Is the Tesla Model S a radical innovation or an incremental innovation?
Based on another article from vancouversun, by improving the Model S seden to all-wheel drive and adding self-driving “auto pilot” features, Tesla are making incremental innovation to boost the sales.
Right now, Tesla is the “Apple” of electric vehicles because they were the first electric vehicle manufacturer to break through into the mainstream automotive market.
What we've found is that beneath the turbulent surface, Tesla's innovation strategy — which focuses on transforming the auto industry as a whole — offers enduring lessons for any innovator, especially in terms of how to win support for an idea and how to bring new technologies to market.
Electric Vehicles (EVs) are an important technological solution to our unsustainable mobility system. The EV constitutes a radical innovation that completely differs from the established Internal Combustion Engine Vehicle (ICEV) (Bakker et al., 2012a).
Tesla is often cited as being a disruptive innovation for the incumbent automakers. However, Clayton Christensen and his followers have argued that Tesla isn't actually disruptive but sustaining innovation. Still others have claimed the company to be a prime example of radical innovation.
Examples of radical innovation include the iPhone, which paved the way for the modern smartphone market, and the merging of farming equipment with sensor technology that provides farmers with data that is used to alter the farming industry.
Radical innovation is an invention that destroys or supplants an existing business model. Unlike architectural or incremental innovation, radical innovation blows up the existing system or process and replaces it with something entirely new.
Tesla did process innovation in terms of changing the ways in which they create innovation and deliver their products. They changed their innovation process from the begging close innovation to nowadays open innovation. Tesla built partnership with other companies such as Panasonic, Daimler AG, Toyota.
Tesla coil
Probably Tesla's most famous invention and certainly one of his most spectacular, the Tesla coil was a product of his ambition to create a system that could transmit electricity wirelessly.
Tesla's Generic Strategy (Porter's Model)
Tesla's generic competitive strategy is broad differentiation. This generic strategy builds competitive advantage based on the development of products that differentiate the company from other firms in the industry.
What is Tesla's strategy?
Tesla founder and CEO Elon Musk launched the company with the mission, “to accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.”1 This mission is the backbone of Tesla's successful business model.
Tesla uses broad differentiation to compete in its industry. The strategy entails developing unparalleled car models that differentiate Tesla from other automakers. Its car models, e.g., Model S, come with eco-friendly technology, making them attractive to a growing environmentally conscious market.
Tesla clearly doesn't qualify under the traditional definition of a disruptive innovation. In the model described by Clayton Christensen, a new entrant offers substitute products using technology that is cheaper but initially inferior to products offered by mature incumbents.
Uber is something many see as a disruptive innovation, when in fact their characteristics are more in line with a sustaining innovation and is thus not even seen to be radical.
Tesla and its founder Elon Musk have been paving the way for sustainable innovation in the automotive industry, renewable energy generation and beyond.
Solar Roofs
One of Tesla's most exciting recent innovations has been its Solar Roof, a roofing system that can harness solar energy to power homes. Tesla's Solar Roof tiles are designed to look like regular roof tiles, but they are actually made of solar panels.
Other remarkable Tesla innovations
Tesla's cars are only able to set mileage records thanks to their fast-charging sustainable batteries. Tesla innovations now reach into the arenas of home power storage and grid power storage. The Powerwall and Powerpack are examples of it.
This is a classic incremental innovation, with great potential, since Apple has created a large and well developed payments ecosystem, addressing many of the current barriers to adoption of mobile payments (acceptance, security, seamlessness).
Incremental innovation doesn't create new concepts or products, as it focuses on marginal improvements to what already exists. For example, Gillette constantly upgrades its razors, adding new features, like extra blades, heated razors, and a pivoting head.
Incremental Innovation
Google built a search engine 20 years back and have made advancements in making that search engine incrementally better every year.
Is Amazon radical or incremental?
Amazon Web Services, the first and largest cloud computing service in the world, established the entire cloud computing business and is another example of radical innovation.
Netflix is an excellent example of the radical innovation to disrupt an industry.
Among dozens of video conferencing services, Zoom has emerged as a huge disruptive innovation from the pandemic, owing to its modern, video-first unified communications with an easy and reliable performance.
Next time you're thinking about the viability of an idea, consider Musk's innovation equation: time plus people plus materials equals the ability to innovate. By applying this simple three-variable equation, you will effectively launch like Elon Musk.
For the second consecutive year the world's most innovative companies list is topped by Apple, with Microsoft and Amazon hot on its heels. Another US tech giant, Alphabet (the parent of Google), ranks fourth, while Tesla maintains its fifth place vis a vis the 2021-edition of the list.
One of the most famous and groundbreaking examples of process innovation is Henry Ford's invention of the world's first moving assembly line. This process change not only simplified vehicle assembly but shortened the time necessary to produce a single vehicle from 12 hours to 90 minutes.
