LEADERSHIP The process, by which a person exerts influence over others and energizes, inspires, motivates, and directs their activities to achieve group or organizational goals, is known as Leadership (Kyle Bruce). In other words an organizational orchestrator, who controls all the elements of an organization to achieve the desired goal. In this essay we will define & evaluate the leadership style & behavior of the South African (born) Canadian – American business magnet Elon Musk who is the Chairman of the Board, Product Architect and CEO of Tesla, Inc. We shall be doing the same by understanding and applying the five main models, styles and perspectives, as below, of leadership to Elon Musk and Tesla. 1. Transformational 2. Trait or Competency Spotting 3. Style Counselling 4. Context-fitting or Contingency 5. Goleman’s Six Leadership Styles Transformational A leadership perspective that explains how leaders change teams or organizations by creating, communicating and modelling a vision for the organization or work unit and inspiring employees to strive for that vision (Kyle Bruce). Elon Musk invested in Tesla, founded in 2003 by Martin Eberhard and Marc Tarpenning, in 2004 and became the Chairman of the board. He then took the reins in his hands by singularly deciding to be the CEO in 2008, firing the current CEO; who was also the cofounder, and now he is even Tesla’s Product Architect. Since taking charge, partially even before, Elon has been very articulate in creating, communicating and modelling Tesla’s
vision but hasn’t been so successful in creating an atmosphere that builds commitment towards the vision. Let’s understand the above argument better with the help of Table 1, where we shall compare Elon’s behavior, actions and communication to the elements of Transformational Leadership perspective. Table 1 – Elements of Transformational Leadership (Positive – Green & Negative - Red) Elements of Transformational Leadership
Elon Musk’s Behavior, Actions and Communication
1. Create a Strategic Vision
The strategic vision of the company has always been to make affordably priced electric
family
cars,
to
move
from
hydrocarbon economy towards a solar electric economy. To enter with a premium car (sports version) and target the high end segment that is ready to pay the premium and then get it down from there towards making the technology available for the mass market, as any new technology initially has high unit cost before it can be optimized and this was no less true for electric cars.
2. Communicate the Vision
Elon has always communicated very clearly the
strategic
vision
to
stakeholders,
employees and customers. One of the best
examples is his letter on Tesla website, titled ‘The Secret Tesla Motors Master Plan (just between you and me)’ where he is very articulate about his vision. He concludes it by summing it up as following: “So, in short, the master plan is:
Build sports car
Use that money to build an affordable car
Use that money to build an even more affordable car
While doing above, also provide zero
emission
electric
power
generation options
3. Model the Vision
Don't tell anyone”
The journey of Tesla from 2004 till date has been as below and it’s really great to see how precisely the Vision has been modeled, without any alteration. 1. Built a high priced sports car – Roadster 2. Invest further in the technology and specially the battery 3. Opened up the battery technology code to competitors to accelerate innovation to further reduce cost 4. Built relatively low mid-priced cars –
Model S & Model X 5. Used the money from the high and mid-priced car to build the largest manufacturing plant in the world for mass production 6. Built a low price car – Model 3 Elon even Models the vision by personally involving
him-self
in
every
aspect,
especially product design, that contributes towards the realization of the vison and that too with an hands-on approach. He is known to be obsessed with detailing and isn’t shy about communicating the same. Musk
told
describing
the
Wall
himself
Street
not
as
Journal, a
mere
micromanager but as something far more intense—a “nano-manager.” Also he has an approach of continuously questioning current practices, not only at industry level but at the company level too and experimenting new ways, to develop something better. The models succeeding the roadster, which are relatively more efficient and economical, are examples of this approach.
4. Build Commitment to the Vision
At one point he is seen as building the commitment to the vison by aggressively
sticking to the strategic plan, gradually achieving the strategic vison by being dedicated, persistent and extremely hardworking but at the same time he hasn’t been successful enough at employee involvement in shaping the shared vision, majorly because of his ‘nano-managerial’ style. He gives no autonomy at any level and controls everything with his singular mindset
which
creates
dis-satisfaction
amongst the employees and they quit, swearing never to work for him again!
