The world we live in
is complex and so is leadership, strategy and change. There is a belief that
systemic actions are the solutions to complex issues (Maani and Maharaj, 2001).
The problem is that at a lot of big companies, process becomes a substitute for
thinking. You’re encouraged to behave like a little gear in a complex machine
(Musk, 2012). Tesla works in a globalized context and neoliberalism is the main
driver of globalization (Boans and Gans-Morese 2009; Thorsen 2009).
Globalization means that it’s increased social and economic activity and
synchronization across territorial dimensions (Sheuermann, 2010; Mann, 2013).
This emphasizes the complexity of globalization. Neoliberalism is an economic
theory that supports economic freedom for individuals, therefore reducing state
intervention and restrictions (Harmes, 2012; Cohen and Centeno, 2006).

 

With theories and
tools within leadership, strategy and change, we can get a better understanding
of it and not having to conclude with simplistic solutions to complex problems.
The “Cynefin framework” by Snowden (1999) can tell how to approach different
contexts and it also helps us recognize what kind of situation we are in. An
example in a chaotic can be production defects in Tesla’s batteries. Firstly,
they focus on fixing the problem, but the initial solution may not be the best.
Then they can come up with a better solution. The employees within these
complex systems are able to observe and adjust accordingly to achieve desired
results (Senge, 1990). This also emphasizes that it’s a learning organization.  It can give you great solutions, but used in
the wrong context they will be useless and possibly harmful (Model 1.0). The
implications with this is that employees, managers etc. are trying to use the
tools and methods that has worked for them in the past to new complex
situations and with this it’s a consequent risk of failure (Dettmer, 2012).

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Tesla (2003) is an
automotive company and focuses on scalable clean energy. Electric cars,
batteries, and renewable energy generation and storage already exist
independently, but when combined, they become even more powerful. Tesla’s mission
is to “accelerate the world’s transition to sustainable energy” and vision is “driving
the world’s transition to electric vehicles.” A transformational change not
only in a business context, but also in a social context, initiating and
revolutionizing sustainable energy in the automobile industry (“About Tesla”,
2017).

Leadership:

One of Tesla’s
greatest assets driving its high innovation are something that can’t be so
easily calculated: leadership.

Leadership put into a
radical, incremental and a continuous change context means that we have to turn
our attention to a discussion of a leadership theory that is intimately tied to
change: “transformational leadership” (Burns, 1975; Bass, 1985).

Visionary and
risk-taker are some words that can describe Elon Musk, CEO of Tesla Inc. His
aims are out of this world and world changing. As Senge (1999) said “Leadership
is about creating new realities” which he is doing by trying to change the
world and the ongoing process of doing it.  Successful leaders ask, “What needs to be
done?” Then they ask, “Of those things that would make a difference, which
are right for me?” They don’t tackle things they aren’t good at (Drucker,
2004). “Hire great people…this is 90 percent of the solution, as hiring
wrong can cost you so much,” (Musk, 2017). 
Mintzberg (2004) approaches management and leadership as a practice and
have the art-craft-science triangle as a means to identify different styles
(Model 1.2). Art is an insightful
management style focusing on vision and ideas. Craft is a more engaging management style based upon experience
and science is an analytical style. He
demonstrates vision, dedication and perseverance as he strives to actualize his
vision. Singh (2011), says about her former boss, “The thing that makes Elon
Elon is his ability to make people believe in his vision.” This emphasizes that
he has an insightful style, but also an engaging style. He has a lot of
experience with leadership and management throughout his career as he started
PayPal in 1999 which revolutionized e-commerce and secure payments online. Mintzberg
(2009) also looked at how leaders view their role in context of those who they
are leading. There are three different views: at the top which is in control,
in the centre which is at the heart, with activities revolving around them and
throughout, operating in a network. He is most likely in the centre, since he
is both CEO and product architect CTO in several of his companies. This is
characterize a successful leader, by developing human assets in the
organization contributing to a successful business. The need for “leaders at
all levels” is one of the critical issues identified in the Global Human
Capital Trends 2014 survey published by Deloitte University Press.

