Innovation and Commercialisation: A Case Study of Tesla's Sources of Innovation and Frugal Innovation

This report explores Tesla's sources of innovation, frugal innovation, and commercialisation funnel. It also discusses the innovativeness of Tesla in context to leadership, organisational culture, and teamwork. The report includes a case study on the potential of flying cars as a new innovative product for Tesla.

Innovation and
Commercialization

TABLE OF CONTENT
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Information about TESLA and its commercial potential.............................................................3
Difference between invention and innovation ............................................................................3
Tesla sources of Innovation.........................................................................................................4
Innovativeness of Tesla in context to leadership, organisational culture and teamwork............5
4 P's of Innovation that appraise in value of innovation funnel and frugal innovation...............6
Importance of commercial funnel and NDP in organisation.......................................................7
Innovation case study...................................................................................................................9
Different tools used by Tesla develop, retain and protect knowledge and intellectual property.9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Innovation is a practical transformation of an idea. Which can be product and services,
start-up concept anything that an individual want to establish in a market and make a growth.
Basically innovation commercialisation is new concept that aim to develop a feasible amount of
growth development idea for an innovation (Edwards-Schachter, 2018). Tesla has turn towards
to auto industry electric vehicles for a new innovation and new product development for their
customer and to growth in the market. This report determine Tesla innovation and their
organisational vision, leadership style, and new concept of innovation in the company.
MAIN BODY
Information about TESLA and its commercial potential
Tesla is an electric vehicle manufacturer and clean energy public company. It was
established at San Carlos, California in 2003. The company designs, create and manufactures the
electric vehicles such as cars and energy generation products like solar panels, solar roof tiles
etc. The mission is to accelerate the world's transition to sustainable energy. The company's
mission is accelerated the globe transformation to sustainable energy and to prove that the
electric vehicles can be better and quicker than petrol cars. Tesla's business model is based on
direct sales and service. The company's future and real potential is a software as service business
and stated as leader in autonomous driving technology. The company's cars not only able to set
mileage records but also their fast-charging sustainable batteries.
Difference between invention and innovation
Basis of comparison Invention Innovation
Meaning Invention means creation of
new idea or product in the
market for the first time.
It means making alterations or
implementation of idea in the
existing products.

Concept It is about creating or
designing of a new product.
This is a process of adding
value to active products.
Concerned with Unique product Mixture or combination of
products
Skills Requires scientific skills Requires technical skills and
marketing knowledge
Process Invention can be autonomous
or induced
It is usually induced
Motive The motive is generally with
non-economic
Economic motive
Occurrence When new idea clicks by
scientist
By understanding the need and
requirements of consumers in
existing product
Tesla sources of Innovation
Tesla is the worlds most valuable auto manufacturer. It is working on various innovations
to change the future of the auto-mobile and energy sector. The company has innovate with the
idea of electric vehicle, vehicle design, solar roofs, user interfaces, battery packs, EV chargers
and many more. It is committed to world-changing technology like its line of fast charging
sustainable batteries. The company is a master of building and using innovation capital to win
support for the ideas. Tesla ecosystem strategy also considers the level of individual components
for its products. This also leads in building out a charging network for its cars across the country.
The company's strategy is by the headline grabbing moves like launching the Cyber truck or the
Roadster through which company claims will improve faster than any production car ever made
in the past years. Tesla also uses Lotus manufacturing plants to produce its vehicles. The
company has taken the advantage of Lotus supply chain to push its electric vehicles into the
market. The partnership between both the companies provide a basis for sharing technology
between the two.

Innovativeness of Tesla in context to leadership, organisational culture and teamwork
Tesla serves many innovative products in the market such as a range of electric cars that
also has meets customers expectations. Currently, it is best seller to plug-in and battery electric
car manufacturer in the world. The company is committed to changing worlds technology such
as by its line of fast charging sustainable batteries. It has aimed to provide the most innovative
products to its customers for which it uses the transformational leadership style. This leadership
style helps in encouraging, inspiring and motivating the employees to innovate and create change
that helps in growth and shaping success in the future. This emphasis on innovation and
development of the performance of employees along with the motive to create a competitive
environment for the rivals.
The Tesla's organizational culture empowers its manpower to search for ideal solutions that
makes the business to stand out in automatic industry and the energy generation or storage
industry. The culture of organization creates opportunities for innovation that keeps the
competitiveness for the electric car business (Szczepańska-Woszczyna, 2018). The company has
innovative problem solving organizational culture by which employees get motivated to
develop profitable solutions to current and emerging problems in the targeted market. Thus, the
company's organizational culture integrates following elements such as
 Ambitious Innovation -The company focuses on moving fast to grab the competitive
advantage by deciding the funds in different growth segments. This characteristics
highlight the employees capability to rapidly responds to trends and changes in the
international market.
 Adherence to First Principles method- The company insists the employees to use this
principle in dealing with issues and problems.
 Doing things differently- Tesla's culture encourages employees to make experiment in
performing the business operations. This leads to doing tasks in different ways with the
implementation of creative idea.
 Lack of Authorities- The company's culture is flexible and does not follow any strict
management process. This makes employees more comfortable in communicating and
performing daily operations.
 Appealing to intangible employee motivational tools- Tesla effectively appeals to
intangible employee motivation tools like verbal and written acknowledgement of