Representation of table 1 in the form of a diagram
CREATE A STRATEGIC VISION Affordable priced and powerful electric car Start from low volume-high cost, move to mid volume-mid cost and then finally go to high volume low cost electric cars
COMMUNICATE THE VISON BUILD COMMITMENTS TOWARDS THE VISION
Dedicated, commited and extremly hardworking Harsh behaviour towards employees resluting to dissatisfaction
Letter to stake holders “So, in short, the master plan is:
Elements of Transformatinal Leadership
Build sports car Use that money to build an affordable car Use that money to build an even more affordable car
While doing above, also provide zero emission electric power generation options Don't tell anyone”
MODEL THE VISION Precisely following the strategic plan to achieve the strategic vison without any major alterations Absolute hands on approach with high level of personal involvement Contasntly questioning and looking for feedback and geting the product better
Trait or Competency Spotting Personal characteristics that lead to superior performance in a leadership role (example skills, knowledge, values). (Kyle Bruce). In Table 2 we shall understand the main Eight leadership traits that our identified as key influencers on leadership potential and predictors of effective leaders and we shall see how many of them apply to Mr. Musk as Tesla’s leader and to what extent.
Table – 2 - Leadership Traits (Positive – Green & Negative - Red) Leadership Traits
1. Personality
Elon Musk
Elon is a person who has always led by example, inside and outside Tesla. He is
Majorly Extroversion &
known to be dedicated towards excellence
Conscientiousness
and precision in whatever he does and that’s one of the key reasons for Tesla’s technology and products to succeed. He is an
outgoing,
highly
sociable
and
flamboyant person, who loves to give interviews, write articles and be at the forefront of all the events to promote Tesla and share his views & thoughts with all his grit.
2. Self-Concept
He ardently believes in himself and his capabilities to achieve remotely possible
Positive self-evaluation
and impossible things and is never shy to
High self-esteem and self-efficacy
communicate the same. He is motivated
Internal locus of control
from within to make this world a better place and eradicate mankind’s dependence on gasoline for travel. In fact he is so selfconfident that he takes things too far over here sometimes, resulting into employees dissatisfaction and higher labor turnover but again that’s what keeps things moving
forward at Tesla. It’s like a blessing and a curse!
3. Drive
Mr. Musk’s inner drive to achieve his goals and commitments is so strong that it alone
Inner motivation to pursue goals
pushes the whole staff to their full
Inquisitiveness, action-oriented
potential or at times even beyond. He is extremely action-oriented and believes in having timely results. Also, he is always inquisitive to learn where he could be going wrong and how things can be made better. The following two statement speaks volumes about his drive: “"I think it's very important to have a feedback loop, where you're constantly thinking about what you've done and how you could be doing it better. I think that's the single best piece of advice: constantly think about how you could be doing things better and questioning yourself." "I don't create companies for the sake of creating companies, but to get things done."
4. Integrity
The fact that Tesla has stuck precisely and aggressively to its strategic vision and plan
Truthfulness
for over a decade now without any
Consistency in words and actions
alterations, come what may, and is still
walking the same path with same sincerity, passion and aggression, it lays an integrity example for the business world.
5. Leadership motivation
Elon Musk’s strong influence on not only customers, shareholders but also on governments, to give them grants and subsidies, making them change the way they saw thing, to make them see ‘what we should do’ rather than ‘what we can do’, shows how well he can motivate others towards his vision.
6. Knowledge of the business
Elon has advanced knowledge in the field of Ultra-capacitors which is the technology
Understand external environment
behind the efficient batteries at Tesla. Also
Aid intuitive decision making
he is a sound and a seasoned businessman, who believes in starting a venture if he feels an idea is significant enough to work on, even if there are only 50% chances of it to succeed.
7. Cognitive/practical intelligence
Elon Musk’s idea of an electric car sprouts out from the dire need of mankind to
Above average cognitive ability
commute
Able to solve real-world problems
Mankind’s
in
a
sustainable
dependence
on
manner. natural
resources (gasoline) and the resulting global warming due to the use of these resources is the biggest of all problems in
our world today. Mr. Musk has the unique ability to solve this issue by using sustainable energy and products, It’s a unique ability because he doesn’t have a significant background into car making, he learns on the go and makes things happen by the way of lateral thinking and most importantly his cognitive intelligence.