These are some traits
of a transformational leader (Burns, 1975; Bass, 1985). Transformational
leaders have a charismatic appeal, but charisma alone is insufficient for
changing how a business works. For transformational leaders to change a
business there are four factors that a leaders must have (Model 1.1), (Bass et
al. 2003). Inspirational motivation is
the promotion of a vision which Musk have. He guides his followers by giving
them a meaning and challenges. Tesla is an innovative and a world changing
company. By focusing on the “what” in problems and do not focus on the blaming
part of it, he does not hesitate on “scrapping” a practice or product if it is
ineffective. The vision and drive defines the leadership style but it sometimes
means that an engineer have to scrap a project that he has been working on 60
hours a week for months. Providing the drive of intellectual stimulation by encouraging new ideas. To act as a role
model that subordinates seek to emulate. He is a product architect therefore
influence subordinates and followers when he practices what he preach. That way
he wins trust and respect through his action. The use of his qualities is aimed
to influence them to strive for the common goal of Tesla. This is called idealized influence. Finally, individualized consideration is when
subordinates are treated differently according to their talents and knowledge.
The idea that the factors and traits defining transformational leadership
affect organizational attitudes and the outcome is established in leadership
literature (Avolio, 1999; Bass, 1985; 1990; 1998; Conger and Kanungo, 1987;
House 1977).  In later years, the
relationship between transformational leadership and organizational success
(Moore, 2008), job satisfaction and organizational commitment (Pillai et al.,
1999), turnover (Chan, 2005), withdrawal behaviours (Walumbwa, 2005), job
performance (Bass et al., 2003), and job motivation (Macey and Schneider, 2008)
has been resulted. Research shows that transformational leaders transfer their
drive and high power to their subordinates by the way of emulating (Brief and
Weiss, 2002). 21. Century leadership is different. Leaders work in a complex
environment struck by global trends, therefore the ability to innovate and
inspire others to perform and get understanding of rapidly changing
technologies and new disciplines is important (Stockton, 2014).

The criticism regarding transformational leadership is that it is difficult to
be trained or taught because of the comprehensiveness of the components, but there
have been shown that transformational leadership can be taught. In two
published studies (Barling et al., 1996; Kelloway et al., 2000) it was found
that it has been statistically significant changes in transformational
leadership resulting from training. According to Brayman (1992), the
transformational leadership looks more to be a set of personal attributes and
traits rather than requirements. It is also argued that it’s associated with
ethics and unethical behaviour. According to Avolio and Howell (1992), traits
and attributes of a transformational leader can lead to unethical act, such
leader can manipulate and make subordinates to make unethical decisions and worst-case
scenario, commit crime (Yukl. 1999). The prime example in this manner is
arguably Adolf Hitler. This is called dysfunctional leadership. There are a
number of contextual factors that, in fact, lead to success or failure.
Dysfunctional leadership is one factor that can lead to failure (Dandira,
2012). A dysfunctional leader is characterized by markedly lower effectiveness,
efficiency, and performance than its peers or in comparison to social standards
(Cooke and Potter, 2006). There are several “symptoms” of a dysfunctional
leader, dictatorial leadership where the leader does not allow disagreements
out of insecurity or low productivity where the management wastes time on
internal attack and defence strategies and not facing the challenges (Yones,
2005). An example could be that Musk is “blinded” by his vision become arrogant,
leading to a unilateral approach and a dictatorial leadership style.  

