Investing in the Future is Simply Good Strategy

This post was first published on October 17th, 2016. Written by LK.

What are the hallmarks of a great company? Employees, culture, leadership, and revenue all come to mind. These traits are must-haves for any company wishing to stand out from the pack. It’s as simple as that — great companies attract loyal customers by providing a great experience for both their customers and clients.

How do companies remain great? They innovate to create value for their customers. The steam engine was an engineering marvel in the late 1700s and is considered to be the sole catalyst for the Industrial Revolution. Yet by today’s standards, the original steam engine’s 10 horsepower is hardly exciting to anyone when Magic Bullet electrical blenders boast 2 horsepower. Innovation drives progress and great companies make innovation in all sectors of the business the number main priority.

Tesla Motors is clearly an innovative company. In just over a decade, Tesla Motors has disrupted the car industry, bringing solar power to the forefront while taking on the space travel industry through its SpaceX project. Many companies dabble in innovation and make the word part of their mission statements but only the successful ones turn words into reality by funding innovative projects. The above chart, courtesy of Statista, highlights how Tesla continues to invest in Research & Development even at the cost of short-term shareholder disbursements. Tesla’s strategy is clearly to go long. Continuous innovation is clearly key to Tesla’s strategy highlighted by the fact that more than 17 percent of sales is diverted to R&D spending. Such a strategy may just become the next phase in the Industrial Revolution.

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