The world we live inis complex and so is leadership, strategy and change.
There is a belief thatsystemic 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 forthinking. 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 maindriver of globalization (Boans and Gans-Morese 2009; Thorsen 2009).Globalization means that it’s increased social and economic activity andsynchronization across territorial dimensions (Sheuermann, 2010; Mann, 2013).This emphasizes the complexity of globalization. Neoliberalism is an economictheory that supports economic freedom for individuals, therefore reducing stateintervention and restrictions (Harmes, 2012; Cohen and Centeno, 2006). With theories andtools within leadership, strategy and change, we can get a better understandingof it and not having to conclude with simplistic solutions to complex problems.
The “Cynefin framework” by Snowden (1999) can tell how to approach differentcontexts and it also helps us recognize what kind of situation we are in. Anexample 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 thesecomplex systems are able to observe and adjust accordingly to achieve desiredresults (Senge, 1990). This also emphasizes that it’s a learning organization. It can give you great solutions, but used inthe wrong context they will be useless and possibly harmful (Model 1.0). Theimplications with this is that employees, managers etc. are trying to use thetools and methods that has worked for them in the past to new complexsituations and with this it’s a consequent risk of failure (Dettmer, 2012). Tesla (2003) is anautomotive company and focuses on scalable clean energy. Electric cars,batteries, and renewable energy generation and storage already existindependently, but when combined, they become even more powerful.
Tesla’s missionis to “accelerate the world’s transition to sustainable energy” and vision is “drivingthe world’s transition to electric vehicles.” A transformational change notonly in a business context, but also in a social context, initiating andrevolutionizing sustainable energy in the automobile industry (“About Tesla”,2017). Leadership:One of Tesla’sgreatest assets driving its high innovation are something that can’t be soeasily calculated: leadership.Leadership put into aradical, incremental and a continuous change context means that we have to turnour attention to a discussion of a leadership theory that is intimately tied tochange: “transformational leadership” (Burns, 1975; Bass, 1985). Visionary andrisk-taker are some words that can describe Elon Musk, CEO of Tesla Inc. Hisaims are out of this world and world changing. As Senge (1999) said “Leadershipis about creating new realities” which he is doing by trying to change theworld and the ongoing process of doing it.
Successful leaders ask, “What needs to bedone?” Then they ask, “Of those things that would make a difference, whichare 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 hiringwrong can cost you so much,” (Musk, 2017). Mintzberg (2004) approaches management and leadership as a practice andhave the art-craft-science triangle as a means to identify different styles(Model 1.2). Art is an insightfulmanagement style focusing on vision and ideas. Craft is a more engaging management style based upon experienceand science is an analytical style. Hedemonstrates vision, dedication and perseverance as he strives to actualize hisvision. Singh (2011), says about her former boss, “The thing that makes ElonElon is his ability to make people believe in his vision.
” This emphasizes thathe has an insightful style, but also an engaging style. He has a lot ofexperience with leadership and management throughout his career as he startedPayPal 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 theyare 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 andthroughout, operating in a network. He is most likely in the centre, since heis both CEO and product architect CTO in several of his companies. This ischaracterize a successful leader, by developing human assets in theorganization contributing to a successful business. The need for “leaders atall levels” is one of the critical issues identified in the Global HumanCapital Trends 2014 survey published by Deloitte University Press.
These are some traitsof a transformational leader (Burns, 1975; Bass, 1985). Transformationalleaders have a charismatic appeal, but charisma alone is insufficient forchanging how a business works. For transformational leaders to change abusiness there are four factors that a leaders must have (Model 1.1), (Bass etal. 2003).
Inspirational motivation isthe promotion of a vision which Musk have. He guides his followers by givingthem a meaning and challenges. Tesla is an innovative and a world changingcompany. By focusing on the “what” in problems and do not focus on the blamingpart of it, he does not hesitate on “scrapping” a practice or product if it isineffective. The vision and drive defines the leadership style but it sometimesmeans that an engineer have to scrap a project that he has been working on 60hours a week for months.
Providing the drive of intellectual stimulation by encouraging new ideas. To act as a rolemodel that subordinates seek to emulate. He is a product architect thereforeinfluence subordinates and followers when he practices what he preach. That wayhe wins trust and respect through his action. The use of his qualities is aimedto influence them to strive for the common goal of Tesla. This is called idealized influence.
