties. Constant experimenting can make it hard for Twitter to maintain a clear direction and reach its long-term objectives. And executing these initiatives well and on time can make or break a company’s reputation.  

Tesla’s change management approach has been pivotal to its success in disrupting the automotive industry and moving the world towards sustainable energy sources. Their strategy requires a longer-term focus on planning and execution. Although vastly different from the agile Twitter structure, the disruptive and calculating Tesla approach also comes with risks and obstacles. For instance, their devotion to the long game might hinder their ability to respond quickly to market or industry shifts. 

Despite Twitter and Tesla being leaders in their respective industries, their approaches to change management could not be more different.   

These two contrasting change management strategies highlight that there is no one-size-fits-all solution to change management. But it does take a clear understanding of your company’s goals, the world economy, and people’s changing wants and needs to determine what strategy works best for your organization. You can make better-informed decisions about your organization’s change strategy by understanding the pros and cons of different methods. 

Elon Musk’s Management Style Impact on Tesla and Twitter

Elon musk’s twitter takeover & management style.

Tesla and Twitter have been heavily impacted by Elon Musk’s influential leadership style, characterized by his penchant for taking risks and thinking unconventionally. Over the past few years, Musk, the magnate, entrepreneur, and engineer, has become one of the most respected figures in technology. Unfortunately, Musk has recently become an emblematic symbol of “hardcore” management due to a particularly staining event: his Twitter takeover. Indeed, his tendency to demand unrealistic work demands and fast results from employees, often at the expense of their mental health and personal lives, generates criticism. Experts continue to warn that his leadership style creates explosive collateral damage, ignores basic human needs, and lacks attention to work culture, which fosters bad business and mental health . 

Musk’s takeover of Twitter and mass layoff led to a lack of experienced staff, an increased workload, and toxic work culture. Employees were informed that they no longer had a job at Twitter through their lack of access to work emails. They later found out they were a part of the unlucky thousands let go–or lucky, depending on how you look at it. According to The Conversation , “Since taking over Twitter on October 27, 2022, Musk has  stopped employees working from home, canceled employee lunches, and laid off about 3,700 employees  – roughly half of Twitter’s workforce.” The emotionally detached mass firing, lack of transparency or communication, and speed at which it was all happening created a work culture based on fear rather than modernization. This is the last thing you want to do when attempting to implement change and invoke innovation. This wave of fear inspires people to dust off their resumes faster than their willingness to work hard and implement change. 

This layoff led to the dismissal of an entire curation team ; two dozen Twitter employees who had pushed back publicly and privately against him were let go; by the end of October 2022, he reduced the staff from 7,500 to 2,700 ; and then he forced his remaining employees to p ledge to accept “long hours at high intensity” –leading to resignations of an estimated 1,200 additional  Twitter  employees. 

But is this rapid change management approach working for Twitter?

“One insider says the company’s current staffing is unable to sustain the platform.” – MIT Technology Review . “In short, it’s becoming unreliable.” The change is happening so quickly, inconsistently, and uncontrollably that Twitter is losing its most active users . Even the statistics on users, capabilities, and staffing are constantly in flux and unreliable.  

Although the chaos of 2022 cannot be unseen, and Twitter started mainly in debt ($13 billion, to be precise), some vast strides toward improvement are seen. Its future is uncertain for one of the longest-running social media networks since Musk’s takeover, but users are increasing–although users are predicted to decrease in 2023 .   

Additional Elon Musk Stat Insights

• 5 Ways Elon Musk has Changed the Twitter Platform – BBC article
• A List of Features Musk Promises to Bring to Twitter – TechCrunch article
• 2021 Twitter stat insights – Finances Online article

Even with potential benefits from Musk’s takeover, one change management strategy gone awry can affect social media’s future. TechCrunch and Taylor Hatmaker’s remark s ring true here. “Elon Musk’s disastrous takeover showed that it just takes one person’s bad ideas to destabilize a social network that everyone thought was a given…” Ironically, in an era where social media reveals more than companies wish to, your digital or business transformation will fail without a change management strategy that considers your employees.  

Elon Musk’s Tesla Takeover & Management Style          

    .

And yet, Tesla has revolutionized the automotive industry with its electric vehicles, becoming one of the world’s most valuable car companies due to Musk’s change management style: transformational & visionary. 

Musk focused on thoughtful yet rapid innovation and was willing to take on established players in the automotive industry. As a result of his leadership, the company developed and launched new electric vehicles globally, with competitors struggling to keep up. In 2022 alone, Tesla delivered 1.31 vehicles and a growth of 40% over last year . “However, the fourth-quarter numbers fell shy of analysts’ expectations.” This failure to meet expected numbers in Q4 was likely tied to his Twitter debacle and the reason for Musk’s announcement that he will be stepping down as Twitter’s CEO once he finds a successor.  

