Leadership

Over Time, Musk Proves Out The Fitness Of Productized Solutions

Tesla's multi-pronged vision and strategy may be the first at breaking through the housing disruption barrier by focusing not just on construction, but what people value in their property as well.

Leadership

Over Time, Musk Proves Out The Fitness Of Productized Solutions

Tesla's multi-pronged vision and strategy may be the first at breaking through the housing disruption barrier by focusing not just on construction, but what people value in their property as well.

January 11th, 2022
Over Time, Musk Proves Out The Fitness Of Productized Solutions
SHARE:
SHARE:

Photo courtesy of Tesla

In real estate and homebuilding, fit and strong are false equivalents to describe a business and its outlook, and should not be taken as one and the same.

Strength, in fact, is only one dimension of fitness. To prosper in the next 12 months, three years, or through 2030, builders may need to evolve to become less fragile, more adaptive firms that go beyond strength, integrating flexibility, balance, speed and mobility, as well as endurance into their essential operating DNA. Call it "future proof" or resilient, or any other term, ... it's about secure access to capability to generate value, come what may.

What's here and coming in fast are Inflation, Interest Rate Increases, and Indefinitely disrupted supply chains. Strength by itself in the form of healthy buyer demand, robust capital structures, and sound operating systems, may not cut for an enterprise to weather turbulence to come.

Fitness – a cross-pollination of adaptive powers of nimbleness, agility, and perseverance – becomes core to capability.

A real world, real time example builders might take as a case in point is Elon Musk – although many might do so reluctantly.

Homebuilders have tended – in the past five or so years – to take Elon Musk with the big grain of salt they apply to most self-proclaimed disruptors. What's more, time lapses and broken promises that strew the sometimes gaping distances between what the man has claimed so boldly and the actual reality of Tesla's production call to their skeptical minds, in more ways than one, other so-called disruptors' smoke-and-mirrors tactics.

But, rather than flame out as an egomaniacal flimflammer or worse, Musk has proved out – in science and technological invention, in cunning production modeling, and in business practices and performance – that his disruptive vision has shaped up to be 180-degrees opposite of a pipedream.

Bloomberg's Dana Hull and Mark Chediak write:

In households, Tesla is angling for comparisons to Apple Inc.’s hardware ecosystem, which tends to push people who’ve already bought in to buy more. Lots of customers already have the trifecta of key Tesla products: an electric car in the driveway, solar panels or a Tesla Solar Roof up above, and a home battery called the Powerwall in the garage (or maybe rigged up outside). “Tesla’s core concept is to make the house as energy-independent and self-reliant as possible,” says Pol Lezcano, an analyst for BloombergNEF, Bloomberg LP’s primary research service on the energy transition. “The idea is to have a Tesla-powered home.”
This combo platter tends to arrive in courses. Electric cars have long been the gateway to solar, because charging a car means a serious upswing in household electric bills, and over time solar can help defray those costs. In October, Musk estimated that a two-car home that swapped both its gas vehicles for EVs would see its power needs double. And Tesla forces customers who pay the requisite tens of thousands of dollars for its solar gear to buy a Powerwall, too. So far the company has installed more than 250,000 of them around the world.

The article goes on to note that, despite a raft of risks and even criticism from one-time members of Elon Musk's inner circle of support and counsel, those critics remain convinced of Musk's skill at making Tesla fit to weather competitive, political, natural, financial, and social turbulence that will play havoc with so many other operational models that have succeeded to date, but may be stress-tested in the near- and long-term future.

Hull and Chediak note:

During the trial over the SolarCity acquisition last summer, Antonio Gracias, an early Tesla investor and former board member, testified to a Delaware Chancery Court that the company hasn’t swerved from an early plan to remake the very way the world produces energy. “My view was that Tesla was going to be the GE of the 21st century,” he said. “We’ve been on that road ever since.”

