Predictable road to performance.Įven though solving high-scale problems is hard, performance and unit costs can predictably decrease as you increase production volume and build units over time - combined effects that are known as the “ experience curve.” (Moore’s Law, which states that computing power can double every two years, might be the best-known example of an experience curve.) Problems as the SolutionĪ vision dedicated to these high-scale and high-complexity problems provides several advantages. But solving these problems is not for the faint of heart: it requires taking “ big bets,” as our colleague David Yoffie documents in his extensive research about Elon Musk. A long stream of research by our colleagues and others suggests that a commitment to reaching critical scale and overcoming complexity can serve as sustainable sources of competitive advantage. These types of problems have a clear potential for a sustainable competitive advantage - if you can solve the problem. For a rocket to be reusable, it must be able to slow from nearly 3,000 mph to a safe landing speed and nail a bullseye landing. Building reusable rockets, like Musk is focused on at SpaceX, is incredibly hard. Second, overcoming a great deal of complexity - resolving dealing with multiple interdependent moving parts - requires the commitment of time and stamina for failure. Giga Texas, the fifth Tesla Gigafactory, is the largest factory in the world by floor area. Consider Tesla’s behemoth “gigafactories.” The idea behind these factories is that mass producing electric vehicles at costs that make them viable for a broad commercial market requires massive scale. Specifically, he seems drawn to problems that involve navigating scale and overcoming complexity.įirst, navigating scale means he selects problems that can only be solved through the commitment of massive fixed-cost investments. While we conventionally think of a vision as being in pursuit of a specific type of solution, Musk seems to take a different approach: he pursues a specific type of problem. In 1980, Bill Gates famously articulated a bold, clear vision for “a computer on every desk and in every home.” Each Musk-affiliated company has its own sense of that boldness and clarity: Tesla’s is to, “ to accelerate the world’s transition to sustainable energy” and SpaceX’s is to, “ make humanity interplanetary.” But to really understand Musk, we need to have a sense for the overall Musk vision that spans his many businesses as a whole. The most effective strategies often have a common trait: they build from a bold and clear vision of the future that gives the business a purpose today. Finally, this framework gives us a lens to think about the attempt to acquire Twitter - which Musk is now trying to walk away from - in the context of Musk’s broader strategy. Investors can also use these ideas to make more thoughtful decisions when providing resources to entrepreneurs in nascent markets, such as Web3 and the metaverse. In understanding the strategy across his many businesses - and the significant risks of that strategy - executives can apply those lessons to launching and growing their own groundbreaking businesses. Musk’s strategy can be characterized by common themes across three areas: what fits into his vision for problems to solve, how he designs an organization as a solution to those problems, and why he can so effectively mobilize resources towards those solutions. Based on our research and teaching on strategy for innovation, technology, and growth, we see (some) method to the madness. We can all learn a lot - both good and bad - from Musk’s other businesses: Tesla, SpaceX, Hyperloop, OpenAI, The Boring Company, and NeuraLink. Why did he want to buy the company in the first place, and what was he planning to do with it? Will he make a lot of money or will he lose all of it? Many questions simply boiled down to: “What is he thinking?!” Or, put another way, is Musk out there just winging this, or does he have a strategy? And if so, what is the Musk strategy? During Elon Musk’s dramatic, sometimes pugnacious, occasionally baffling campaign to acquire Twitter, we heard many of the same questions from both his followers and his critics.
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