©2018 Michael Devers
on November 4, 2016
Just a few months after having their Model S named Motor Trend’s 2012 Car of the Year, Tesla Motors found themselves staring down the barrel of a crisis that threatened to shut down the factory that produced the Model S and perhaps even the entire company itself.
About six weeks ago, I finished reading Ashlee Vance’s biography of Elon Musk. Amid the dozens of stories I dog-eared and highlighted, the story of how Tesla CEO Elon Musk responded to that crisis stood out above all others. His secret is really no secret at all, yet I am constantly amazed at just how often companies and individuals fail to do the same thing Musk did. Specifically: Take Action.
According to the book’s author Vance, in the first quarter of 2013 Tesla’s issues had become terminal and without a combination of selling more cars, correcting service issues, and an in-flux of cash, a Tesla stock tumble of massive proportions was a likelihood. The company was at a crossroads and something had to happen.
I have seen this before. Not only at an organizational level, but also on an individual level. And I am constantly amazed at how often the principals involved do nothing and then afterwards stand among the ashes and ask, “What happened?”. Of course, the perception of these victims is that they did take action. But their version of “action” amounts to shuffling deck chairs on the Titanic: Data Collection. Studies. Reports. Spreadsheet analysis. And God help them, more and more meetings.
Then there are others who literally do nothing. The wait-and-see’rs. Just wait it out. Let’s let this play out a little longer. By the time they realize that what’s “out there” isn’t going to change, it’s usually way too late to do something “in here”.
This recently played out in my current industry. A competitor that had done $50M+ in 2013 and $40M+ in 2014 saw their 2015 run rate at $24M. Their overhead spending remained at 2013 levels despite the fact they were running 50% of the revenue. They took almost no action, convinced that more revenue was just around the corner. They were sure of this through all of 2015 and early 2016 right up to the moment they had to shut the doors. There is another competitor staring at the same scenario as I type this and I’m curious to see how they respond. So far they’ve been in “wait it out” mode.
Elon Musk, however, took action. Not only did he take action, it was immediate and massive. According to Vance:
Musk pulled people from recruiting, the design studio, engineering, finance, and wherever else he could find them and ordered them to get on the phone, call people with reservations (customers who had paid a $5,000 deposit on a car, but had not yet committed to purchase one), and close deals. “I don’t care what job you were doing. Your new job is delivering cars.”
Along with putting most everyone on the payroll into sales, Musk also fired a rash of senior leaders he deemed subpar and promoted a flood of junior people. He personally guaranteed the resale price of a Model S to remove that objection from reservation holders for his newly assigned sales staff. Then he went to work on Plan B, just in case.
Musk called Larry Page at Google and expressed his concerns about Tesla being able to survive through the crisis. He detailed the issues and by the end of the conversation he and Page had a handshake deal for Google to acquire Tesla Motors. While Page was enthusiastic, Google’s attorneys had concerns about some of Musk’s stipulations for the acquisition. In the two weeks it took Google’s attorneys to talk about and haggle over the deal, Tesla’s newly minted sales force sold enough cars for the company to post its first ever quarterly profit which drove the stock through the roof which increased customer confidence and sold even more cars. So while Google was busy thinking about taking action and deciding about taking action, Musk’s massive and immediate action created so much value that he called off the deal with Google completely.
On an individual level, this same principle was at play with an employee of mine earlier this year. This individual (let’s call him Kurt) was at the bottom of the ladder, but doing well in his position. When I sat down with him for a performance review, he stated he wanted to advance and advance quickly and would take any opportunity available. I gave Kurt a few small tasks that he did well with so when the next opportunity came up I had him in mind.
I let Kurt know what was needed and how critical it was that he compile all of the data needed for a major presentation one of our managers would be giving to a customer the following week. If he did a good job with compiling the data, Kurt would go to work in this manager’s department which would be a promotion with a raise. The catch was that the majority of the data compilation would have to be done over the weekend and handed off to the manager late Sunday night.
When I spoke to the manager on Monday morning, he was highly agitated. Apparently Kurt had run into a snag in trying to access the server over the weekend and it wasn’t until the data was due on Sunday night that he informed the manager. Who then had to pull an all-nighter to gather the data himself.
Later, when I asked Kurt about it, he said he had done everything he could. I specifically asked him what action he had taken when he learned he couldn’t access the server. Kurt’s response: “I left tech support a voice mail.” That was it. That was the “everything he could have done.” Leaving one voicemail and not informing his perspective new manager until he got the Sunday night call, “Where’s the data?”
Leaving a voice mail is NOT taking action.
So what is taking action? We saw what Musk did, reassigning a major portion of his workforce and then firing and promoting another chunk of it. In the other example, Kurt could have called the perspective manager and told him, “I can’t get into the server from home, so I’m driving to the building right now and if you can’t find someone to let me in, I’ll break in.” He could have grabbed his laptop, a couple of pizzas, and then driven to the house of someone from tech support. Or a number of other things. But some people (and some companies) will let the tiniest obstacle stop them dead in their tracks.
What about you? There has to be a big opportunity or a big problem “on your desk” right now that you are still thinking about. Take Action! Get out a 3×5 card right now and write down three different actions you could take today to make progress. It doesn’t have to be something as massive as telling 500 employees they are now salesmen, but don’t let the sun go down on you until you’ve done at least one of those three. You’ll be amazed how unstuck you’ll suddenly become and the new momentum you will have.
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