Analyzing Systems Design of Tesla

For this week, we are going to look at the pivotal role systems design plays in the growth of any service/product of a company. Drawing out references from ‘Thinking in Systems’ by Donella Meadows, ‘Living with Complexity’ by Donald A.Norman, we look at analyzing the systems design of Tesla.

“Modern technology can be complex, but complexity by itself is neither good nor bad: it is confusion that is bad.” Donald A.Norman, Living with Complexity.

In the words of Tesla’s Founder, Elon Musk, the goal of the company is: to create an affordable mass-market electric vehicle that will supplant gasoline-powered cars. Tesla started of as an alternative high end Electric Vehicle cars and now has slowly trickled down to supply EV’s for the mass market. It’s business model of moving from a high end product to a low end product can be tagged as unique and one of a kind. Though tagging Tesla as a disruptive innovation can be debated upon. Before we jump into the details of the argument, here are the definitions of Systems Design and Disruptive Innovation for a quick reference.

Disruptive Innovation

Systems Design

According to the term coined by Christensen, Tesla should have started with a low end EV model that performs better than it’s competitors and is being offered at a lower price than the rest and then slowly move up the ladder to the high end market. But, it is apparent that Tesla is moving in the exact opposite direction. It is a strategic move of Elon Musk to breach the high end market first, prove the potential of the product to them and slowly create the ecosystem for the product to be viable for a low end market.

Elon correctly identified charging the EV to be the biggest barrier for the product to be a huge success. He therefore set up to design solutions that overcome this problem and so was born Supercharger: The world’s fastest EV charging station. With users were able to make a quicker transition from Gasoline to EV’s. It is key to note that the product itself was not a strong incentive for the shift but the ecosystem in which it functions is. Solarcity: An American solar energy services provider, another Elon Musk’s initiative, is also another piece of the puzzle that helps boost the growth of Tesla by allowing users to draw energy from the solarcity grid for powering their vehicles.

To conclude, it is fair enough to suggest that Tesla alone might not be as disruptive as per the definition of Disruptive Innovation. But, having said that, the ecosystem that has been designed for Tesla to function to its maximum potential can be categorized as a Disruptive Systems Innovation.

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