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Aleksandra Kuśmierska
Bachelor Programme in Business and Administration Faculty of Law, Administration and Economics University of Wrocław
Elon Musk’s business strategy and leadership model
Strategia biznesu i model przywództwa Elona Muska
Summary Article describes Elon Musk’s business and innovative solutions that will shape the future of whole planet, the new, confident way of managing business and how to become a successful leader.
Keywords technology, innovation, future, business leadership
Streszczenie W artykule opisano rozwiązania biznesowe oraz innowacyjne działania, których autorem jest Elon Musk, a które będą miały wpływ na przyszłość naszej planety. Przedstawiono charakterystykę nowe- go i odważnego sposobu zarządzania biznesem oraz w jaki sposób stać się liderem odnoszącym suk- cesy w biznesie.
Słowa kluczowe technologia, innowacja, przyszłość, przywództwo w biznesie
“Musk has taken industries like aerospace and automotive that America seemed to have given up on a recast them as something new and fantastic.” [Vance, 2015]
Introduction
Elon Musk is known mostly as a CEO of Tesla, SpaceX and SolarCity. But his his- tory didn’t start and at those companies and projects. He started his story with technol- ogy at age 10, when he received the Commodore VIC-20 and thought himself a compu- ter programming and sold for US$500 the code of BASIC-based video game called
Aleksandra Kuśmierska
Blastar to the magazine PC and Office Technology [Belfare, 2007]. That was the first money he earned. In 1995, with his brother Kimbal and Greg Kouri, he created his first start-up – Zip [Strauss, 2017]. This was a web software company, with capital raised from a group of angel investors, and it was an online city guide for newspapers. It was acquired by Compaq company in 1999 for US$307 million and US$37 million in stock options. Musk received US$22 million from his 7 percent share from the sale [Vance, 2015] at age 27. After selling Zip2, in 1999, Musk co-founded X.com with US$10 million from the sale, online financial services and payment via e-mail. This was one of the first online banks. One year later, in 2000, the company merged with Confinity, the biggest com- petitor which had money-transfer service called PayPal. Then Musk was the biggest shareholder and became CEO (he was released from this role due to disagreements with other company leaders the same year, but stayed as a member of the board). In 2002 PayPal was acquired by eBay for US$1.5 billion in stock. From 11,7 percent PayPal’s share Musk gain US$165 million [Penenberg, 2012]. Another company that Elon Musk co-funded is SpaceX, a company known mostly for launching Falcon Heavy 1 with Tesla roadster^2 (called Starman to tribute for David Bowie) that supposed to reach Mars in July, and also of private space program which target is to colonize Mars in 10 year time, and as well of program or rocket airlines which will permit space travels from two different end of the world in only one hour or less as says Gwynne Shotwell. [Shotwell, 2018] SpaceX was founded in 2002, with US$ million that Musk invested from his own pocket [Vance, 2015]. Tesla Inc. was co-funded in July 2003 by Martin Eberhard and Marc Tarpenning, who financed the company until the Series A round of funding. Both men played active roles in the company’s early development before Elon Musk’s involvement. Musk in- vested US$70 million of his own money into that project. In 2014, Musk announced that Tesla would allow its technology patents to be used by anyone in good faith to entice automobile manufacturers to speed up development of electric cars. Right now Tesla is facing some troubles with financial loses, but as Musk says, in quarters 3 and 4 of 2018 there will be finally noted income of the company. Strongly connected to SpaceX and Tesla is another company of Musk, which is So- larCity. Musk provided the initial concept and financial capital for SolarCity, which was then co-founded in 2006 by his cousins Lyndon and Peter Rive. Musk invested US$10 mil- lion of his own money into that project. In 2012, Musk announced that SolarCity and Tesla are collaborating to use electric vehicle batteries to smooth the impact of rooftop solar on the power grid, with the program going live in 2013. What is more, SolarCity
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Thomas Edison was an inventor. On the other hand, innovation happens when someone improves on or makes a significant contribution to something that has already been in- vented. Apart from Elon Musk, Steve Jobs as well is excellent example of an innovator [Bhasin, 2012]. One of the most innovative ideas for a humankind was the wheel, electricity, the aeroplane or the telephone. Of course, no one can say that in last decade there was no innovation in the other areas. Areas like the telecommunication or robotics were ex- tremely developed and we can observe it only by taking into our hands last 5 mobile phones that we have owned and notice the difference in the parameters and design. That was the main areas that our world had focused on in last years. But ideas like Mars colonization, 100% electric cars, using at own home only solar energy, from own solar factory or AI development were mostly know from science-fiction movies, not from the real life. Innovation cannot stop only by creating something new. The most difficult part is to inspire a society and acknowledge them with the profit coming from it. Regarding Elon Musk’s innovative ideas, they are important for all humankind. With the climate change and fast growth of world population, contamination of the environment in every part of the globe we need to find another solution to survive and keep the Earth in good condition. That is why Elon Musk went much forward with his business because the world population in the era of him was suffering from decadence.