Leader-follower
theory characterize Elon Musk and Tesla. The methods used by leaders and
followers to interact be it through leader-member exchange theory (Phillips
& Bedeian, 1994), adaptive change theory (Heifetz & Laurie, 2001), or
social identity theory (Hogg, 2001), two import components must be present and
continuously upheld by both the leader and followers, they are: effective
communication and relationship building. The impact leader-follower theory has
on management and the workplace environment are significant. Transformational
leadership have a positive impact on follower outcomes (Curphy, 1992; Lowe et
al., 1996), but a dysfunctional leader is as “dangerous” as a dysfunctional
organization (Cooke and Potter, 2006).

Strategy:
The first “master plan” Tesla wrote was:
1. Create an expensive sports car
2. Use that money to create an affordable car
3. Use that money to create an even more affordable car

While doing above,
also provide zero emission electric power generation options. This was 10 years
ago.

To find a strategy
that will reflect Tesla`s daring mission and vision statements, we have several
ways of finding it. As stated by Box (1976), “All models are wrong, some are
useful.” This emphasizes that Tesla can’t find a strategy using one model, but
using several because of the complexity of the internal and external factors
affecting it. As Tesla are pioneers and an innovative company, strategy will
change. It may be natural to refer to Mintzberg (1987) emergent strategy in
that context. Mintzberg suggests that emergent strategies are developed from
streams of behaviours and the actions of an organisation over a period, which
would give the organisation the flexibility of changing their ideas and
adapting to issues and challenges (Model 2.1). In other words, strategies can
fail. Changing a strategy at an “early stage” of a project to minimize risk
makes more sense than to wait at the result. The process on finding a strategy
needs to be viewed from a wider perspective so that the variety of ways in
which strategies take shape can be considered.

Tesla has the necessary
strengths to remain successful in the industry in the future. As shown in the
SWOT analysis (Model 2.2) the strength and opportunities that Tesla have,
improves their capability to grow in the future by continually innovating
processes and opportunity to increase their sales. Authors (Bartes, 2009; Hamel
& Green, 2007; Senge, 2007; Barták, 2006; Collinson, 2005) agree that the
21st century is based on information and innovative economy. According to
Tidd et al. (2006) innovation contributes to achieving a competitive advantage by innovating of
processes.  But, as identified in this SWOT analysis, there are some issues
that the Tesla must address to maintain its competitive advantage. Tesla must
improve its international presence. For example, new facilities and sales
operations in high-potential developing countries can improve business growth.
Also, the company must continue its investments in R&D to continue
innovating and producing products. This SWOT analysis shows that Tesla can
potentially grow in the global electric vehicle market despite aggressive
competition.

Tesla doesn’t have
goals regarding producing cars or to make money. The mission of Tesla is to
accelerate the world’s transition into sustainable energy. This makes them
different compared to other automotive companies. This makes Tesla also a
“chaotic” company for New York Stock Exchange (NYSE) analysts because Tesla is
hard to define from a financial point of view.

Humphrey (1964) and
has been credited the technique of SWOT analysis but later developed by Weihrich
(1982). Many of the difficulties of using a SWOT analysis relates to
information gathering. Information gathering is both time consuming and
expensive. Information gathered can be biased based upon who collects it. Key
points can be missed if a variety of sources aren’t used. As Tesla continue to
grow and economy change, the analysis can be outdated if it isn’t updated
regularly. Many says that the journey is more important than the destination
(Humphrey, 1970; Porter, 1987; Mintzberg, 1998). “I think it’s very important
to have a feedback loop, where you’re constantly thinking about what you’ve
done and how you could be doing it better.”? (Elon
Musk, 2009). Feedback loops are a part of systems thinking. Positive feedback
loops tend to reinforce change, while negative feedback loops tend to limit
change (Senge, 1990). The process of doing the analysis is more important than
the results of the analysis themselves like different theories and techniques
like Porter’s Five Forces (Model 2.3) or a PESTEL analysis (Model 2.4).