Or course, were Tesla's competitive advantage simply a combination of scale and output, legacy carmakers like Volkswagen would be the ones with trillion-dollar valuations, not Tesla. That's because, without a doubt, technology is Tesla's most pronounced competitive advantage — not output.
Nikola Tesla: IQ 160–310
Nikola Tesla, the Serbian-American inventor—and arch-rival of Thomas Edison—reportedly had an estimated IQ falling somewhere between 160 and 310, depending on the measure.
Touchscreen
All Tesla models feature a unique touchscreen that comes with an array of features including video games, streaming services, and live traffic updates. The screens are also home to standard features like climate control and navigation but look nothing like anything else on the market.
Tesla is an electric vehicle manufacturer and clean energy company led by billionaire Elon Musk. Tesla is also the biggest seller of plug-in electric vehicles; its Model 3 sedan, which debuted in 2017, is the world's all-time bestselling plug-in EV, having sold more than 800,000 before the start of 2021.
How is Tesla different from its competitors?
Tesla's battery-powered vehicles are significantly simpler than their internal combustion competitors. By some estimates they have significantly fewer parts per vehicle — around 20 — versus the 2,000 in internal combustion engines.
Tesla has the potential to disrupt the automotive and power generation industries with its technology for electric and autonomous vehicles, batteries, and solar generation systems. Tesla will see higher profit margins as it achieves its plan to reduce battery costs by 56% over the next several years.
Tesla stock is up +19,000% since its IPO due to the blue ocean it created for itself. But Lexus, Mercedes, Audi, and BMW are introducing electric cars to compete, and the blue ocean will inevitably turn ruddy in no time.
Classic Christensen theory says Tesla is not disruptive; it's a 'sustaining innovation' because an incumbent could do what Tesla is doing but better, cheaper and quicker and easily overtake the start-up.
Later on, other video and movie streaming services climbed up the ladder using disruptive innovation but Netflix remains an excellent example for radical innovation.
This was the strategic direction that Netflix took. The innovation process took time, it involved incremental and radical innovations. The biggest Netflix innovation was a transformation from a DVD rental company to an online video-streaming platform which allowed Netflix to become a global market leader.
The formation of video as digital content and its delivery over the internet has become a radical innovation, as it destroyed the demand for video rental and DVD mailing services. It has become a disruptive innovation due to the disappearance of incumbents and the rise of a late entrant–Netflix.
Tesla's best-known product, its electric vehicles, are actually more sustainable than traditional cars with combustion engines. Although the production of electric cars causes more emissions, on average they are more environmentally friendly after about 20,000 miles on the road, as they emit much less per mile driven.
As a company, Tesla does not report enough details about the production of its vehicles or the sourcing of its products for consumers to have any idea about how sustainable that process is. Also, Tesla is remarkably inefficient in its use of raw materials, with 40% of its purchases of raw materials being scrapped.
Radical innovation involves significant improvements in products and services and the provision of new products and services (Nguyen, 2018). Incremental innovation involves slight changes in technology and some new value or differentiation in current products, services and technology (Okuyama, 2017).
What are some other examples of incremental or radical innovations?
The internet, the horseless carriage, GPSs, and digital encoding of music and video technology were radical innovations resulting in the development of new markets. Incremental innovations. involve smaller improvements in ideas, products, services, and processes.
Incremental innovation doesn't create new concepts or products, as it focuses on marginal improvements to what already exists. For example, Gillette constantly upgrades its razors, adding new features, like extra blades, heated razors, and a pivoting head.
Amazon Web Services, the first and largest cloud computing service in the world, established the entire cloud computing business and is another example of radical innovation.
Apple. One of the most famous examples of incremental innovation is the Apple iPhone. Every year, Apple makes small but significant changes to the iPhone to improve it.
- Gillette. You might not think of Gillette as one of the great innovation leaders but in actual fact, the brand is a great example of a company that has used incremental innovation to stay ahead of the competition. ...
- Coca-cola. ...
- Cadbury. ...
- Sainsbury's.
To prove his point, Christensen uses Uber as an example. He suggests that while Uber is innovative, it's not a disruptive innovation. Instead, it's a sustaining innovation, meaning that Uber represents only an incremental improvement on the existing taxi industry.
By using incremental innovation, a company can stay relevant to the customer over time. For example, Coca Cola has added new flavours such as Cherry co*ke to their product line to satisfy customers's needs.
Incremental innovation is a series of small improvements or upgrades made to a company's existing products, services, processes or methods. The changes implemented through incremental innovation are usually focused on improving an existing product's development efficiency, productivity and competitive differentiation.
Business Model
Tesla produces unquestionably innovative products, including a range of electric cars that defy consumer expectations, like the Model S, “the safest and quickest car on the road”. Tesla is also committed to world-changing technology, like its line of fast-charging sustainable batteries.
Tesla uses operations management (OM) best practices to maximize productivity while minimizing costs, based on the 10 strategic decision areas. This optimal operational condition contributes to Tesla's ability to sell its products at reasonable prices, given current market forces and cost of materials.