Musk has also been heavily involved in product design and development. Although he prioritized rapid innovation for the company, he was methodical and delayed launches to affirm product expectations. As a result of this approach, Tesla has produced a wave of new products and has become a world-class car company explicitly targeting the environmentally concerned wealthy . With this highly targeted approach, Musk created a focused goal using transparency, communication, and inspiration. Very different from his strategy with Twitter, where his goal was to cut staff, save money, and reduce overhead for a product with a much larger base of users. Both companies were supposed to be geared toward innovation, yet he attacked both with different change management tactics.  

Musk has been muddying the waters of his leadership approach and is now pulling in Tesla resources to save Twitter. Due to his rushed change management initiatives at Twitter, its future is in question. Musk has pulled more than 50 employees into Twitter , “mostly software engineers from the Autopilot team,” according to CNBC. In hopes of climbing out of the Twitter debt, Musk is trying to pool resources. Unfortunately, he continues to rush his change management strategy due to the pressure felt by his high publicity coverage.  

It looks like the toxic work environment is not limited to his Twitter takeover. Tesla was criticized by its employees for workplace discrimination in 2022. They have reported long hours, sexual harassment, low pay, racism , and a lack of safety measures making them feel overworked and undervalued. Several strikes and protests have occurred due to employees demanding better treatment and a more reasonable workload. As a result, the company is now under the radar for environmental impact, with some experts arguing that electric vehicle production is still harmful to the environment. 

Reuters Excerpt:

Elon Musk’s Tesla Takeover & Management Style

Elon Musk’s leadership style is risky. If you push people to the limit, they need to feel inspired to move along with you. This is one of the critical steps to successful change management. 

Despite Musk’s arrival, Twitter has experienced relatively stagnant growth and engagement. But could he have done more if he had just slowed down, communicated, treated employees respectfully, and had a clear inspirational vision for employees to buy into? 

After Musk took over Twitter on October 27, 2022 , purchasing the company for $44 million, he suggested there could be a bankruptcy in the future if they didn’t start generating more money. He further pushed the envelope of work/life balance by stopping work-from-home options, canceling employee lunches, and laying off nearly 3,700 Twitter employees. He ruthlessly changed the culture to emphasize long hours at an intense pace. Musk even fired employees criticizing him based on information Musk received from hired agents reviewing private messages on Slack. By betraying employee trust and privacy, reducing transparency and communication, increasing output while decreasing resources, and inciting fear instead of inspiration, Musk used a different change management approach than he did with Tesla.  

The tension is felt among the remaining employees, complaining about his micromanagement and the lack of communication, leading to mistrust and decreased morale among Twitter’s workforce.  

The Conversation states, “Both Tesla and SpaceX have  many unhappy employees , with lawsuits filed over working conditions and Musk’s management style.” 

Because of Musk’s toxic management style at Twitter, his leadership is being questioned at Tesla and SpaceX . His flashy charismatic leadership forgoes processes and actual governance. Although he had followers behind his mission for Twitter, he produced little to back it up. His unpredictable Twitter habits have Tesla investors questioning his genius reputation . Once the dust settles after a failed change management strategy, especially one as public as his, it seems to bring other actions into question, exposing more failures than accomplishments.  

Unlike his change management approach with Tesla,  

• Musk did not set a clear or motivating goal for his newly acquired employees. Tesla is a mission-driven company. 
• He rushed initiatives without a concise change management plan.  
• Employees were the last to know about changes or business vision. 
• He increased work demands while decreasing resources and support. 
• He left Twitter without the appropriate staff and tools to manage everyday initiatives and safeguards.  
• He did not inspire his employees or have an innovative initiative or vision for the company. 
• He rushed deadlines. 
• He broadcasted company objectives inappropriately. 

Like Tesla,  

• He created a toxic work environment. 

Beginning of a New Era, maybe?

Digital Change Management Strategy Optimization  

In change management, Twitter and Tesla have made significant strides. Musk’s relentless drive and focus on innovation has helped push the boundaries of technology and lead to breakthroughs. But he couldn’t have done it without the employees under him. In the past, these companies may have stayed competitive and at the forefront of their industries by embracing a culture of experimentation and data-informed strategies alone. But the relevance of company culture will play a more significant role in their success or demise over the coming years.  

Company culture is becoming increasingly crucial to the success or failure of change management efforts. With fast changes as widespread and all-encompassing as Twitter and Tesla, education, efficiency, and communication are key. Automated learning tools and software, such as digital adoption platforms (DAPs) , can play a pivotal role.

