Tesla Innovation Capabilities: Development and Implementation Roadmap

This report presents an innovation roadmap for Tesla, building upon a previous analysis of the company's internal and external environment. It identifies future trends in the automotive and clean energy sectors, such as photovoltaics, smart interfaces, and electric batteries, and aligns them with Tesla's innovation requirements using frameworks like the Pentathlon framework and a simplified innovation process model. The roadmap proposes diversifying Tesla's electric vehicle portfolio with trucks and utility vehicles and becoming a global supplier of rechargeable batteries. The report also addresses factors crucial for developing Tesla's innovative capabilities, including stakeholder engagement, knowledge management, change management, and organizational culture, climate, and leadership, to ensure successful implementation of the roadmap.

CW2: Individual Report: A full
report comprising an action plan
roadmap for the development and
implementation of the innovation
capabilities of the chosen
organisation.

EXECUTIVE SUMMARY
The nature of this project is such that it is the second project in a series of two projects in
which tesla, the automobile and clean energy sector giant’s detailed internal and external analysis
and capability identification was undertaken in a previous project titled CW1. On the other hand,
the main aim of this project titled CW2 was to study and take the previous project as a reference
in order to study and document the future of the industries in which Tesla conducts business in to
identify opportunities for innovation by planning a detailed innovation roadmap. The report
contained detailed analysis and researches related to the future trends that are set to dominate the
above-mentioned industries such as use of photovoltaics, smart system interfaces in vehicles and
widespread adoption of clean and sustainable electric batteries. Then the report supplemented
these trends with analysis of the innovation requirements of Tesla by analysing the company
through models such as the Pentathlon framework and simplified innovation process model
which helped identify the areas in which potential for innovation exists for Tesla. A detailed
innovation roadmap was prepared on the basis of the conducted analysis which contained two
broad plans of action for Tesla, one being to diverssify their electric vehicle portfolio by adding
new electric trucks and utility vehicles and the second being to become a full time global
supplier of rechargeable electric batteries. In order to ensure that the developed innovation
roadmap gets implemented down the road without any critical errors, the report also conducted
an analysis of various aspects which help develop Tesla’s innovative capabilities such as
stakeholder engagement, knowledge management, knowledge transfer, change management
issues and strategies along with organizational culture, climate and leadership.

Table of Contents
EXECUTIVE SUMMARY...........................................................................................................2
INTRODUCTION..........................................................................................................................3
MAIN BODY..................................................................................................................................4
The future of the industry 2020 and beyond......................................................................4
Tesla's innovation requirements 2020 and beyond...........................................................5
Building the Future Innovation Capabilities for the Organisation.................................8
CONCLUSION............................................................................................................................12
REFERENCES.............................................................................................................................13
APPENDICES..............................................................................................................................16

INTRODUCTION
In order to survive in the modern business environment, firms need to be on top of their
game and ensure that their operations are technologically advanced and are built for the purpose
of long term growth. In order to build a robust framework which fosters innovation, firms need
to judge the future innovation drivers of their specific industry, the innovation requirements of
the industry going forward and also develop frameworks to satisfy the identified avenues of
innovative growth (Trevlopoulos and et.al., 2021). This report will be based on the findings
obtained the from previous CW1 project on the innovation process and dynamics of Tesla within
which it was identified that technology driven innovation in the auto mobile industry is the way
to go forward in terms of capturing a better market share for Tesla and the firm has more than
enough capabilities to undertake any road possible towards new technological innovations. This
report will focus on the future market outlooks for Tesla and the auto mobile industry at large in
order to develop an innovation roadmap for the company's future innovative operations and
aspirations and the report will also highlight the key processes involved in charting innovation
pathways such as organizational culture and approach to change management (Markovic, and
et.al., 2020).
MAIN BODY
The future of the industry 2020 and beyond
As identified in CW1, the auto mobile industry has great future potential for growth as
the industry in UK is worth more than 60 billion pounds and has been recording steady growth
especially on the back of new technologies such as smart user interfaces and electric vehicles
whose market in the UK is also showing robust future projections. Some key drivers of
innovation which will drive the future of the auto mobile and clean energy sector forward were
also identified in the CW1 which Tesla can take advantage of and they are listed herein.
 Technology – The amount of technological leaps that auto mobiles have taken over the
last few decades has been nothing short of a miracle as what once was powered through
steams is now charged using solar power. Tesla's future in innovation will be driven by
new and emerging technologies such as integration of smart systems such as bots and AI
on the dashboard of cars. When it comes to renewable energy industry, various new

