Tesla may fail but its impact will be felt forever
I was with a large corporate client the day that Elon Musk announced the new semi truck and roadster. The team lead gathered a group of engineers and industry experts to share his thoughts on what the announcement meant for their business, which is currently at risk of disruption by Tesla. I expected something along the lines of, “Oh, he can’t deliver something this audacious. This is why we don’t make promises we can’t keep.” Instead he pointed out something truly insightful:
“Whether Tesla delivers on this or not, their announcement has created a new bar in customer expectations that everyone will have to meet.”
This really surprised me. The common assumption is that most corporations look at disruptors like Blockbuster did Netflix, with skepticism and dismissal. This client, however, wisely understands the implications of disruptors for entrenched corporations not used to seeing upstart competition.
It’s difficult to tell how Tesla will fare. They aren’t profitable, and they have recently faced production issues delaying their mid-market offering. Plenty of people predict they’ll be dead in 24 months, claiming that Elon Musk is a snake-oil salesman. But others swear by Tesla’s products the way that Apple die-hards have for decades. I have no idea what will happen to Tesla, but I do believe their impact will be felt in every industry they occupy for decades to come (including, but not limited to: consumer automotive, auto dealerships, fuel, electric utilities, and even home building and city planning).
Here are three ways Tesla is disrupting mature industries:
1. They innovated the distribution channel
Much like Netflix, who started sending DVDs straight to your house (with no late fees), Tesla has obliterated the concept of dealers. They’ve done the leg work with litigation and red tape, clearing the way for disruptors to follow in their wake (much like Uber has in some cases). Similar to what Apple does with Apple Stores, Tesla owns their distribution and consumer channels themselves. Apple didn’t want to rely on retailers and Tesla doesn’t want their fate in the hands of dealers. Whether Tesla’s products can deliver on Musk’s audacious promises, their disruptive sales strategy already has. More importantly, they’ve created a large wake through winning lawsuits that makes it easier for the next Tesla to succeed.
2. They set new consumer expectations
Whether Tesla can deliver on their ambitious fuel efficiency promises doesn’t matter to consumers. Consumers cannot unsee or unhear these numbers, which will pressure the industry forward regardless.
At Innovatemap, we refer to this as “changing the table stakes.” We see it in B2B software every day. Consumer-oriented software products and apps have created pressure for enterprise products. Consumers now expect the UX they get outside the office, in the products they use at work. In the 90’s and even early 2000’s, enterprise software didn’t have to invest in design when they had a stranglehold on a market. Today, prescient, enterprise companies like IBM, Adobe, and even SAP are heavily investing in UX. Wise car manufacturers will see Tesla the same way and start resources to invest in meeting new consumer demands or risk disruption.
3. They’re developing companion industries based off core technology
Tesla is doing something that many experts in digital transformation advise large corporations to do: get creative about the IP you have. Tesla doesn’t see themselves as a car company. Instead they develop batteries. This allowed them to announce a semi and consumer-oriented Roadster in one product demo. It’s also why they are in the running to rebuild Puerto Rico’s power grid while finalizing plans to bring affordable (well, affordable to some 🤑) solar panels to the consumer market. Even if Tesla the car company fails, Tesla the battery company will likely live on.
Those of us looking at Tesla from the outside love to nitpick and predict their demise, but it’s important to remember the impact these disrupters–both failures and successes–have on well-established markets. Large corporations should adopt the same attitude because whether disruptors succeed or not, their impact can forever change industries in ways that will force innovative corporations to adapt.
When I’m not making sense of Elon Musk, I’m the Executive Design Partner for Innovatemap. Or I’m busy editing and writing about product management, marketing and design at https://current.innovatemap.com