In-app learning software helps enterprises manage change more efficiently by:  

• Streamlining processes 
• Providing proactive data and insights 
• Increasing employee engagement 
• Announcing changes in real-time 
• Updating business processes instantly 
• Reducing manual effort 
• Among other benefits for addressing change management initiatives

Enterprises can take advantage of automated tools and software, such as DAPs, for workflow updates, segmented messaging to specific users (ex., Personalized announcements about companywide changes or business process changes), and proactive user behavior monitoring to better evolve and understand software adoption progress and ensure compliance with change management protocols . These solutions deliver operationally sound approaches to managing modifications, permitting companies to capitalize on the market and reach objectives. By utilizing specialized tools and software, businesses reap higher productivity levels while reducing costly resources associated with alteration management. Such tools produce quicker acceptance rates, reduced exposure, and superior company performance. Through DAP implementation, enterprises can assimilate their change management practices and meet their needs more efficiently. 

Read More: 4 Reasons to Include a DAP in your Change Management Training – Apty  

It can be argued that Musk’s change management style has been mixed on both Twitter and Tesla. On the one hand, the companies have achieved tremendous success and growth under his leadership. Nevertheless, this success has had a high cost for the employees and those involved. Finding a balance between promoting innovation and taking care of employees is crucial if the current management style negatively affects their mental and physical health.  

Before making any conclusions, leaders should weigh both the positive and negative aspects of their change management style. Being aware of your weaknesses can help you become a better leader overall.  

Read More: Three Leadership Qualities Elon Musk’s Replacement as Twitter’s CEO Will Need to Have  

The effectiveness of change management relies on critical components like explicit and transparent communication, informed decisions through due diligence, employee engagement and drive for change, and factoring in long-term sustainability. The controversy between Twitter and Tesla illustrates how easily these criteria can be overlooked. It also explains what to avoid to achieve efficient and effective change. 

Elon Musk’s comical take on Twitter’s change management leadership reflects his laissez-faire communication style in an unstable company environment and remaining potentially inexperienced staff.

Consider The “ART” of Change Managemen t

If you answered no to the “ART” questions, change your something. Don’t push through without addressing the obvious false starters.

Quick advice on solving the objectives above… 

• It’s OK to ask for help . 
• Invite subject matter experts (SMEs), outside consultants, stakeholders, or experienced employees into the conversation before implementing change. Communicating early and often is key to success.  
• Even after implementation, establishing a transparent feedback loop for this center of excellence (CoE) team members will help execute tasks faster and avoid mistakes sooner, saving you money! 
• Implement tools, resources, and personnel to help you scale faster, achieve goals more effectively, and meet those deadlines. OR change your timelines–extending deadlines is not always bad for transformation initiatives. 
• Inspire , communicate, and be transparent with your staff. They can help, and you want them to feel inspired to do so. 

Learn more about Change Management

• Change Management Best Practices: https://www.apty.io/blog/change-management-best-practices/   
• Change Management Check List: https://www.apty.io/blog/change-management-action-items/   
• Everything Change Management: click here   

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Strategic Management - Case Study on Tesla

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Tesla motors change management analysis & solution, hbr change management solutions, strategy & execution case study | eric van den steen, case study description.

To maximize their effectiveness, color cases should be printed in color.In mid-2013, Tesla Motors was riding a wave of success: It had launched its first really mass-produced car-the model S-to rave reviews; had recently raised first-year production targets; and had started taking orders for its next car, the Model X. Tesla seemed to be on its way to defying the skeptics and becoming the first US company to enter the car industry with a mass-produced car since WWII and the first to successfully launch a fully electric car. Or was it not?

Change Management, Economics, Innovation, Marketing, Organizational culture, Strategy execution , Case Study Solution, Term Papers

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What is Change Management Definition & Process? Why transformation efforts fail? What are the Change Management Issues in Tesla Motors case study?

According to John P. Kotter – Change Management efforts are the major initiatives an organization undertakes to either boost productivity, increase product quality, improve the organizational culture, or reverse the present downward spiral that the company is going through. Sooner or later every organization requires change management efforts because without reinventing itself organization tends to lose out in the competitive market environment. The competitors catch up with it in products and service delivery, disruptors take away the lucrative and niche market positioning, or management ends up sitting on its own laurels thus missing out on the new trends, opportunities and developments in the industry.

What are the John P. Kotter - 8 Steps of Change Management?

Eight Steps of Kotter's Change Management Execution are -

• 1. Establish a Sense of Urgency
• 2. Form a Powerful Guiding Coalition
• 3. Create a Vision
• 4. Communicate the Vision
• 5. Empower Others to Act on the Vision
• 6. Plan for and Create Short Term Wins
• 7. Consolidate Improvements and Produce More Change
• 8. Institutionalize New Approaches

Are Change Management efforts easy to implement? What are the challenges in implementing change management processes?