technologies and frameworks are also coming out which will change how Tesla and
others build and market their product lines such as more efficient solar cells
 Competition – Another major driver which was identified in project CW1 was the
intense competitive nature of the automotive and clean energy industry as the promise of
riches and lucrativeness of these market segments are attracting a lot of new entrants,
both newcomers and veterans (Ebrahimi, Baboli and Rother, 2018). Tesla faces tough
global competition from various firms such as BYD energy, BMW along with Audi
which are all engaging in rapid research into new technologies and product lines in the
form of new cutting edge car and vehicle models along with new sustainable energy
avenues such as the Skyrail of BYD energy which is changing the face of modern transit.
On the basis of these identified drivers and the trends which have been seen in the field of
automotive and clean energy sources, the future of the industry can be effectively predicted and
has been listed herein.
 One of the major future advances in the auto mobile sector will be the advent of self-
driving and autonomous cars which will be a much needed revolution as it will make
transportation much easier and will roads much safer as most of the accidents happen due
to driver negligence and laziness
 Vehicles will be much easily identified with the help of connectivity and shared digital
data tags which will allow both drivers and authorities to easily track and use information
for the purpose of insurance and driver safety
 The advent of electric cars will also guide the future of the auto mobile industry as the
focus on sustainability is increasing rapidly with more brands introducing electric car
lines
 The clean energy sector also a bright future and one of the major ways the industry will
shape up in the future will revolve around use of advanced photovoltaics and the mass
integration of big data analytics and smart artificial intelligence driven systems as energy
grids involve quick time thinking and every complex calculations. There is also a
growing market for electric batteries and renewable battery options globally along with
new hydrogen centric markets (Tarhan and Çil, 2021)

Tesla's innovation requirements 2020 and beyond
The future development prospects of both the major industries which Tesla operates in is
categorized by high volume of growth in future with the major driver of changes being the rapid
advancement in technologies and in order to innovate both its internal and external operations,
Tesla will need a detailed innovation roadmap which will include all the technical capabilities of
the firm along with its penchant for great marketing. In order to properly innovate and generate a
clear pathway towards product line and operational innovation, Tesla must design a system
which is designed to fail fast and where exploration of new ideas are done in a quick and precise
manner and one such framework which can help fulfil the innovation requirements of Tesla is
the Pentathlon framework. This framework allows a company to structure and utilize key
elements of high performance which when integrated in the operational framework leads to
better chances at innovation driven growth and stages of this framework have been described
herein (Barbosa, Salerno and Pereira, 2019).
Figure 1 Penthatlon Framework
 Methods of constant new idea generation using forecasting and market analysis tools
such as big data analytics
 A robust systemic framework for selection and prioritisation of ideas of Tesla such as
new vehicles like the promised Tesla Cyber truck which got delayed
 Project management skills to gauge the feasibility of such ideas and streamline them
towards performing in a highly uncertain environment

 The innovation that Tesla will generate will mostly be linked towards launching of new
electric vehicles and new products related to solar power usage which will lead a robust
innovation strategy to power through
 The auto mobile and clean energy sector are also very unpredictable and customer trends
change very quickly which is why existence of a robust enterprise culture is necessary to
obtain desired results
Another major model is the process of innovation which states the way in which
companies like Tesla can effectively turn innovative ideas and thoughts that come in the brain of
the firm's think tank along with the detailed operations which can help convert their ideas into
reality in the form of either a new product aimed at disruptive innovation or through minor
changes for sustainable innovation (Marion and Fixson, 2021). Innovation as a concept is quite
detailed and complex which is why a simplified view has been presented herein in the context of
the company's innovation requirements going forward.
Figure 2 Innovation process model
The various stages of this model have been applied herein in order to identify the areas in
which tesla should innovate further and plan a roadmap accordingly.

Conception
This stage is concerned with the processes related to various idea formation and
generation which are then analysed by the company in terms of their feasibility and this is the
first step towards charting a plan for future growth for Tesla (Alghalith, 2018). According the
analysis conducted in the CW1 project and the future outlook of the industry discussed above,
there are two major pathways wherein Tesla should aim to disrupt the market through innovation
as they offer the firm a chance at obtaining competitive differentiation which are listed below.
 The company should look to move beyond the need of only producing cars and expand
its product line or enter new vehicle markets as the EV market is currently booming
 One of the major disadvantages of EV’s are its short batteries and this has made demand
shoot up which tesla should take advantage of
Figure 3 Global EV market

Implementation
Tesla has immense financial capabilities and it can pursue all the ideas which are viable
such as new product extension and taking up mass battery production as it has avenues for
developing smart prototypes for new vehicle concepts such as a cyber-truck. As far as batteries
are concerned, Tesla has ample room for experimentation as it has access to latest technologies
and mass scale factories.
Figure 4 Cyber truck prototype
Marketing
Tesla is a master of effective marketing strategies and it should look to cater to its
premium end of the market segment which consists of its regular customers and offer them new
hi-tech vehicles such as trucks which possess more capability and utility than its cars to attract
them. It can then create self centered demand by selling rechargeable and green batteries to the
people it sells its vehicles to in order to make a marketing loop with high profits involved.

