Few can have missed that Tesla announced its upcoming Pickup truck back in November 2019. The truck shocked the world with its “cyber” design. The look is not a choice just to polarize the world. It is a result of how they chose to design the car.
The most expensive part of an electric car is the battery. However, an electric car needs fewer parts and the electric engine is much smaller than an internal combustion engine. An electric car is thus easier and cheaper to build, if the car is design for electric drive.
Electrifying an existing car model that is originally built for internal combustion engines is not a good idea. The upcoming Volkswagen ID.3 will be 40 % cheaper to build than an e-Golf according to VW CEO Herbert Diess.
Work on the strategic design for the Tesla Pickup-truck seems to have been initiated in the summer of 2018. By then Tesla had just endured its production hell when stepping up production of Tesla model 3.
Work on the strategic design was led by CEO Elon Musk and Design Manager Franz von Holzhausen.
To understand how the design team came up with a Cybertruck, we need to understand how Elon Musk reason about strategic design. Firstly, you start with a blank piece of paper; you throw away all old ideas and the history of everything that others have done before. Secondly, you focus solely on the effect goals for the application and the technical platform. And thirdly, it is only the laws of physics that set the limits.
The Tesla Company don’t have any known line-organisation structure, they seems to put people together depending on what is needed to be done. In this case, to develop a concept for an electric pickup truck with at least the same performance as the market leader Ford F 150.
According to media reports, Tesla was working on two parallel development paths in 2018 and early 2019. One path was to make a more conventional pickup truck, the other was the now famous Cybertruck.
This way of working, a project team with engineers lead by some of the highest executive, may be common in the car industry (I don´t know), but it extremely unusual in the more than 50 companies from other industries that I have analyzed. There things are rather the opposite.
The management team accept (or not) a project according to a proposal from R&D, or sometimes they give the task to R&D to start a project with some vague goals. But after their decision to start the project, their commitment is limited to quarterly PowerPoint sessions.
The result of this is that the engineers go back to their problem lists from the old design and start working on them. The final product will be a better iteration of the old one. It may be good enough, but that will not be a product that change the world, or change the sales figures and profitability significantly.
Many development projects starts with a decision such as “make a new Pickup-truck”. But Tesla’s development of the Cybertruck concept was not a development project. It was work on a strategic level to define a concept and a technical platform for a specific application. And as strategies are a concern for the executives, the work was lead by CEO Elon Musk together with Design Manager Franz von Holzhausen.
Projects and Strategic design
Projects became popular in the 1970’s. When used properly, the projects will connect people from different parts of a line organization, which makes the work considerably more efficient. In the best scenario project participants is working full time together and are collocated in the same office with clearly defined project goals.
However, according to research from the 1980’s, introducing the projects has reduced the influence of the managers. The researchers’ proposal was to develop a strategic design, a work that should be led by people from the management team. Toyota implemented this solution in the early 90’s and they later added a Obeya (a pulse room) and daily stand-up meetings to maintain strategic influence throughout the project.
This was the starting point for Toyotas creative period when the hybrid car Prius and new brands such as Lexus and Scion were launched.
The problem with a line organization is that it reflects today’s products and business models. People who work within it cannot free themselves from its influence. An engineer being drawn into a small line organisation box can only act within its tight frame.
Although the idea of a line organization is that decisions should be made according to the line structure, this rarely happens. In reality, a lot of work and decisions are channeled through a randomly created network. This phenomenon has at all times made it difficult for managers to truly manage their business.
What you need is a more dynamic organizational layout that allows you to move people and resources to defined missions. And the executive managers have to drive continuous strategic development, because only they can make the decisions that will produce something truly new like a Cybertruck.
At Tesla, the strategic development is driven by the managers. Already in the summer of 2018, a number of tweets from Elon Musk indicate that several important technical decisions had been made to define goals for the technical platform. A couple of these decisions were that the pickup should have seating for up to six people and that the truck should have adjustable suspension height.
Later in the fall of 2018 and early 2019, the team worked on various possible development paths. It is only in March 2019 that the final decision is made to choose the Cybertruck track. That’s when Elon Musk starts talking about a Pickup truck that don’t look like anything else.
At the end of summer 2019, it was announced that the presentation of Pickup truck would take place in November, and then team had a deadline to work towards. Just weeks before the event, the first prototype was built.
Elon Musk and the design team had no idea what the reaction would be. They knew that all the truck-people that had seen the Cybertruck was shocked, but also that the specifications seemed to make sense to them. But would anyone really pre-order the car? The November event was a test, and a risk. If few people had accepted the truck, they would have had to develop a different design.
The point here is how Tesla works with strategic design. CEO Elon Musk himself is the one who leads the work and makes strategic decisions along the way. Developing a car that looks so different is a huge risk. If successful it will fundamentally change the industry and open a new market for Tesla. But if it fails, then Tesla would risk their credibility.
When this is written, Tesla has received more than 250,000 pre-orders, and Tesla seems to have an upcoming success story. As someone wrote, “it is good that the car looks so futuristic; it will be with us for a long time into the future”.
The Parmatur model for Agile Governance of Strategy and Development focuses on strategic design together with pulse meetings that facilitates and coordinate operational and strategic decisions.