 
The phrase “culture eats strategy for breakfast” by Drucker (1985) is a
reality. If Tesla don’t take culture and strategy into consideration, Tesla’s
success will be at risk. Culture is complex and surrounds us all and
organizational learning and planned change cannot be understood without
considering culture as the main driver for resistance to change (Schein, 1992).
This stress the power of organizational culture. Culture
and strategy needs to be designed together, it’s all about strategic alignment,
to make Tesla potentially grow. Organizational culture has been characterized
as the “glue that holds organizations together” (Goffee and Jones, 1996). A
strategy is normally viewed from a 3-5 year perspective and continuously
updated, culture needs to be reviewed in the same process. This doesn’t
necessarily mean to change Tesla’s core values, it means in context of strategy
what kind of skills are required and what are the cultural skills needed to
make Tesla grow and be successful. Culture is complex, it grows and evolves
over time. The importance of considering culture and strategy are significant.
Rick (2014) statement regarding strategy and culture summarize how they
complement each other, “Don’t let culture eat strategy for breakfast. Have them
feed each other.”

 

Change:
As Tesla’s mission is to accelerate to world’s transition into sustainable
energy. They encourage change, not only in an organizational level but also in
a larger context. Their approach to change and innovations are transforming the
automobile industry. Tesla’s organizational culture creates employee competence
for innovating products. A company’s organizational culture represents the
values that defines employee behaviour and decision making. Unlike a
bureaucratic organizations with a unilateral approach, which hinder change
through too much control and little attention to external factors (Burns and
Stalker, 1961; Damanpour, 1991; Ostroff and Schmitt, 1993), Tesla have a
participative approach. Tesla’s culture encourages its employees to search for
ideal solutions that makes the company achieve its goals and stand out in the
automotive industry. The culture provides important conditions for change and
managers and leaders provide clear goals to support and stimulate employees to
participate (Burke, 1987; Cotton, 1990.).

Tesla identifies six characteristics of their organizational culture:

1.  
Move fast

2.  
Do the impossible

3.  
Constantly innovate

4.  
Reason from “first
principles”

5.  
Think like owners

6.  
We are ALL INN

Move fast highlights the
importance of react quickly to trends and changes in the market. Tesla ensure
that employees “think outside the box”. Tesla recognizes the importance of new
ideas and the benefits of solving a problem in an unconventional way, in other
words “Doing the impossible”. For
example, employees are trained to go beyond conventional limits of productivity
and creativity in automotive design.  One
of the essentials of Tesla is constantly
innovate. The leader promotes reasoning
from first principles. It involves identifying root factors to solve
problems. Tesla uses its culture as a tool to get a mind-set supportive of
business development. The company wants its workers to think like they are the owners. Tesla’s cultures unifies its
employees to be a collective. This cultural characteristic helps minimize
conflicts through teamwork. Creating a unified team, “We are ALL IN”. This organizational type describes Mintzberg’s
adhocracy type (1992). The structure tends to be low in formalization and
decentralization. The technostucture is small because technical specialists are
involved in the organization’s operative core and the support staff is large to
support the complex structure.

These characteristics sets a solid foundation for change in the organization.
As Senge (1990) said, “A learning organization is an organization that is
continually expanding its capacity to create its future”, which I interpret
when Tesla is adaptable it will be prepared for the future and continue to
grow.

The advantage of
Tesla’s organizational culture is that it supports innovation and change and
promotes problem solving and rapid response to change. Lewin’s (1999) work on group
dynamics was informed by optimistic assumptions regarding systems behaviour and
feedback structures that allowed the emergence of new ‘quasi-stationary states
of equilibrium’ in a context of continuous change (Caldwell, 2006).

The disadvantage is
that it pressures employees to innovate all the time, it can “wear out”
employees. Tesla’s organizational structure can also limit the responsiveness
of employees, therefore be ineffective in facilitating decision making to
address concerns.

