BEMM 118
Strategic Innovation Management
Content
1. Introduction
2. Innovation for Growth’s framework
3. Diamond Model
4. Recommendation
5. Conclusion
6. Reference
Innovation Audit of Tesla
1. Introduction
It is generally recognized that innovation is one of the most important drives for the
growth of an organization while many managers fail to well understand whether the
organization is innovative and how can it become more innovative (Mobbs, 2011).
Against this backdrop, innovation audit is increasingly required for organizations to
measure and evaluate its ability of innovation. Tesla, a premium electric vehicles
company founded in 2003, is chosen as the object of this study. It was founded by
Silicon Valley engineers who fell over backwards to prove that electric vehicles can be
promising. In the past 11 years after its foundation, Tesla has made itself a firm with
2000+ employees and 31 stores and services location worldwide, its vehicles are on
the road in 37 countries. As Silicon Valley engineers, the founders claim to challenge
custom and question tradition, they make the best electric cars and electric
powertrains in the world, they offer an efficient path to a sustainable energy future
by their technology, they introduce a radically different driving experience and they
are trying to change the industry. It’s more than electric, it’s Tesla (Tesla, 2014). They
are innovating. This study is to evaluate how well they manage innovation and to
recommend what Tesla should do to make it better. Two evaluation frameworks are
used to conduct the innovation audit for Tesla. Innovation for Growth’s framework
(Figure1, Figure2) tends to examine the innovation management by questioning five
aspects which are innovation strategy, idea generation, selection, implementation
and organization/capture. After that, Diamond Model will offer a
questionnaire-oriented method to give a result of the evaluation and make the
recommendation for Tesla before drawing a conclusion.
Figure 1
Figure 2
2. Innovation for Growth’s framework
Innovation for Growth is a business consultancy firm that specializes in the provision
of advice to SMEs. It works with companies from all sectors undertaking innovation
audit, and providing innovation advice to maximize their innovation capabilities. In
Innovation for Growth’s innovation audit framework, five aspects of an organization’s
current innovation capabilities and their strengths and weaknesses are examined in
depth. Each of the five segments (Figure 2) needs to be considered (Innovation for
Growth, 2011).
Innovation Strategy
From the perspective of innovation strategy, this framework evaluates the innovation
capability of an organization by questioning whether the organization has a clear
statement of innovation and whether the innovation strategy serves for the
corporate strategy. In 2006, when the Elon Musk, the current CEO of Tesla, was asked
about the strategy, he stated that: “The starting point is a high performance sports
car, but the long term vision is to build cars of all kinds, including low cost family
vehicles” (Hamilton, 2006), which is in conformity with the mission statement of
Tesla: “Tesla’s goal is to accelerate the world’s transition to electric mobility with a
full range of increasingly affordable electric cars.” (Tesla, 2014). The innovation of
Tesla is seen as disruptive innovation which creates a new market never existing
before. It is not only technological innovation but also process innovation namely
business model innovation (Yan Gong, 2013). In terms of technology, compared with
traditional-designed car like BMW, Tesla vehicles have no engine and gearing system
on its chasis, instead, the batteries (Picture 1). It is the unique technology of battery
that makes Tesla innovative in the perspective of technology and it helps deliver the
core value of Tesla that it tends to make more electric vehicles on the road and offer
a path to a sustainable future, which is totally conformity with its corporate strategy.
Picture 1
Apart from technology, Tesla manages its process innovation in three aspects. First, it
is born under an innovative and Silicon-Valley-style management team, Elon, who is
the CEO of Tesla, inserts gene of internet to this vehicle firm, Blake works for Apple
before and now are in charge of UE, and another management is the CTO of Tesla
who makes the technologies of aviation grafted to vehicles. Secondly, Tesla focuses
on offering the perfect users experience (UE). Apart from technology, Tesla also
delivers the feeling of cool (Picture 2) and the concept of sustainability. Marketing is
another process innovation of Tesla, it uses experience store (like what Apple do) and
internet MLM as the distribution channel instead of using 4S store. Also, the buying
process is different from that of the traditional one (Figure 3), which can provide
Tesla with great cash flow to support its R&D.