Organizational Creativity and Innovation of Tesla Inc. Assessment Answer
Tesla, Inc. operates as a manufacturer of electric vehicles as well as a clean energy American company. It was established in 2003 and falls in the automotive industry of the USA under the Consumer Discretionary sector (Bloomberg, 2020). It is based in Palo Alto of California and specialises in manufacturing electric vehicles. It manufactures solar tiles for roof, as well as solar panels. It designs, develops, manufactures as well as sells electric cars and systems of energy storage, also installs, operates as well as maintains energy and products for storing solar energy. For creating an energy ecosystem that is sustainable in nature, Tesla uses to also manufacture energy solutions like Powerwall, Solar Roof, and Powerpack to enable businesses, utilities, and homeowners to manage renewable storage, consumption, and energy generation (Tesla, 2020)
Innovation and strategy
Innovation is the process or action of innovating something new or unique. There are mainly four different kinds of innovation, such as Incremental, Architectural, Radical, and Disruptive (Christensen, Raynor & McDonald, 2015). All these help illustrate different ways that organisations can innovate. There are a few more kinds of innovations companies use to innovate. Tesla is one of the most innovative automotive companies across the world (Tesla, 2020). Tesla applies incremental theory for developing its cars and also applies architectural innovation depending on the requirements. It follows hardware architecture which gives it the advantage of over competing for the electric cars that are built following the architectures of traditional vehicles, like the lower centre of gravity, more efficient and powerful battery management, and more energy density. It means Tesla aims to defeat its competitors who use old architecture related to internal combustion of vehicles, for instance, putting the batteries of the car in the trunk, instead of putting the same in a flat packaging as shown below.
Figure 1: Architecture of Tesla Car
(Source: Tesmanian, 2020)
The four commonly used innovation types are Incremental, Architectural, Radical, and Disruptive. Incremental innovation utilises existing technology as well as increases value to consumers (design changes, features, and more) within the existing market. Almost every company applies incremental innovation theory in different forms. Disruptive innovation involves applying a new technology that is more expensive and harder to use compared to the existing technologies (Christensen, Raynor & McDonald, 2015). Architectural innovation refers to innovate by taking lessons, overall technology, and skills and then applying them in a different marketplace. It helps in increasing new consumers. Radical innovation introduces new industries (or companies) or swallows the existing ones. It involves in creating completely new and revolutionary technology.
Tesla Inc’s technology strategy uses to focus on the technology that involves pure-electric propulsion, as well as transferring some other technological approaches from the industry involves in technology to the industry of transportation like updates in the online software. It allows patents on technology to get used by others in trust and good faith. Tesla strictly follows an ecosystem strategy. This particular strategy of Tesla assists the company to consider the level of individual components for its products. The total profit generated in the automotive industry gets directed to the bottlenecks, i.e. components that use to limit the performance of the system. In the case of electric vehicles, batteries stand as the bottleneck in relation to the entire system’s performance. For the industry’s future, Tesla applies the strategy to invest in the batteries by which they control such bottlenecks as well as the profit centre. Also, Tesla's strategy takes the system level into account. This means it takes the set of add-ons into account that its consumer needs or desires to use its product and this is the reason for which the company has already built a broad network of a number of branded Superchargers across the world for its electric vehicles. Tesla stands as the only electric vehicle manufacturer that provides cars that can travel very long distances by taking required assistance from its charging station and battery infrastructure (Tesmanian, 2020).
Dimensions of the concepts of innovation
According to Andersson et al. (2016), innovation is a new idea or method or a product that gets introduced by a company or organisations for business purposes or any other purpose. Innovation stands as the procedure of translating a specific invention or a particular idea of a human being into a product or service which can create value for customers for which they can pay. For calling an innovation, a product or an idea needs to be replicable at a cost that is economic in nature and must be able to satisfy a need. As per Schilling & Shankar (2019), innovation uses to involve the application of imagination, creative thoughts, thinking, information, and initiatives deliberately in order to derive different values from all kinds of resources to a great extend, as well as includes every process through which new concepts and ideas get generated and then converted into some useful products or services. In businesses, innovation results when new ideas get applied by companies for satisfying their customers' expectations and needs.
Needs of the customers in the competition
The needs of customers are price, choice, quality, and convenience. Price is the volume of money a company (here Tesla) charges from a customer for its products or services. Customers always want a pocket-friendly price while buying a product and usually choose products at a low price but high in value, i.e. value for money product. The quality uses to relate to a product’s standard that being offered by a company. Customers always found expecting a standard level of quality product, no matter what they use to pay for such a product. Basically, those paying fewer prices expect low quality and vice versa. Choice refers to customers' different desires and needs when purchasing products that vary one customer to another in terms of products' sizes or styles or features, etc. Convenience means something being quicker, easier or no or less hassle (while buying) for customers. All these four needs of customers are found in the competition, and companies try to meet all these needs to attract customers to buy their products (BBC, 2020).
Design thinking is defined as the strategic, practical, and cognitive processes through which the concepts of design are developed. It is a highly iterative as well as non-linear process that uses to seek to understand the users, redefine problems, challenge assumptions, and create a number of innovative solutions for test and prototype (Carlgren, Rauth & Elmquist, 2016).
Design thinking is applied by Tesla for optimising its process of creating products, marketing, as well as renewal of different contracts. It also applied by the company’s design thinkers for problem-solving, developing deep empathy for its customers, and for creating solutions that can match its customers’ needs exactly.
Entrepreneur and creativity
Role of an entrepreneur working as an initiator who uses to initiate the procedure of creating a company or enterprise by putting his/her business idea and plan out the way to turn such an idea into reality
- Performing as a risk-taker by investing fund and stands accountable to face every uncertainties or failure of the entrepreneurial idea
- Reducing the risk by bringing efficient people (investors or shareholders) who can assist the enterprise or business grow
- Allocating capital properly and seeking the desired results with the help of introducing KPI’s
- Adhering to the legal procedures and norms (García, Skotnicka & Maeso-González, 2015)
Creativity and innovation
Creativity refers to the act or capability to conceive something unusual or original. Innovation refers to implementing something new. Invention stands as the creation or development of something new, i.e. something that has never been made before and recognised new ideas or insights and using them to create a new and unique product.