According to authorlist Change management efforts are absolutely essential for the surviving and thriving of the organization but they are also extremely difficult to implement. Some of the biggest obstacles in implementing change efforts are –

• Change efforts create an environment of uncertainty in the organization that impacts not only the productivity in the organization but also the level of trust in the organization.
• Change management is often a lengthy, time consuming, and resource consuming process. Managements try to avoid them because they reflect negatively on the short term financial balance sheet of the organization.
• Change efforts are often made by new leaders because they are chosen by board to do so. These leaders often have less trust among the workforce compare to the people with whom they were already working with over the years.
• Change efforts are often targeted at making fundamental aspects in the business – operations and culture. Change management disrupts are status quo thus face opposition from both within and outside the organization.
• Change management efforts are made when the organization is in dire need and have fewer resources. This creates silos protection mentality within the organization.

Tesla Motors SWOT Analysis, SWOT Matrix, Weighted SWOT Case Study Solution & Analysis

How you can apply Change Management Principles to Tesla Motors case study?

Leaders can implement Change Management efforts in the organization by following the “Eight Steps Method of Change Management” by John P. Kotter.

Step 1 - Establish a sense of urgency

What are areas that require urgent change management efforts in the “ Tesla Motors “ case study. Some of the areas that require urgent changes are – organizing sales force to meet competitive realities, building new organizational structure to enter new markets or explore new opportunities. The leader needs to convince the managers that the status quo is far more dangerous than the change efforts.

Step 2 - Form a powerful guiding coalition

As mentioned earlier in the paper, most change efforts are undertaken by new management which has far less trust in the bank compare to the people with whom the organization staff has worked for long period of time. New leaders need to tap in the talent of the existing managers and integrate them in the change management efforts . This will for a powerful guiding coalition that not only understands the urgency of the situation but also has the trust of the employees in the organization. If the team able to explain at the grass roots level what went wrong, why organization need change, and what will be the outcomes of the change efforts then there will be a far more positive sentiment about change efforts among the rank and file.

Step 3 - Create a vision

The most critical role of the leader who is leading the change efforts is – creating and communicating a vision that can have a broader buy-in among employees throughout the organization. The vision should not only talk about broader objectives but also about how every little change can add up to the improvement in the overall organization.

Step 4 - Communicating the vision

Leaders need to use every vehicle to communicate the desired outcomes of the change efforts and how each employee impacted by it can contribute to achieve the desired change. Secondly the communication efforts need to answer a simple question for employees – “What it is in for the them”. If the vision doesn’t provide answer to this question then the change efforts are bound to fail because it won’t have buy-in from the required stakeholders of the organization.

Step 5 -Empower other to act on the vision

Once the vision is set and communicated, change management leadership should empower people at every level to take decisions regarding the change efforts. The empowerment should follow two key principles – it shouldn’t be too structured that it takes away improvisation capabilities of the managers who are working on the fronts. Secondly it shouldn’t be too loosely defined that people at the execution level can take it away from the desired vision and objectives.

Tesla Motors PESTEL / PEST / STEP & Porter Five Forces Analysis

Step 6 - Plan for and create short term wins

Initially the change efforts will bring more disruption then positive change because it is transforming the status quo. For example new training to increase productivity initially will lead to decrease in level of current productivity because workers are learning new skills and way of doing things. It can demotivate the employees regarding change efforts. To overcome such scenarios the change management leadership should focus on short term wins within the long term transformation. They should carefully craft short term goals, reward employees for achieving short term wins, and provide a comprehensive understanding of how these short term wins fit into the overall vision and objectives of the change management efforts.

Step 7 - Consolidate improvements and produce more change

Short term wins lead to renewed enthusiasm among the employees to implement change efforts. Management should go ahead to put a framework where the improvements made so far are consolidated and more change efforts can be built on the top of the present change efforts.

Step 8 - Institutionalize new approaches

Once the improvements are consolidated, leadership needs to take steps to institutionalize the processes and changes that are made. It needs to stress how the change efforts have delivered success in the desired manner. It should highlight the connection between corporate success and new behaviour. Finally organization management needs to create organizational structure, leadership, and performance plans consistent with the new approach.

Is change management a process or event?

What many leaders and managers at the Car Tesla fails to recognize is that – Change Management is a deliberate and detail oriented process rather than an event where the management declares that the changes it needs to make in the organization to thrive. Change management not only impact the operational processes of the organization but also the cultural and integral values of the organization.

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