2. Visionary Leadership
To understand what a visionary leadership is, essential may be to explain first what is a leadership. Anthropologists analysing homo sapiens behaviour observed that already during the Cognitive Revolution there existed individuals that lead the tribes and groups with a special character features, and it was not all about a strength as is commonly thought, but about a communication skills and relationships with other members of a tribe. Since then this concept was only developed but it is based on the same motives [Harari, 2011, p. 29]. Nowadays leadership is understood as an ability to manage plans, targets and achieve goals by taking an initiative, fast decisions and decisive actions. It is mostly a part of a character, natural feature of someone that comes easy and may help with life success. People that have that attribute usually finishes at high positions in a business or a political world. But it is not all, good leadership requires a clear vision, confidence, ability to coordinate and balance the own environment during conflict and peace time. Currently with the development of studies about human nature was possible
Elon Musk’s business strategy and leadership model
to difference few types of a leadership, like for example autocratic, democratic, bureau- cratic, charismatic, team or visionary leadership. Elon Musk is an example of the visionary leader. He dreams about stuff that no one else would dare or no one else would be capable of dreaming at the level of complexity that he does. He has an ability to think at system level of design that pulls together de- sign, technology and business, and that requires a lot of confidence and coming from that ability of crazy risk taking. This type of leadership involves a personality that recogniz- es, that methods, steps, processes of leadership are all obtained with and through people. They have a nature that they will do everything to transform their ideas and plans into reality. They are good with communication skills and management and they have a talent of inspiring other people with their visions, which they will keep like their personal ideas and do everything to achieve it [Patrick, 2018]. Visionary leaders, especially in business, are effective at leading a workers to achieve a common goal. These leaders promote organized learning, creativity, and the development of strong relationships within the team. Daniel Goleman, in 2002, in his book points out 4 types of leadership: visionary, coaching, affiliative and democratic. He observes there that only emotionally intelligent leaders are able to create a climate of enthusiasm, where people can feel most innovative and give their personal best at work. He defines visionary leadership as follows “This kind of leadership moves people towards shared dreams. Visionary leaders help people to see how their work fits into the big picture. People get the feeling that their work mat- ters and they also understand why. To articulate a truly inspirational vision, the leader must be able to sense how others feel and understand their perspectives. This kind of leadership style is particularly effective when the business is badly in need of a new vision or has to be turned around” [Goleman, et al., 2002, p. 57]. By following an actions of Musk he fulfil all requirements of a visionary leader. From the statements of his co-workers and employees we know that he is not an easy person to work with. As Gwynne Shotwell observed, the biggest challenge of working with him is that, that he never accepts “no” as an answer [Shotwell, 2018]. By himself he is very committed to work, even when he was younger and working at Zip2, he was sleeping next to his desk, and he asked his workers “kick me when you will come to wake me up” [Vance, 2015]. Right now he is working usually 6 days per week, sometimes 7, trying to make his best and to force people to do their best. He is verbally assaulting everybody at work, and as Ashlee Vance observed “you love Elon, or you hate him” [Vance, 2015].
Elon Musk’s business strategy and leadership model
100% shop online [Tesla, 2018]. It is very innovative solution, because to the price of the product are not added extra costs like renting a real estate to have a dealership or to pay salary to bigger amount of workers etc. What is more, by buying a Tesla car, the charging of it, is for free entirely. In many countries still there is no infrastructure, but this is a problem that will be resolved in close future. [Musk, 2013]. Thanks to that, another plus for a customer is long distance per- spective for making savings on the fuel that was used to the traditional petrol car.
Conclusion
Elon Musk definitely gave some new fresh air not only for world innovation but as well opened mind of many people. As Ashlee Vance observed in her book “When Mark Zuckerberg wants to help you share baby photos, Musk wants to… well… save the hu- man race from self-imposed or accidental annihilation” [Vance, 2015]. Even if he is a dif- ficult and complicated person and leader, definitely every entrepreneur should take him like an example or at least acknowledge his history and never forget that the world of in- novation and confidence, is our future. He is an example that everybody’s childhood dreams even if they seem difficult to achieve are possible. And there are no limits. Every future leader and entrepreneur have to be able to take risk. Elon explains his actions in easy statement “I’m not trying to by anyone’s saviour. I’m just trying to think about future and don’t be sad” [Musk, 2017].
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Notes
(^1) Falcon Heavy is the fourth-highest capacity rocket ever built after Saturn V, Energia and N1. (^2) The Tesla roadster with manikin of spaceman is called Starman like a tribute for David Bowie, which Elon Musk is very big fan.
