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Looking into Accurate Decision-Making

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Looking into Accurate Decision-Making

Introduction and History of Tesla

Industry and Founders

The motoring industry has been experiencing a charge in the electric vehicle surge. Tesla Inc. is a newcomer in the motoring industry that manufactures exclusively electric vehicles. The company was founded in early 2003 as a way of proving to the consumers that electric vehicles can be as luxurious and efficient as internal combustion engines without a need to compromise on the quality of the vehicles (Dzialo, 2018). One of the key aspects that the company took a challenge it was not in the engineering of the vehicle but rather the development of an electric car that was desirable to its users. At its inception, the founders – Martin Eberhard and Marc Tarpenning, focused on developing an electric sports car that had an acceptable range and performance while maintaining the desirable design features.

Alternating Current, Offices, and Elon Musk

The name Tesla was derived from the alternating current inventor Nikolai Tesla. Funding was sort from investors, and key of them was PayPal co-founder, Elon Musk. To develop the first sports electric car – the Roadster – the company outsourced most of the parts that it required. This was a fact that the founders realized was enabling in the automotive industry. The automotive industry had become liberalized over the previous two to three decades in various ways, including outsourcing parts such as windshield and mirrors from specialty companies (Baer, 2014). The company’s offices were set-up in Menlo Park, California. Elon Musk was a particularly unique investor since he did not look into the potential monetary returns as other investors but shared in the vision and ideals of the organization. With this shared vision, the company set off to make a car that was better than the internal combustion engine car in every way.

The Roadster and other Models

The first electric sports car – the Roadster – was developed from the base of a Lotus Elise. The vehicle was developed in-house. The vehicle enabled the testing of various components in a prototype manner. To popularize the car, the company held a public relations event where they sought to sell 100 Roadsters with a plaque of the company’s values engraved inside. The event included road tests which immediately revealed to the world a new experience in driving. Electric cars would no longer be perceived as being boring and unreliable. This is perhaps one of the key turning points for the company’s fortunes as many people now believed in the possibility of an electric car future and wanted to be part of it. With the company growing, the role of the chief executive officer was moved from Eberhard to Michael Marks. The company became publicly traded in 2008 and went on to produce the Model S as its second model. The company set-up a manufacturing base in San Jose and was further funded by the US government. Shortly after the Model S, the company released the Model X and later the Model 3. Currently, the company is working on releasing the Cyber Truck.

Example of Boundaries

Bounded awareness is a situation where decision-making is masked by a lack of awareness of stimuli around them. The failure of people to see and use the stimuli or information that is readily available to them can lead to various failures (Chugh & Bazerman, 2007). There are various instances that this can be seen in the running of Tesla. To begin with, there is a lack of realization that the company’s CEO at the inception, Martin Eberhard, was not the perfect fit for the organization. Martin Eberhard had good engineering skills and vision. He could develop the necessary technology where needed. He was also a visionary in the technical aspect as he had the ability to bring together various engineering individuals and companies to work together to develop the Roadster. However, he lacked the qualification to run the organization in a business-like manner like a professional CEO. As such, the company from an early beginning was highly troubled in developing and meeting the delivery of the vehicles, especially with growing demands. Although the company eventually replaced Eberhard with a more proficient CEO to run the daily operations of the company, the decision could have been made earlier to avoid lots of pains.

Another example of bounded awareness is the manner in which the board moved to elect a new CEO. The board elected Michael Marks without including Eberhard, who was a key member of the board as well as a shareholder. This decision did not consider the company policies of the organization. As such, this led to legal tussles that led to lost resources as the election and appointment had to be conducted again with Eberhard being included. Also, there was the damage to the company’s reputation to the public, which would cost some loss in confidence about its daily running and decision-making.

Example of Framing

Framing is linked to many biases in decision-making. The way that a problem is framed affects the manner in which human beings make decisions based on the framing of an issue. This often happens in the way marketing is done as well as the framing of words. One of the key values for Tesla was developing a car that would out-perform the internal combustion engine car in every way. This is a strong statement that has an impact on making the Tesla car look as much superior to the internal combustion engine car.

With this, the expectation that the design of the car from a performance an aesthetic value point is going to be appealing. For this purpose, the company has had to endure long delays in pre-ordered vehicles as many of the qualities of the car had to be just right to meet the promise that it aims at delivering to the consumers.

One of the key issues that Tesla faced was a lack of adequate appreciation for Elon Musk. In many of the press briefings and releases, the company did not, in part, mention his contribution. As such, the press framed Elon Musk as an early investor in the company while, in reality, he was a key part of developing, design, and other activities in the company. This led to lots of disturbances in the company. In an email to the top management, Elon stated that he was not satisfied with his media image in regards to the way the company was developed (Dzialo,n 2018). This had a real effect on the relationship between Elon Musk and the then CEO Eberhard who did not do much to rectify the situation by making a press statement on his role. As such, this was not an issue, but the manner in which the company framed Elon’s contribution developed to feelings of under-appreciation by Elon, who is the current CEO of the company.

References

Baer, D. (2014). The Making Of Tesla: Invention, Betrayal, And The Birth Of The Roadster. Retrieved from http://www.businessinsider.com/tesla-the-origin-story-2014-10

Chugh, D., Bazerman, M. (2007). Bounded awareness: What you fail to see can hurt you. Retrieved from https://www.researchgate.net/publication/226778749_Bounded_awareness_What_you_fail_to_see_can_hurt_you

Dzialo, B. (2018). “Charging down the Road: A Historical Analysis of the American Auto Industry and Tesla Inc.” UVM Honors College Senior Theses. 228. https://scholarworks.uvm.edu/hcoltheses/228

 

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