Finally, individualized consideration is whensubordinates are treated differently according to their talents and knowledge.The idea that the factors and traits defining transformational leadershipaffect organizational attitudes and the outcome is established in leadershipliterature (Avolio, 1999; Bass, 1985; 1990; 1998; Conger and Kanungo, 1987;House 1977). In later years, therelationship between transformational leadership and organizational success(Moore, 2008), job satisfaction and organizational commitment (Pillai et al.,1999), turnover (Chan, 2005), withdrawal behaviours (Walumbwa, 2005), jobperformance (Bass et al., 2003), and job motivation (Macey and Schneider, 2008)has been resulted. Research shows that transformational leaders transfer theirdrive and high power to their subordinates by the way of emulating (Brief andWeiss, 2002).
21. Century leadership is different. Leaders work in a complexenvironment struck by global trends, therefore the ability to innovate andinspire others to perform and get understanding of rapidly changingtechnologies and new disciplines is important (Stockton, 2014).
The criticism regarding transformational leadership is that it is difficult tobe trained or taught because of the comprehensiveness of the components, but therehave been shown that transformational leadership can be taught. In twopublished studies (Barling et al., 1996; Kelloway et al., 2000) it was foundthat it has been statistically significant changes in transformationalleadership resulting from training. According to Brayman (1992), thetransformational leadership looks more to be a set of personal attributes andtraits rather than requirements. It is also argued that it’s associated withethics and unethical behaviour. According to Avolio and Howell (1992), traitsand attributes of a transformational leader can lead to unethical act, suchleader can manipulate and make subordinates to make unethical decisions and worst-casescenario, commit crime (Yukl. 1999).
The prime example in this manner isarguably Adolf Hitler. This is called dysfunctional leadership. There are anumber 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 dysfunctionalleader, dictatorial leadership where the leader does not allow disagreementsout of insecurity or low productivity where the management wastes time oninternal 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-followertheory characterize Elon Musk and Tesla. The methods used by leaders andfollowers to interact be it through leader-member exchange theory (Phillips& Bedeian, 1994), adaptive change theory (Heifetz & Laurie, 2001), orsocial identity theory (Hogg, 2001), two import components must be present andcontinuously upheld by both the leader and followers, they are: effectivecommunication and relationship building.
The impact leader-follower theory hason management and the workplace environment are significant. Transformationalleadership have a positive impact on follower outcomes (Curphy, 1992; Lowe etal., 1996), but a dysfunctional leader is as “dangerous” as a dysfunctionalorganization (Cooke and Potter, 2006).Strategy: The first “master plan” Tesla wrote was: 1. Create an expensive sports car2. Use that money to create an affordable car3.
Use that money to create an even more affordable carWhile doing above,also provide zero emission electric power generation options. This was 10 yearsago. To find a strategythat will reflect Tesla`s daring mission and vision statements, we have severalways of finding it. As stated by Box (1976), “All models are wrong, some areuseful.
” This emphasizes that Tesla can’t find a strategy using one model, butusing several because of the complexity of the internal and external factorsaffecting it. As Tesla are pioneers and an innovative company, strategy willchange. It may be natural to refer to Mintzberg (1987) emergent strategy inthat context. Mintzberg suggests that emergent strategies are developed fromstreams of behaviours and the actions of an organisation over a period, whichwould give the organisation the flexibility of changing their ideas andadapting to issues and challenges (Model 2.1). In other words, strategies canfail. Changing a strategy at an “early stage” of a project to minimize riskmakes more sense than to wait at the result.
The process on finding a strategyneeds to be viewed from a wider perspective so that the variety of ways inwhich strategies take shape can be considered.Tesla has the necessarystrengths to remain successful in the industry in the future. As shown in theSWOT analysis (Model 2.2) the strength and opportunities that Tesla have,improves their capability to grow in the future by continually innovatingprocesses and opportunity to increase their sales. Authors (Bartes, 2009; Hamel& Green, 2007; Senge, 2007; Barták, 2006; Collinson, 2005) agree that the21st century is based on information and innovative economy. According toTidd et al. (2006) innovation contributes to achieving a competitive advantage by innovating ofprocesses.
But, as identified in this SWOT analysis, there are some issuesthat the Tesla must address to maintain its competitive advantage. Tesla mustimprove its international presence. For example, new facilities and salesoperations in high-potential developing countries can improve business growth.Also, the company must continue its investments in R&D to continueinnovating and producing products. This SWOT analysis shows that Tesla canpotentially grow in the global electric vehicle market despite aggressivecompetition.Tesla doesn’t havegoals regarding producing cars or to make money. The mission of Tesla is toaccelerate the world’s transition into sustainable energy.
