Introduction
Elon Reeves Musk is the company CEO of Tesla, a producer of electric vehicles. Besides the top CEO role, he is the company’s product architect, which he joined in 2004 before later becoming the CEO in 2008. He invested over 6 million US Dollars in the company, which propelled him to join Tesla’s board of directors serving as its chairman. His management style revolves around consistent learning, breakthrough, and innovation (Musk, 2021).
For instance, he has invested the company’s shares in bitcoin digital currency, translating from 1.5 billion US Dollars to over 2.4 billion US Dollars. During Musk’s tenure, Tesla has had more than one billion US Dollars net income, from about 12 billion US Dollars in revenue (Yahoo Finance). Musk has undoubtedly boosted the robust development of Tesla through his technical work and leadership. Elon Musk is a transformational leader focused on bettering the business world through technology.
Musk is an atypical entrepreneur whose leadership focus and style are peculiar to the vehicle industry. He has a personal conviction to push his agenda forward, which can be seen from his financing of the SpaceX project (Muegge & Reid, 2019). His leadership, though transformational, faces several criticisms due to his unconventional means of running his company operations. Tesla employees find Musk’s way of working unbearable since it is result-oriented rather than people-focused; they hardly walk past his desk because of his hot temper and intolerance.
Tesla has serious competition from automotive veterans, bitcoin volatility, and increasing cost of materials. Companies such as Toyota and General Motors, that have experience in manufacturing and distribution of vehicles, have dealt with electric vehicles, giving them an upper hand over Tesla (Yahoo Finance). In China, Tesla competes with Nio and Xpeng, all supported by the Chinese government. Musk invested Tesla’s finances in bitcoin, which exposes the company to a crisis in case of a significant loss. Furthermore, Tesla has been grappling with a shortage of manufacturing materials caused by disrupted supply chains resulting from the coronavirus pandemic.
Analysis of Leadership Issues and Recommendations
The Drucker management theory focuses on leadership by example, whereby the leader sets an example practically; that is, a leader who serves as a worker. Its principal tenets include knowledge tact, management by objectives, decentralization, and smart-goal setting. Tesla has to fill its expanding capability gap, to compete with other auto tech giants. From its unfulfilled ambition of producing Model 3 Teslas in mass, it is evident that it has a challenge in mass production (Teece, 2018). In addition, the entry of new electric vehicle brands could limit the growth of Tesla. For Tesla to curb such challenges, and in line with Drucker’s theory, Tesla needs to reconfigure itself under Musk’s leadership. He needs to set innovative goals and incentivize technological discoveries with his employees.
Contingency or situational approach to management seeks to diversify leadership, where there is no one right leadership style. Problem-solving, and management in general, should handle situations as they are, and solutions should be sought based on the particular need. Tesla faces inadequacy of assets to match customer demand; electric vehicle direct customers wish to have widely-distributed charging stations. Tesla, at some point, tested fast-charging and battery swapping options for its drivers. For enhanced growth and success in the electric vehicle market, Tesla should also avoid defined ways of operation and adjust to trends to fit customer demand, more than its bureaucratic make-up.
Action Steps
An aspect of competition Tesla management has to battle with is technology-based. Companies will soon equip cars with sophisticated tech systems with development and electric vehicle market competition. To add to Tesla’s competition, General Motors and Ford use in-house software provision rather than outsourcing; therefore, they are ahead of Tesla concerning this technology. Tesla vehicles have a 3G connection that easily facilitates software updates; they usually minimize recalls and enhance Tesla functionality (Teece, 2018). It is beneficial since it makes Tesla vehicles efficient; however, it is also disadvantageous since it needs constant upgrading and reinvention to match market competition.
Tesla has to overgrow the competition and produce more electric vehicles at affordable purchase costs. According to Akakpo et al. (2019), Tesla faces the challenges of ever-growing technology, growing rates of carbon emissions, and instability in the motor vehicle industry. To shift from traditional means to modern innovation, Tesla should use long-range batteries that produce a high volume of fumeless cars equally low in cost and with little or no noise to the environment. Tesla is focused on having sustainable and environment-friendly products despite stiff competition in their market. Musk’s entrepreneurial ambitions magnify that fact; instead of being only profit-oriented, he seeks to solve world problems and leave a better planet (Aybaly et al., 2017). Moreover, Tesla uses a vertical integration approach, reducing its reliance on suppliers and lowering final product costs (Sathish & Weenk). This method is equally disadvantageous since it reduces focus and flexibility.
Conclusion
Leadership is not just a function of management as many perceive it; it is also work and example. Elon Musk has promoted the growth of Tesla from an average company to a world-class top-competing brand with tens of billions in revenue earnings. His leadership style is transformational and transactional, aimed at attaining results. He is not just a CEO who serves as a boss; he serves as Tesla’s product architect. He also leads by example, working like all the rest of the employees. Despite criticisms and challenges, Elon Musk remains one of the best company leaders globally, managing a fast-growing brand- Tesla. Indeed, a lot can be learned from Musk’s organizational leadership, especially that whenever a company’s best interest is a priority, workers are incentivized to produce more, and the company grows as a result.
References
Akakpo, A., Gyasi, E. A., Oduro, B., & Akpabot, S. (2019). Foresight, organization policies and management strategies in electric vehicle technology advances at Tesla. In Futures Thinking and Organizational Policy (pp. 57-69). Palgrave Macmillan, Cham.
Aybaly, R., Guerquin-Kern, L., Manière, I. C., Madacova, D., & van Holt, J. (2017). Sustainability practices in the luxury industry: How can one be sustainable in an over-consumptive environment? Sustainability in the automotive world: The case of Tesla. Procedia computer science, 122, 541-547. Web.
Muegge, S., & Reid, E. (2019). Elon Musk and SpaceX: A Case Study of Entrepreneuring as Emancipation. Technology Innovation Management Review, 9(8). Musk, E. (2021). Elon Musk Biography.
Sathish, S., & Weenk, E. Case Study of Tesla.
Teece, D. J. (2018). Tesla and the reshaping of the auto industry. Management and Organization Review, 14(3), 501-512.
5 Challenges to Tesla’s Growth. (2021). Yahoo Finance. Web.