Nowadays, managers often misinterpret the true meaning of strategy. They define it as an instrument of identifying and targeting appealing markets to then find the most effective methods of maintaining lucrative positions of an advantage there. Unfortunately, protecting market positions cannot ensure the profitability and growth of an enterprise. Todd Zenger (2013) argues that managers must see the value a firm provides as a source of immense competitive advantage. To do that, each company needs to develop a corporate theory, which would inform key strategic decisions. Zenger (2013) notes that giants such as Disney and Apple have managed to clearly define their core assets and allocate their resources efficiently using an underlying theory of value creation. The effectiveness of a company’s strategy depends on foresight, insight, and cross-sight, each element crucial to an enterprise’s sustained success.
Tesla has a strong corporate theory, which has helped to guide the company towards becoming a learner in an otherwise niche industry of electric vehicles in a matter of a decade. An article in Harvard Business Review by Nathan Furr and David Dyer (2020) points out that Tesla’s business trajectory stands on two main pillars: “winning the resources to commercialize vs. commercializing the idea.” Both of these traits of Tesla’s corporate theory are connected by a common goal of gaining a competitive advantage by emphasizing innovation and bringing new technology to the market.
In the context of foresight, insight, and cross-sight, the strategy of Tesla is exceptional. The basis for Tesla’s foresight is the assumption that affordable yet slick electronic vehicles with unique high-tech features will have a vast appeal to the customers. Furr and David (2020) point out that even more than a decade since the company’s launch, it continues to masterfully predict the industry’s shifts and evolution. In terms of insight, Tesla possesses company-specific knowledge regarding its assets and capabilities. It recognizes its innovation-specific human, social, and reputation capital. The company continues to invest primarily in building up its innovation capital, which refers to its ability to offer something never seen before to the market. As for cross-sight, Tesla has complementary assets, which could add value to the primary selling proposition of high-tech electronic cars: favorable operating costs, an opportunity to contact the manufacturer directly, prioritization of safety, and autopilot technologies.
References
Furr, Nathan, and Jeff Dyer. 2020. “Lessons from Tesla’s Approach to Innovation.” Harvard Business Review, Web.
Zenger, Tom. 2013. “What Is the Theory of Your Firm?” Harvard Business Review, Web.