8. Emotional Intelligence
Well Elon surely lacks this trait of leadership; he is so high on self-concept
Perceiving, assimilating,
that he doesn’t regard anybody worthy
understanding and regulating
enough and treats people the wrong way.
emotions
To an extent that people feel used and tossed to the curb like litter! Here are few statements by his employees: “I try really hard to back away and put my ego aside. Elon is incredibly difficult to work for, but it’s mostly because he’s so passionate. He can be impatient and say, ‘God damn it! This is what we have to do!’ and some people will get shell-shocked and catatonic. It seems like people can get afraid of him and paralyzed in a weird way.” “Elon’s worst trait by far, in my opinion, is a complete lack of loyalty or human connection. Many of us worked tirelessly
for him for years and were tossed to the curb like a piece of litter without a second thought. Maybe it was calculated to keep the rest of the workforce on their toes and scared; maybe he was just able to detach from human connection to a remarkable degree. What was clear is that people who worked for him were like ammunition: used for a specific purpose until exhausted and discarded.”
So here we see how Elon has all the traits of being an effective leader but significantly lack one of the most important traits of being emotionally intelligent and this could be one of the reasons for Tesla’s success at a slower pace. Style Counselling This perspective of leadership pays attention to the behavior patterns of a leader rather than their personality. It states that there are two kinds of leadership behavior, employee centered and job centered; also it argues that the latter is less effective than the former. Let’s understand this better by defining the two and relating them to Mr. Musk at Tesla. 1. Employee Centered – A pattern of leadership behavior that demonstrates sensitivity to relationships and to the social needs of employees (consideration). – text book 2. Job Centered - A pattern of leadership behavior that emphasizes performance of the work in hand and the achievement of product and service goals (initiating structure) – text book
Elon Musk’s leadership is 20% employee centered, as he at times does listen to subordinates and allows participation but its 80% task oriented, as at the same time he is not so friendly and easily approachable and doesn’t at all involve himself in employee problems. His whole focus is always on initiating structures, singularly deciding what will happen, how it will happen and by when will it happen and then its ‘his way or the high way’! Well this is again a blessing and a curse, because the work does get done but there is a high labor turnover and employee dissatisfaction. The perfect term for Mr. Musks leadership behavior is ‘Benevolent-authoritative’ – System 2 - Rensis Likert (1961). Now let’s see how this leadership behavior affects Tesla in Table – 3. Table – 3 Initiating Structure - High High Performance – Achieving the distantly possible Consideration - Low
Many Grievances – Employee dissatisfaction High Labor Turnover -
The Style-Counselling perspective helps us to conclude how Elon’s leadership behavior is not balanced which is impacting Tesla more in a negative way than positive. Context Fitting or Contingency A perspective of leadership that demonstrates that effective leaders chose the most appropriate leadership style as per the contingencies like employee, the task and the situation - to influence employee expectations about desired results and their positive outcomes, originated with expectancy theory of motivation (Path {employee expectancies} Goal {employee performance} Theory). (Kyle Bruce)
Path Goal Theory A leadership style which proposes that effective leaders can motivate subordinates by identifying the outcomes, rewarding the workers when the desired outcome is achieved, clarifying the paths to achieve the outcome and expressing confidence in the ability of workers. Now the same can be done with one or a balance of all four behaviors, as below, depending upon the contingencies: 1. Directive Behavior – set goals, assign tasks, show how to do things 2. Supportive Behavior - look out for worker’s best interests 3. Participative Behavior – give subordinates a ‘voice’ in matters that affect them 4. Achievement-oriented Behavior – setting very high and challenging goals, believing in worker’s ability. Now, when it comes to Mr. Musk his leadership behavior is out and out ‘Directive’ with a light hint of ‘Achievement-oriented’. Elon does set very high and challenging goals, delegates work, has an hands on approach - demonstrating how things need to be done but when it comes to believing in worker’s ability and giving them voice and autonomy, he lacks this sense of faith. To understand whether Elon’s leadership behavior is appropriate in context to Tesla, let’s go through the Path-goal contingencies table - 4.