employee contribution, celebration of memorable dates such as birthdays, anniversaries
and achievements.
4 P's of Innovation that appraise in value of innovation funnel and frugal innovation
It is a technique used to explore the innovation area and defines the direction of
innovation by focusing on efficient use of resources (Gross and et.al., 2018). The four P's of
innovation in context to Tesla are as follows:
Paradigm Innovation– This innovation leads to changes of an underlying mental model. Tesla
establishes with a new concept to consumers that the luxury life should not affect the
environment. By introducing itself with the new electric car which does'nt require petrol or gas
to operate. With the increasing demand of consumer leads to innovation of electric- power
process stations. Due to this feature, Tesla made a Paradigm innovation on consumers mind and
make them to adopt with the innovative change process.
Process Innovation- It is the process in which certain changes are made in techniques,
equipment and software to improve production operations. Tesla has changed their innovation
process from being closed innovation to open innovation. The company has built partnership
with various companies such as Toyota, Panasonic etc. By research and development and
cooperating with other companies, Tesla has successful in open innovation of their
advancements in products. The Process innovation has helped the company to gain more
resources from other countries. This makes more chances to establish new products and
expansion in existing product.
Product Innovation- It concerns with introduction of new product or improvement in existing
one, with respect to its characteristics and uses. Tesla is continuously focusing on product
innovation and improvements in technology. The company's recent innovation in powerful
electric motors, long run sustainable batteries and the charging stations. Tesla model S is the one
to plug-in electric vehicle which is the evolution in auto mobile industry.
Position Innovation- This innovation is concerned about repositioning a product or services and
offering it in a new market. Tesla has created a new market for the electric range cars, which is
different from the petrol vehicles. As the companies has developed many charging stations for
electric vehicles and gas-powered vehicles. Their targeted customers are the people who are
environment conscious and the peoples who wants to save and sustain in green environment.

Innovation Funnel This process is focusing on generation of new ideas and implementing with
the innovative way. The aim of innovative funnel is to prioritize the creative ideas by ensuring
their effectiveness. It leads to high quality development ideas (Anzola-Román and et.al., 2019).
In context to the Tesla's innovative product flying electric car it ensures on efficient of resources
while manufacturing the product. The aim of any product development needs to understand the
market needs in an economical form. The company needs to prepare effective budget plan and
needs to encourage employees in achieving the predefined budgets.
Frugal Innovations It is the process of reducing the overall costs and adding value in the
production process (Albert, 2019). It focuses on reduction in cost of goods and its operation. In
context to the innovation of Flying electric car the company has reduced overall costs and has
make additional value to its product. The new product has benefited in many way like it has
reduced petrol and additional gas costs. The new electric flying car has helped in environment
conservation. Frugal Innovation helps the company consumers to afford quality based product
with the least minimum cost. The Tesla will improved its technologies and resources which helps
in cutting extra cost of business. The company will change its strategies to make more with less
resources. This will lead to less utilization of resources and proceeds with smart development
Importance of commercial funnel and NDP in organisation
Commercial funnel determined the chronology process to attract the customer by using
marketing tool which define company quality and efficiency. Commercial funnel also analyses
the company production, distribution, and sales (Clow, 2018). With this commercial funnel
company identify about the market and their competitor and see the actual potential of the
company and their innovative idea because the actual success of company come through the
commercial funnel analysis. The analysis involved the innovative idea about the product, service
or anything which company willing to launch.
In development of new product, company launch new product very carefully after testing and
measuring the market and understanding the consumer behaviour and market situation.
Idea generation of new product development process
Internal ideas: - In internal idea sources, company has find their idea internally might be
company take help of their research and development team and also company take idea from

their employees. For e.g. Tesla start in a 2003 by a group of engineer who want prove the people
that They didn't need to compromise to drive the electric vehicles (About Tesla,2021).
External idea: - in internal idea sources company find the idea from the outsource which can be
their supplier or customers mainly external idea sources are come from the customers. For an
new development process customer is the best one for giving the new idea about the product,
services, business. For e.g. the William Morrison create first electric wagon from the tesla
company take their idea of new innovation of electric cars.
Idea screening of new product development process
This process includes the testing and the personal judgements of the product, service etc. Tesla
doing the driverless car idea screening before launching (Edwards-Schachter, 2018).
Concept development and Testing
This process involves the affordable checking of the product for example tesla has three
standard range of cars for every type of customers. Driverless cars of Tesla in starting might be
expensive.
Marketing Strategy Development process of new product
This process includes the target market for the new product and product price and long term sale
and profit from that product. Tesla target market for driverless car is everyone from youth to old.
Business Analysis of new product development
This process helps the company to determine the cost which will include in process of the new
product. Before launching the car tesla also did the cost analysis.
Product Development
This process includes the designing of the product and newly market and goods and services.
The designing of tesla cars is very different from their competitors and this help company very
well because their designs is very different from others.
Test Marketing of new product development
This process analyses by the strategy from company to see the viability of the product. Testing is
the essential thing tesla company has done before they launch their products.
Commercialisation of new product development
This is the simple process that bring new product, service or business into the market. Tesla
bring so many innovative products in the market for e.g. driverless car, electric car etc.

