Imagine a firm where all managers and staff are expected to work as entrepreneurs, with:
· No budget limits or constraints on spending.
· No job descriptions.
· No approvals needed.
· Performance reviews done by the staff, not by bosses.
· Practically no managers.
· No controls from HR.
· No career planning.
· No managerial ladder to climb.
If you are expecting to see a firm in financial disarray amid management chaos, you will be surprised to find that the firm is already three times more valuable than its largest rivals. And that its market capitalization increased over the last week by almost $200 billion.
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Welcome to Tesla, an American multinational automotive and clean energy company headquartered in Austin, Texas. Tesla combines a combination of big vision, astonishing technology, radically different management that enables exponential innovation and ultra-rapid product development.
The result is a radically different kind of company. Tesla can make up 60 model changes per day to its vehicles per day, whereas the other auto makers are making model changes every three to five years. This kind of difference in performance can hardly be called competition: it is more like a hare being chased by a herd of turtles.
Nevertheless, financiers have had trouble understanding Tesla. So, it’s been a rough ride for Tesla in the stock market over the last few years, as the stock increased massively up to the end of 2021 before crashing more than 75% by late 2022. The chaotic acquisition of Twitter by Tesla CEO Elon Musk didn’t help his standing with Wall Street.
But through it all, Tesla has continued to perform, shipping a record of more than 400,000 cars last quarter. News of the deal in which GM and Ford agreed to use Tesla’s charging network was the key to the increase of the stock price last week by almost $200 billion—more than the entire market cap of any of its rivals.
The Role Of AI In The Workplace Realized
Financial analysts often say that it’s impossible to imagine what AI will do to the workplace. But if they would just look up from their data-filled spreadsheets for a second, they would see that there is no need to imagine such a workplace. It is already present at Tesla.
What these analysts don’t grasp is the significance of Tesla’s innovations that have transformed the very concept of management:
· Self-allocation of workers to the projects where they can add the most value.
· Algorithmic provision of the information to workers that enable them to make good decisions as to where they can make the most gain to Tesla’s mission.
· Almost all work is done in self-organizing teams or mobs.
· Agile work practices have been dramatically accelerated with continuous iterations in ultra brief sprints.
· Budget allocations, and re-allocations, are being done in seconds via software apps.
· The numbers of parts and lines of code are being systematically lowered.
· All work is co-located in the same building as executives also work on the production line, solving problems. with no silos or executives working in different buildings.
· Stable interfaces allow teams to pursue parallel improvements at different rates.
· The formal appointment of managers is limited to roles required by regulation such as plant managers, which can in any event rotate.
· The result is a flat organizational structure with practically no hierarchy or bureaucracy.
The Transformation Of Agile Management
Fifteen years ago, it was a revolution when software firms shifted from annual or even multi-annual work cycles to one-, two- or three-week cycles. For Tesla, that is way too slow. At Tesla, budgets are allocated multiple times an hour or even faster by a software app. So there’s no annual budget, weekly or even daily budget at Tesla. Instead, there is real time allocation of capital, through digital self-management
Twelve years ago, Marc Andreessen stunned everyone by declaring in the Wall Street Journal that “software is eating the world.” His article marked the start of software firms’ dominating the stock market.
Today, the tables are turned. An auto-firm—Tesla—is showing software firms how Agile itself can be exponentially accelerated.
Why At Tesla Everyone Must Come To Work
At the recent Tesla shareholder meeting, CEO Elon Musk was quizzed on many things, particularly his insistence that everyone must work at the factory in person, even those writing software. Musk’s’ reply that “it wasn’t fair” for them to work from home didn’t make sense to his interviewers. Musk himself couldn’t seem grasp why they didn’t understand his answer.
Work at Tesla isn’t dependent on a job description: the job is to help solve the most important bottleneck at the time. Everyone is expected to pitch in. That might initially be software development but not if the biggest bottleneck at a certain moment in time is something else. When “pitching in” is the norm, it’s obvious you “must” be there in person.
Tesla is driven by the bold entrepreneurial vision of CEO Elon Musk, and there is always a risk that he may bite off more than Tesla can chew, as he has almost done several times, though so far, managing to recover.
His ambition might also lead him to stumble into another sector about which he knows little, like Twitter, and so make beginner mistakes.
The obsession with self-driving is promising, as Teslas now “almost drive themselves”, but that “almost” is still a catch, as reports of an increasing rate of accidents from self-driving cars emerge.
While small-minded worries about margins help keep Tesla investors awake at night, the more likely outcome is that Tesla will continue expand its mastery of innovation and management to dominate not only automobiles, rockets and renewable energy but also other domains.
That’s because Tesla is not only innovating its products: it’s innovating management itself, and potentially changing the way that all companies are run. As analyst Louis Stevens suggests, “World domination” is now possible.
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