Table 4 - Path Goal Contingency Table/Matrix
Contingencies at Tesla – Green
Elon’s leadership behavior – Red Directive
Supportive
Participative
Achievementoriented
Employee Contingencies Skill
& Low
Low
High
High
External
Internal
Internal
Experience Locus of Control External
Environmental Contingencies Task Structure
Non-routine
Routine
Team Dynamics
Negative norms Low Cohesion
Non-routine Positive norms
In the above table we can clearly see how as per the employee and environment contingencies the required leadership behavior is a blend of ‘Participative’ and ‘Supportive’ but Elon is doing the complete opposite, and this is the very reason for employee dissatisfaction at Tesla. Now after looking into the above perspectives of leadership in relation to Elon at Tesla, we can repeatedly see that Elon lacks majorly in aspects of leadership that are related to employees. But, at the same time Tesla is still successful, not completely but partially yes, they are heading positively towards success! So Elon’s leadership is somewhere working pretty well, therefore let’s understand or rather justify how Elon’s leadership style and behavior is acceptable to a degree through Goleman’s Six Leadership Styles in table 5, however here we shall focus only on the 3 that we have concluded in this Essay.
Table 5 - Goleman’s Leadership Styles Style
In Practice
In a
Competencie
When to
Our
Phras
s
use
Justification
e
1. Coercive
Demands
‘Do
Drive to
In a crisis,
Though
complianc
what I
achieve, self-
with
there are no
e
tell
control
problem
problem
people
people but
you’
the company is surely in crisis as they have to achieve the distantly possible in a stipulated amount of time and limited financial resources.
2. Authoritative
Mobilizes
‘Come
Self-
When
The
people
with
confidence,
new
company
me’
change
vision and continuousl
catalyst
direction
y needs a
is needed
new direction to achieve its over ambitious vison. If one thing fails they have to go the other way and keep on going various ways till they achieve what they have to!
3. Pacesetting
Sets high
‘Do as
Initiative,
To get
As
standards
I do,
drive to
fast
mentioned
now’
achieve
results
earlier they
from a
only limited
motivate
time,
d team
majorly in relation to the funds
they have. If they don’t achieve they perish, so having fast results is the key to success at Tesla.
Conclusion We can convincingly conclude that Elon is a good leader but surely he is not the perfect leader that Tesla requires. He lacks one of the most important leadership angles of being employee oriented and having faith and empathy towards his team. Also, to an extent we can agree that Mr. Musk’s leadership style and behavior is justified considering the environment and conditions at Tesla (Goleman’s table). However, it would be better if Elon Musk changes his approach, inculcates Goleman’s other three leadership styles too and then establishes a good balance between all six.
References 1. https://www.tesla.com/en_AU/blog/secret-tesla-motors-master-plan-justbetween-you-and-me?redirect=no 2. http://www.monarch.edu.au/2016/08/teslas-management-strategyunique/#.WLZcC2-GPIU 3. http://fortune.com/2015/01/21/elon-musk-micromanagement-control/ 4. http://www.businessinsider.com.au/working-with-elon-musk-tesla-20155?r=US&IR=T 5. https://prezi.com/axwpck2ra0co/tesla-leadership-presentation/ 6. https://theoutline.com/post/1069/tesla-worker-jose-moran-elon-musk 7. https://evannex.com/blogs/news/great-leadership-10-elon-musk-quotes-that-provide-aglimpse-into-the-dna-of-tesla 8. http://www.forbes.com/sites/simonmainwaring/2016/04/06/the-elon-musk-leadershipmodel-3-key-steps-to-building-radical-brand-evangelism/#30b6033f24b7 9. http://www.boothco.com/360-feedback-resources/leadership-style-of-elon-musk/ 10. https://sites.psu.edu/leadership/2014/11/30/power-and-influence-elon-musk/ 11. http://www.biography.com/people/elon-musk-20837159#synopsis 12. https://www.wired.com/2009/06/eberhard/