Innovation case study
The innovation in business community is so much needed now a day because of the
rapidly changing environment and people behaviour. Innovation can extend the attractiveness of
the company and the product. customer will stick to the for a long term when company continue
bring new innovation into the market
New product flying cars
It is a type of personal air vehicle that provide door to door transportation to the people by both
road and air.
Need of new innovative product: For Tesla company can bring Flying cars in the
market. Even though Elon musk says they will bring flying cars in the market in 2022. Flying
cars can be personal air taxis for the people except the jet packs. Need of the flying cars in the
globe is not that essential but as world evolve and technology also increases therefore, it must be
great to launch the flying cars for faster commutes for an individual. Especially in traffic people
have to wait hours to reach their destination in flying cars there’s no need to wait.
Importance: Importance of flying car are they're highly effective and efficient when
cruising. Even though it will be very beneficial for the long trips. Customer will surely buy this
innovative product because flying cars provide door- to-door transportation by road and air both
depends on the customer preferences (Yun,,and et.al 2020). It will help people to reach their
destination on time as now in busy days for everyone it is essential for all the people.
Investment and implement: For implement the flying cars into the market private
company will need a public support because the cost of producing the flying car is very high and
government only support companies with the suitable land for take off. The approximately
investment will be 1.5 trillion dollar.
Monitor KPI: Flying cars only carrying 3-4 people in the cars because of the safety
measure. In flying cars key performance indicators will be tracking safety measures and the
quality and performance of the innovation. Public subsidies is needed in this type of innovation.
Different tools used by Tesla develop, retain and protect knowledge and intellectual property.
There are so many methods that Tesla used to retain its knowledge and intellectual
property Such as trademark and patent these are the methods that company need a proper
documents for this. By this method company obtained the right to manufacture the product or

form a new product. Patent prevents and gives the company right to stop others using their
design of the product and inventions like Tesla have the right to sue other companies if they copy
their patent and invention. Tesla have 3304 patent all over the world. Out of 3304 patents, 2147
patents are active (Tesla Motors: Patent Portfolio Overview, 2021). While as trademark can be
identify as design, symbol or source of the product that company invent Tesla trademark is “T”
that featured on the USTPO application. Tesla publicity method is word of mouth marketing.
CONCLUSION
Innovation is something new and trendy it might be service, product, business, start-up
anything. It has been summarised from the above report that Tesla selling electrical cars and
battery cars all over the globe. The 4p model of innovation will analyse the the new opportunities
of company and their benefits. Innovation funnel and frugal drives ideas and implementation,
cost of the product and the complexity is known as funnel and frugal of the company. Case study
of innovation in the Tesla company to develop something new and also refereed the new product
development and key performance indicator of the company.

REFERENCES
Books and Journals
References
Albert, M., 2019. Sustainable frugal innovation-The connection between frugal innovation and
sustainability. Journal of Cleaner Production. 237. p.117747.
Anzola-Román, P. and et.al., 2019. Technological proximity and the intensity of collaboration
along the innovation funnel: direct and joint effects on innovative performance. Journal
of knowledge management.
Clow, D., 2018. April. MOOCs and the funnel of participation. In Proceedings of the third
international conference on learning analytics and knowledge (pp. 185-189).
Edwards-Schachter, M., 2018. The nature and variety of innovation. International Journal of
Innovation Studies.2(2). pp.65-79.
Gross, R. and et.al., 2018. How long does innovation and commercialisation in the energy
sectors take? Historical case studies of the timescale from invention to widespread
commercialisation in energy supply and end use technology. Energy policy. 123.
pp.682-699.
MIRGHAFOORI, S .H., MOROVATI, S. A. and ZAHEDI, A. E., 2018. Designing an Integrated
Model for Developing the Innovation and Commercialization Level of Iran's
Knowledge-based Companies.
Szczepańska-Woszczyna, K., 2018. Strategy, corporate culture, structure and operational
processes as the context for the innovativeness of an organization. Foundations of
Management. 10(1). pp.33-44.
Yun, J.J.,and et.al 2020. The culture for open innovation dynamics.
Online
Tesla Motors: Patent Portfolio Overview, 2021. [Online]. Available through;
<https://insights.greyb.com/tesla-patents/>
About Tesla,2021. [Online]. Available through;
<https://www.tesla.com/about>

Online
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