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Five Things Tesla’s New Manufacturing Leadership Needs to Do

Posted By Jeff Moad, May 31, 2016 at 11:16 AM, in Category: Next-Generation Leadership and the Changing Workforce

100316578_Car_in_Tunnel.jpgStung by quality and production snags and needing to dramatically increase output of his company’s expanding line of electronic vehicles, Tesla Motors’ CEO Elon Musk recently parted company with his two top manufacturing executives and publicly invited the sharpest minds in manufacturing to join Tesla.

Clearly, Musk understands that, if Tesla is going to live up to his stated ambition of increasing production five fold over the next two years to 500,000 vehicles per year—and to upward of one million by 2020—Tesla will need to up its manufacturing game significantly.

As if to put a bizarre exclamation point on Tesla’s pressing manufacturing challenge, Musk has reportedly taken a personal interest in getting the company’s manufacturing on the right track, going so far as to spend some nights curled up in a sleeping bag in the company’s Fremont, CA, plant.

Recently, Tesla took a significant step, bringing in a seasoned automotive executive—from Volkswagen/Audi—to be the company’s new vice president of vehicle production. It might be a good start since the new guy, Peter Hochholdinger, brings 22 years of automotive production experience and is a sharp contrast to Tesla’s departed top manufacturing leaders who had scant automotive experience pre-Tesla.

But it’s just a beginning. Now Tesla will need to continue building its manufacturing leadership bench. As it does, here are some of the manufacturing leadership qualities Tesla should look for:

  • The ability to collaborate and have an impact across functional boundaries. High tech consumer products companies such as Tesla—in fact most manufacturers today—compete on the ability to get new products to market fast. That means manufacturing leaders must be able to engage with product development, engineering, and supply chain partners throughout the product lifecycle. The good news is that the growing digitization of manufacturing enterprises is making that easier. But manufacturing leaders, especially at companies such as Tesla, need to be able to get outside the plant and impact the entire enterprise;
  • The ability to engage and inspire employees all the way down to the plant floor. Digitization and Manufacturing 4.0 mean that supervisors and operators have more information than ever that they can use to improve operations and cut waste. But everyone on the team needs to be engaged if manufacturers such as Tesla are to cash in on that opportunity. That requires clear communication and enough transparency so that everyone understands the impact their actions have on the company and the customer.
  • Respect for documented process formality, continuous improvement, and accountability. There’s a reason why every large automotive manufacturer—starting with Toyota—has a manufacturing operating system that defines standard work and processes in great detail, including how to escalate exceptions when they happen on the plant floor and elsewhere: You can’t quickly get to the root cause of quality and other problems if different teams are doing things differently. Tesla may be the Silicon Valley version of a car company, but it still has to master the basics of manufacturing management.
  • The willingness to embrace diversity. OK, Tesla is into disrupting the traditional automotive paradigms, from its product designs to its distribution strategy. Great. But the best, most disruptive ideas usually come from non-traditional sources and people asking what would appear to be dumb questions that really aren’t. So Tesla needs more of those people than the average manufacturing enterprise. Sure, Tesla’s home turf of Silicon Valley has a poor track record on diversity. But Tesla’s manufacturing leaders should break the mold.
  • The willingness to stand up to Elon. Let’s face it, it’s difficult to put your stamp on a team when the big boss is hovering too closely…or sleeping nearby. Tesla’s new manufacturing leaders need to take ownership and responsibility and get the job done.

Written by Jeff Moad

Jeff Moad is Research Director and Executive Editor with the Manufacturing Leadership Community. He also directs the Manufacturing Leadership Awards Program. Follow our LinkedIn Groups: Manufacturing Leadership Council and Manufacturing Leadership Summit

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Tesla’s Elon Musk provided a bit more insight into how he plans to turn around his company’s manufacturing operations, telling attendees at Tesla’s annual shareholder meeting that he expects to deliver “at least an order of magnitude” factory performance improvement. http://electrek.co/2016/06/01/elon-musk-machines-making-machines-rant-about-tesla-manufacturing/ 
Musk said he and his team will do this by redesigning Tesla’s factories in the image of high-density computer chips. By significantly increasing the volumetric factory space that is actually used to build cars—from 2-3% today to between 20% and 30%--and by cranking up the velocity at which production takes place, said Musk, Tesla can dramatically improve factory performance. Musk, who said he’s been spending most of his time recently observing operations on the plant floor, said he wants to apply a similar level of engineering focus and talent to improving production as Tesla does to designing and improving its products. Musk predicted that many will doubt his approach. Indeed, his engineering-centric focus on reducing production costs and increasing production is out of step with many automotive competitors. While large OEM competitors continue to be concerned with reducing costs and driving productivity, most today are equally focused on improving factory agility to quickly accommodate fluctuations in demand and accommodate more frequent product launches. Musk seems to think of the factory as an island—a high-density computer chip isolated from the broader system, if you will. Competitors, meanwhile, are striving to integrate the plant more effectively with the broader system and functions such as product development, engineering, and the supply chain. They know that, simply optimizing the plant in isolation won’t necessarily deliver the required levels of agility and quality.
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