Designing solutions, for transportation, energy, and even housing from the ground up without a – perhaps prejudicial, costly, complicated, and illogical – prior set of rules, constructs, principles, platforms, and conditions that have been mastered by incumbent dominant players can go either the way of Jeff Bezos or Elizabeth Holmes.

Looks, according to a widening array of stakeholders, like Musk and the organization, practices, and focus he's put together at Tesla, like it's leaning in the direction of Bezos. Wall Street Journal staffer Rebecca Elliott writes of Tesla's prescience and agility in navigating what caught the far more experienced Big Three car companies flat-footed over the past 18 months:

Traditional auto makers often have let parts suppliers handle sourcing chips. Mr. Musk’s preference for making vehicle components in-house meant that Tesla had greater supply-chain visibility in some areas, having forged close relationships with semiconductor companies before the crisis hit, some semiconductor executives and analysts said. Tesla, for example, designed the computer that enables its advanced driver-assistance technology in newer vehicles.
“Anything where they decided to make something by themselves, well then they had to have a direct relationship with the semiconductor supplier,” said Nakul Duggal, who leads the automotive business of Qualcomm Inc., which designs chips and supplies Tesla.

Luck in timing or skill in anticipating how to thrive even if conditions turned adverse? What the Tesla team also seems to have recognized – unlike some of the vaunted multi-billion-dollar-backed forays into construction innovation that foundered – is that success means not only in productizing the manufacturing process but the ability to derive value in the property itself, a meld of transportation, energy, and livability.

The genius of Musk includes not just the ability to build a strong value proposition, but to evolve a fitness around the productization of a solution – transportation, power, liveability – and a business practice that can draw on both knowledge and learning simultaneously.

Like machine learning, only human. Taking what is known, experienced, proven, and blending it with what needs to be learned, evolved, adaptive ... that's fitness.

Join the conversation

ABOUT THE AUTHOR

John McManus

John McManus

President and Founder

John McManus, founder and president of The Builder’s Daily, is an award-winning editorial, programming, and digital content strategist. TBD's purpose is a community capable of constant improvement.

MORE IN Leadership

Here's What Promise Homes' Access To Global Capital Means

Wall Street investment giant Baring's $200 million debt facility opens Promise's access to capital rocket-fuel that can allow it to scale, expand its ecosystem, and set a transformative housing economic equality cycle in motion.


Century's 'Buy-Now' Ground-Breaker Shifts The CX Goal Line

Here Century Communities president Liesel Cooper unpacks the strategic, operational, and consumer-focus reasons for cutting over to its click-to-buy contract platform. And, she affirms the "integral ongoing role" of sales associates in the new normal.


This Little M&A Deal Says A Lot About What A Builder Is Made Of

Between the lines of Grand Oak Builders' announcement it has acquired Kansas City-area homebuilder Lambie Custom Homes, there's a deeper, larger story that sheds light on exactly who homebuilders are.


ABOUT THE AUTHOR

John McManus

John McManus

President and Founder

John McManus, founder and president of The Builder’s Daily, is an award-winning editorial, programming, and digital content strategist. TBD's purpose is a community capable of constant improvement.

MORE IN Leadership

Here's What Promise Homes' Access To Global Capital Means

Wall Street investment giant Baring's $200 million debt facility opens Promise's access to capital rocket-fuel that can allow it to scale, expand its ecosystem, and set a transformative housing economic equality cycle in motion.


Century's 'Buy-Now' Ground-Breaker Shifts The CX Goal Line

Here Century Communities president Liesel Cooper unpacks the strategic, operational, and consumer-focus reasons for cutting over to its click-to-buy contract platform. And, she affirms the "integral ongoing role" of sales associates in the new normal.


This Little M&A Deal Says A Lot About What A Builder Is Made Of

Between the lines of Grand Oak Builders' announcement it has acquired Kansas City-area homebuilder Lambie Custom Homes, there's a deeper, larger story that sheds light on exactly who homebuilders are.