Tesla CEO Elon Musk Sets Aggressive Goals, But It Serves A Purpose

JUN 17 2018 BY EVANNEX 5

GET OVER IT, ELON MUSK SETS AGGRESSIVE GOALS

To create breakthrough products, Steve Jobs created his own reality distortion field which helped Apple reach unattainable goals. Likewise, Elon Musk has an unorthodox method for setting Tesla’s goals. Yes, there’s a lot of bellyaching in the media over Musk’s missed deadlines. But according to former Apple analyst Gene Munster (via Loup Ventures), “There’s a method to Musk’s goal-setting madness.”

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Matt Pressman. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: Tesla’s Model 3 (Image: Wikipedia via Carlquinn)

Munster argues that “Musk misses expectations because he publicly sets the same targets for all four of the company’s stakeholders” — investors, suppliers, employees, and customers. To better understand Musk’s aligned (albeit reality distorting) approach to setting goals, let’s examine each key stakeholder group for Tesla.

Investors

Investors on Wall Street have struggled to understand Musk’s many missed deadlines. But, Tesla is different than most public companies. Why? Munster explains, “Most public companies have the luxury of sending different messages to each of their stakeholders. By comparison, most other public companies don’t have to carefully balance these groups for 3 reasons: 1. they can source parts from multiple suppliers; 2. they have a broader product line; 3. they have a more favorable cash position.”

Suppliers

According to Munster, “Tesla needs to pressure suppliers to promptly deliver parts. If the company tells those suppliers that they need to have parts to produce 5,000 Model 3’s per week by the end of June, and tells investors that they expect 5,000 by the end of September, that may cause some of its many suppliers to believe they have wiggle room in what Tesla has asked them to deliver.” Even worse, “If one supplier misses its target, the entire production line misses its target. As Musk wrote in an internal letter, ‘actual production will move as fast as the least lucky and least well-executed part of the entire Tesla production/supply chain system.'”

Employees

Employees also need to get consistency and alignment when it comes to deadlines. Once suppliers hit their milestones, “The next step is assembly. Employees need to be held to the same goal as the suppliers to assemble the Model 3 on target. Like the supplier, if the employees think there’s wiggle room in the target, they will likely fall short.”

Customers

In addition, “customers are notified via email when to expect delivery of their vehicle. Those communications to customers are also picked up by suppliers, investors, and employees. If any one of the stakeholder groups senses wiggle room, they’ll slow down; it’s human nature. And speed of production is a critical element to Tesla’s success.”

Above: Tesla Model 3s parked together (Image: Wikipedia via Seungho Yang)

So what’s the best way to forecast Tesla’s elusive timelines? According to Munster, his “rule of thumb to translate Musk’s targets into reality is to add 3-9 months.” Musk admitted so much at Tesla’s Shareholder Meeting, “I think I do have an issue with time… I’d probably put some sandbag on future dates, that’s probably wise.”

For long-term investors, a missed deadline may be disappointing. But it doesn’t take away from Musk’s successful track record. Yes, Musk has been late with deadlines for Tesla’s Roadster, Model S, and Model X. But each vehicle program eventually hit its marks. And each car became an industry game-changer. In turn, Munster expects, “the Model 3 [to] mark a pivotal moment in the world’s adoption of EVs.”

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Source: Loup Ventures

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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5 Comments on "Tesla CEO Elon Musk Sets Aggressive Goals, But It Serves A Purpose"

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Another hard-hitting expose by Evannex, lol.

Did Jobs miss every deadline? Why not? It’s easy to incent suppliers and employees to beat the public schedule. This problem goes way beyond communication. Musk skips steps and cuts corners. He fires those who warn him not to. When it backfires, the company has to do stupid, expensive things just to survive. Like building and staffing FOUR mostly manual general assembly lines to do the work of one automated line.

This is why Tesla can’t make money.

@Doggydogworld said: “Did Jobs miss every deadline?…”
————-

Answer:

“…Well-known leaders like Steve Jobs was notorious for setting “impossible deadlines” to bring out the best, most creative energy in his employees…” source:

https://www.thebalancesmb.com/reasons-why-entrepreneurs-need-deadlines-4118723

Jobs frequently set improbable deadlines that sent employees scrambling…” source:

https://www.cnbc.com/2017/04/20/elon-musk-steve-jobs-management-trick-to-inspire-employees.html

@Doggydogworld: “…Tesla can’t make money…”
————-

Wrong…

A *choice* of hyper aggressive capital spends over profit does not mean Tesla can’t make money… it means Tesla has deferred profit for sake of faster growth.

Doggy is a long time serial anti-Tesla troll here who blatantly lies like his BS assertion that the Model 3 lines are “mostly manual”, LMAO as if anything they went to far with automation. Doggy is best ignored and laughed at.

Meanwhile in the real world, Musk is the first person in over a hundred years to successfully take a startup auto OEM in US to large scale production.

Tesla is also the only US OEM to challenge and defeat the vaunted German luxury/sport OEMs in their segments.

Tesla has been setup by Musk to be the dominant mid-high end compelling BEV manufacturer for at least the next 5-10 years, etc, etc, etc.

Steve Jobs? Steve missed many deadlines, and had many product flops. His product batting averages was less than .500. But, the wins make up for the product under-performers. But, like Tesla he was a Product guy. The product had to be exceptional.