The valuable lesson on Change Management from Tesla
1. The Need for “Change Management” in a New Context
Due to the impact of the pandemic, we have become more familiar with terms that once seemed foreign, such as “Digital Transformation,” “Work from Home,” and online work tools like Zoom and Microsoft Teams. The world is changing every second, and we are changing along with it. Fear has grown as a result. People are talking more about change. This change is not short-term, responding only to the obstacles caused by crises and pandemics. It’s a long-term transformation to adapt and grow. The topic that arises is change management, which allows us to proactively and confidently face the challenges ahead.
Change Management is often referred to as one of the essential skills for business leaders. However, if we look deeper into its essence, we see that change management is a vital skill for everyone. From the real-life lessons learned from giants that “fell” due to their failure to change, like Nokia (Finland), to the resounding success stories of top companies that thrived after crises, such as Toyota, Apple, and Samsung, we understand the importance of leading and implementing change in a timely manner.
2. Decoding Tesla’s Success through the Lens of Change Management
Recently, news has been full of headlines about the alternating positions of the “World’s Richest Person” between Jeff Bezos, CEO of Amazon (soon to be Chairman of Amazon’s Board of Directors in Q3 2021), and Elon Musk, CEO of Tesla. The success of the world’s largest e-commerce platform and the most valuable car company in the world cannot be encapsulated in just one or two factors. However, it’s undeniable that their keen sensitivity to trends, meeting customer expectations, and constantly improving and changing quality have contributed to the stellar success of both companies.
Regarding Tesla, the company’s strategy is to offer electric vehicles to consumers and penetrate the automobile market with high-end models aimed at wealthy buyers. Once the product matures and sees good sales, the company plans to enter the mass-market segment, where competition is fiercer.
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Tesla has started by keenly grasping future development trends.
Instead of passively responding to changes, Tesla proactively analyzed and seized global shifts, successfully implementing change management to achieve extraordinary success.
Nearly a decade ago, when the world was still enamored with internal combustion engine vehicles, Musk declared, “The goal of SpaceX, Tesla, and SolarCity is to change the world.”
It wasn’t until many oil reserves in the Middle East, Africa, and Central America began to run dry, and a shocking warning was issued that “the fate of diesel engines is being counted down day by day,” that people truly began to take Elon Musk’s statement seriously.
The electric cars produced by Tesla went beyond the realm of just “green energy” vehicles. No internal combustion engine car could achieve 100% torque immediately, and high-performance electric vehicles were the key to the issue.
Tesla’s products met two crucial criteria: first, they used renewable energy; second, they created powerful machines that rivaled fossil-fueled vehicles.
Many surveys show that the Tesla Model S is the most popular car in the U.S. Of course, “cars with no exhaust pipes” are the best solution to today’s environmental protection and climate change challenges.
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From insights into customer trend shifts, tesla has established an effective market vision.
“Market research” is not a new field, but for Elon Musk, grasping the market and trends isn’t just about dry statistics; he sees the potential through his technological vision.
Although Tesla is an American company, China has become its “paradise.” Chinese consumers are the company’s highest-spending customers.
The U.S.-China trade war with retaliatory tariffs in 2018-2019 caused the price of Tesla cars in China to nearly double. Yet, in 2019, the company witnessed a 161% increase in sales in China compared to the previous year, amounting to 40,000 Tesla cars.
Despite the COVID-19 pandemic causing a 42% drop in sales in China in Q1 2020, Tesla managed to bounce back, with sales continuously reaching new highs in March and April.
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Tesla continuously improves and strengthens its internal capabilities with powerful technological weapons.
Tesla has once again set itself apart. Its most powerful weapon is the integrated central controller, also known as Hardware 3.
This device incorporates two AI chips developed and produced by Tesla itself, providing autopilot self-driving features, as well as an extremely advanced in-car infotainment system, all controlled via a 17-inch touchscreen.
All of Tesla’s software and features are constantly updated, which is a major difference from other automakers on the market.
Another weapon that Tesla possesses is its battery technology. The company is progressing towards developing batteries that can last millions of kilometers before they need replacing, as opposed to the current batteries that last about 160 kilometers. The new battery model is expected to challenge traditional gasoline and oil, creating disruption for the automotive industry.
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Making a mark on the global market with a unique business model – no marketing.
What sets Tesla apart is that the company spends no money on advertising and does not have a marketing director. It manufactures cars, and they sell out as quickly as they are produced. This model is known as D2C (Direct to Consumer), meaning the product is sold directly from the manufacturer to the consumer. This is another factor contributing to Tesla’s current success.
After celebrating 10 years on the stock market at the end of June, despite many automakers struggling due to the global COVID-19 pandemic, Tesla has soared and surpassed Toyota to become the most valuable car company in the world. As of the close of trading on July 2, Tesla’s stock price rose to $1,119, boosting its market capitalization to $207 billion, a 500% increase compared to the same time last year. Tesla is also showing promising results with four consecutive quarters of positive growth, despite having to close its California factory.
Change Management can come from major actions such as strategy, vision, organizational restructuring, or the adoption of new manufacturing technologies, as well as small changes in work habits, connections, or the positioning of products. There is no guarantee that change will always be successful, but one thing is certain: “change over time or be left behind.”