This makes themdifferent compared to other automotive companies. This makes Tesla also a”chaotic” company for New York Stock Exchange (NYSE) analysts because Tesla ishard to define from a financial point of view. Humphrey (1964) andhas been credited the technique of SWOT analysis but later developed by Weihrich(1982). Many of the difficulties of using a SWOT analysis relates toinformation gathering. Information gathering is both time consuming andexpensive. Information gathered can be biased based upon who collects it. Keypoints can be missed if a variety of sources aren’t used. As Tesla continue togrow and economy change, the analysis can be outdated if it isn’t updatedregularly.
Many says that the journey is more important than the destination(Humphrey, 1970; Porter, 1987; Mintzberg, 1998). “I think it’s very importantto have a feedback loop, where you’re constantly thinking about what you’vedone and how you could be doing it better.”? (ElonMusk, 2009). Feedback loops are a part of systems thinking. Positive feedbackloops tend to reinforce change, while negative feedback loops tend to limitchange (Senge, 1990). The process of doing the analysis is more important thanthe results of the analysis themselves like different theories and techniqueslike 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 areality.
If Tesla don’t take culture and strategy into consideration, Tesla’ssuccess will be at risk. Culture is complex and surrounds us all andorganizational learning and planned change cannot be understood withoutconsidering culture as the main driver for resistance to change (Schein, 1992).This stress the power of organizational culture.
Cultureand strategy needs to be designed together, it’s all about strategic alignment,to make Tesla potentially grow. Organizational culture has been characterizedas the “glue that holds organizations together” (Goffee and Jones, 1996). Astrategy is normally viewed from a 3-5 year perspective and continuouslyupdated, culture needs to be reviewed in the same process. This doesn’tnecessarily mean to change Tesla’s core values, it means in context of strategywhat kind of skills are required and what are the cultural skills needed tomake Tesla grow and be successful. Culture is complex, it grows and evolvesover time. The importance of considering culture and strategy are significant.Rick (2014) statement regarding strategy and culture summarize how theycomplement each other, “Don’t let culture eat strategy for breakfast.
Have themfeed each other.” Change: As Tesla’s mission is to accelerate to world’s transition into sustainableenergy. They encourage change, not only in an organizational level but also ina larger context. Their approach to change and innovations are transforming theautomobile industry.
Tesla’s organizational culture creates employee competencefor innovating products. A company’s organizational culture represents thevalues that defines employee behaviour and decision making. Unlike abureaucratic organizations with a unilateral approach, which hinder changethrough too much control and little attention to external factors (Burns andStalker, 1961; Damanpour, 1991; Ostroff and Schmitt, 1993), Tesla have aparticipative approach. Tesla’s culture encourages its employees to search forideal solutions that makes the company achieve its goals and stand out in theautomotive industry. The culture provides important conditions for change andmanagers and leaders provide clear goals to support and stimulate employees toparticipate (Burke, 1987; Cotton, 1990.). Tesla identifies six characteristics of their organizational culture:1.
Move fast2. Do the impossible3. Constantly innovate4. Reason from “firstprinciples” 5.
Think like owners6. We are ALL INNMove fast highlights theimportance of react quickly to trends and changes in the market. Tesla ensurethat employees “think outside the box”. Tesla recognizes the importance of newideas and the benefits of solving a problem in an unconventional way, in otherwords “Doing the impossible”. Forexample, employees are trained to go beyond conventional limits of productivityand creativity in automotive design. Oneof the essentials of Tesla is constantlyinnovate. The leader promotes reasoningfrom first principles.
It involves identifying root factors to solveproblems. Tesla uses its culture as a tool to get a mind-set supportive ofbusiness development. The company wants its workers to think like they are the owners. Tesla’s cultures unifies itsemployees to be a collective. This cultural characteristic helps minimizeconflicts through teamwork. Creating a unified team, “We are ALL IN”. This organizational type describes Mintzberg’sadhocracy type (1992). The structure tends to be low in formalization anddecentralization.