To be effective in a
change process there are several models and theories to use. Kotter’s
“8-step-model” (1995) is one of them (model 3.1) and doing the eight steps in
the right order (Kotter and Cohen, 2002). Organizations frequently make the
same mistakes when trying to bring about change, they allow too much
complacency (Kotter, 1995).  Change have
helped improve organizations in competitive markets, but many situations have
been disappointing and the results have been disastrous for subordinates and
those in charge (Kotter, 1996). The two first steps is arguably the most
important steps of the model. When organizations fail to share information
about the changes and the reason for change, it will have a highly negative
impact on the process (Covin and Kilmann, 1990). Kotter (1996) points out that
the biggest mistake organizations do is to plunge into the change process
without creating an urgency in managers and employees.

Lewin’s “3-Step
Model” (1947), (model 3.2) is one of the earliest change models and Kotter’s
8-step-model aligns with Lewin’s 3-stage model. Where the unfreeze stage relates
to stage 1-4, transition stage relates to 5-6 and refreeze relates to 7-8.

The criticism is that
it’s a “checklist” for change. Tesla Inc. as an organization is a community of
people and not a mechanistic structure. As well as not giving a company a
“recipe” for sustaining change but more of initiating change. Mechanistic
change approaches are barriers to change and the lack of interaction may evoke
tension among employees (Waldersee and Griffiths, 2004).

 

When implementing
change, Tesla has to remember that it does not happen overnight and can be a
though process. In the change process Tesla may be forced to take a look at
their very essence. This is called a “controlled crisis” which shows the
importance of motivation to make change (Ritchie, 2004). Leadership and organizational culture are
widely believed to be linked in the process of change (Schein, 1986). A leader
who encourages continuous learning, change helps to define an organizational
culture that is flexible.  

 

In a world that is
constantly changing, Tesla must do the same. To react to these changes they
must build agility, identify and capture opportunities more quickly than their
competition, to their culture. A crucial factor in the effectiveness of an
organization is the ability to adapt to change (French and Delahaye, 1996). Since
Tesla is in a relatively “new” market, changes will happen more frequent. Fast
growing competitors, politics and regulations are some of the external factors
that can affect the industry. The “fossil fuel vehicle” industry is also a
competitor that are well settled all around the world. These does not
necessarily have a negative impact on Tesla. Increasingly popularity of low-carbon
lifestyles and increasing preference for renewable energy affect the business
positively, as well as energy consumptions regulations. Organizations that
identify what’s changing their business environment and can then quickly react
to those changes will have cultures that put them at a competitive advantage.
At the same time, commitment to corporate values must be upheld (Rick, 2012).

 

Conclusion:

To conclude this
analysis, we must know the importance and synergy of leadership, strategy and
change. They are all interlinked with each other. A good business has a leader
or leadership style that support its strategy and a strategy that supports its
leadership style. They think of the needs and the opportunities of the
organization before they think of their own needs and opportunities and the
strategy compliments both parts (Drucker, 2004). Ultimately leading to an
effective change process and sustainable competitive advantage. If employees
fail to see the reason for change, the outcomes that they can expect and the
profits that change may bring them, they will assume a rejecting attitude
(Kotter, 1996; Ford and Ford, 1995) and the company will struggle. Even though
in the leadership analysis, it only concerned top management, but it can
reflect the organization. Results show that top management commitment
positively affects all levels in a business (Tzempelikos, 2015). Tesla`s
organizational culture shows and supports his leadership style. This analysis
is all about context and the complexity of the different aspects of the
company. Peters (1989) said, “If you are not confused, you are not paying
attention”. When innovating for solutions and problem-solving in this complex
world with political, environmental and organizational issues, the answer to
problems will close a door, but there is a possibility of opening several
others. Tesla’s approach to change in a contextualized world is innovative as
the company itself with Elon Musk as the face of a still upcoming organization.
The use of these models is not enough to understand or analyse the company, but
get the essentials. Tesla Inc. is a company for the future and the process of
getting there are as important as the “result”. The world is constantly
changing and the pioneers, innovators and visions at Tesla is a factor that
affects the change.