The technostucture is small because technical specialists areinvolved in the organization’s operative core and the support staff is large tosupport 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 iscontinually expanding its capacity to create its future”, which I interpretwhen Tesla is adaptable it will be prepared for the future and continue togrow. The advantage ofTesla’s organizational culture is that it supports innovation and change andpromotes problem solving and rapid response to change. Lewin’s (1999) work on groupdynamics was informed by optimistic assumptions regarding systems behaviour andfeedback structures that allowed the emergence of new ‘quasi-stationary statesof equilibrium’ in a context of continuous change (Caldwell, 2006).
The disadvantage isthat it pressures employees to innovate all the time, it can “wear out”employees. Tesla’s organizational structure can also limit the responsivenessof employees, therefore be ineffective in facilitating decision making toaddress concerns. To be effective in achange 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 inthe right order (Kotter and Cohen, 2002). Organizations frequently make thesame mistakes when trying to bring about change, they allow too muchcomplacency (Kotter, 1995). Change havehelped improve organizations in competitive markets, but many situations havebeen disappointing and the results have been disastrous for subordinates andthose in charge (Kotter, 1996). The two first steps is arguably the mostimportant steps of the model.
When organizations fail to share informationabout the changes and the reason for change, it will have a highly negativeimpact on the process (Covin and Kilmann, 1990). Kotter (1996) points out thatthe biggest mistake organizations do is to plunge into the change processwithout creating an urgency in managers and employees.Lewin’s “3-StepModel” (1947), (model 3.
2) is one of the earliest change models and Kotter’s8-step-model aligns with Lewin’s 3-stage model. Where the unfreeze stage relatesto stage 1-4, transition stage relates to 5-6 and refreeze relates to 7-8. The criticism is thatit’s a “checklist” for change. Tesla Inc. as an organization is a community ofpeople and not a mechanistic structure. As well as not giving a company a”recipe” for sustaining change but more of initiating change.
Mechanisticchange approaches are barriers to change and the lack of interaction may evoketension among employees (Waldersee and Griffiths, 2004). When implementingchange, Tesla has to remember that it does not happen overnight and can be athough process. In the change process Tesla may be forced to take a look attheir very essence. This is called a “controlled crisis” which shows theimportance of motivation to make change (Ritchie, 2004). Leadership and organizational culture arewidely believed to be linked in the process of change (Schein, 1986). A leaderwho encourages continuous learning, change helps to define an organizationalculture that is flexible. In a world that isconstantly changing, Tesla must do the same.
To react to these changes theymust build agility, identify and capture opportunities more quickly than theircompetition, to their culture. A crucial factor in the effectiveness of anorganization is the ability to adapt to change (French and Delahaye, 1996). SinceTesla is in a relatively “new” market, changes will happen more frequent. Fastgrowing competitors, politics and regulations are some of the external factorsthat can affect the industry. The “fossil fuel vehicle” industry is also acompetitor that are well settled all around the world. These does notnecessarily have a negative impact on Tesla. Increasingly popularity of low-carbonlifestyles and increasing preference for renewable energy affect the businesspositively, as well as energy consumptions regulations.
Organizations thatidentify what’s changing their business environment and can then quickly reactto 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 thisanalysis, we must know the importance and synergy of leadership, strategy andchange. They are all interlinked with each other. A good business has a leaderor leadership style that support its strategy and a strategy that supports itsleadership style. They think of the needs and the opportunities of theorganization before they think of their own needs and opportunities and thestrategy compliments both parts (Drucker, 2004).
Ultimately leading to aneffective change process and sustainable competitive advantage. If employeesfail to see the reason for change, the outcomes that they can expect and theprofits that change may bring them, they will assume a rejecting attitude(Kotter, 1996; Ford and Ford, 1995) and the company will struggle. Even thoughin the leadership analysis, it only concerned top management, but it canreflect the organization. Results show that top management commitmentpositively affects all levels in a business (Tzempelikos, 2015).
Tesla`sorganizational culture shows and supports his leadership style. This analysisis all about context and the complexity of the different aspects of thecompany. Peters (1989) said, “If you are not confused, you are not payingattention”. When innovating for solutions and problem-solving in this complexworld with political, environmental and organizational issues, the answer toproblems will close a door, but there is a possibility of opening severalothers. Tesla’s approach to change in a contextualized world is innovative asthe 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, butget the essentials.
Tesla Inc. is a company for the future and the process ofgetting there are as important as the “result”. The world is constantlychanging and the pioneers, innovators and visions at Tesla is a factor thataffects the change.