According to the analysis that has been conducted above in this report and during the
previous project CW1, the following innovation roadmap has been designed for the betterment
for the betterment of Tesla in the long run.
Plan of action Strategic focus Target
customers
Capabilities to
develop
Key risks
Diversifying the
electric vehicle
product portfolio
by developing
electric trucks
and utility
vehicles
Product line
extension and
diversification
Affluent people
who are
sustainably
aware and whose
personal and
commercial
needs do not
align with a car
purchase
Knowledge
management
sand transfer,
new EV
technology
integration and
astute leadership
Product failure,
supply chain
disruptions and
customer base
uncertainty
Becoming a
global supplier of
EV and clean
rechargeable
batteries through
mass scale
production
Diversification
and market
development
Electronics and
auto mobile
manufacturing
industry, owners
of Electronic
vehicles
Mass production
and factory site
management,
workplace safety
standards,
sustainable
innovation plans
Employee safety
issues, the
production
bottom line,
demand might
not scale as
predicted
Building the Future Innovation Capabilities for the Organisation
According to the detailed research which has been conducted in both this report so far
and the previous project, it is clear that the innovation of Tesla in the immediate future is in
diversification of its electric vehicle portfolio as the current range of Tesla models is not
adequate enough to deal with the ongoing and predicted competition in the segment. The
diversification process will not just there for Tesla as the firm has enough money and factory
production capabilities to go into full production of EV and clean batteries which will also

reinforce its commitment towards being sustainable and leading the charge against
environmental degradation which is the long term vision of the company. In order to engage in
building the proper capabilities for its future innovation, it is very important to understand the
way in which the major stakeholders of the firm will be engaged with in the future. Some of the
major stakeholders and the ways in which they will be engaged are listed herein along with other
major aspects of the firm’s innovation capability building,
Stakeholder engagement
 Communities – These group of stakeholders are the most important ones for Tesla as
their designated market image is of an affluent and cutting edge technique which is
exclusively for rich and premium customers. This segment will be engaged in a very
proactive manner as they are mostly concerned with better products and for the firm to
remain environmentally stable. By enlarging the supply and distribution of different EV
and clean battery solutions and offering a wide variety of electronic vehicles apart from
cars will help the company become much more efficient at controlling their emissions
and will appease these stakeholders as a part of their innovation roadmap (Ahmad and
Khan, 2019)
 Customers – This section of stakeholders are entirely concerned with the effectiveness of
the product lines of Tesla and the way in which the company is satisfying their current
demands. Through this proposed innovation roadmap, Tesla can gain proficiency in the
supply and distribution of EV batteries separately which will help their customers and
will also help company reduce their cost through economies of scale. By offering a much
larger selection of batteries, Tesla can also make their cars more affordable to the general
public which can bring a whole new section of customers to add mileage to their
innovation roadmap. By entering new markets with new EV vehicles, the company can
also appease new customers as there is great demand for hi-tech electric bikes and trucks
which Tesla should enter with urgency
 Employees – Being one of the most innovative and dynamic companies in the world.
Tesla treats its employees in a special way as they consider them the prime assets of the
company and value their proper engagement which is necessary to ensure the proper

innovation strategy implementation for the company. Tesla should, as a part of its
innovation roadmap, should focus on providing specialist courses to its employees to
train them for the upcoming diversification in product lines of the company
 Investors – Tesla was initially highly dependent on these stakeholders but the rapid
development and growth has made them lose some of their influence evident from the
way they have led the CEO of Tesla, Elon Musk, run wild on social media. By making
better and cleaner Electronic vehicle batteries and supplying them on a mass scale and
also making the streets and highways cleaner through proper cyber trucks, the investors
will be highly pleased with the innovation roadmaps the positive company image
increases their stock and reputation
 Governments – Despite being a heavyweight in the auto mobile industry, Tesla still has
to abide with the governmental rules and this innovation roadmap involves proper
strategic planning and a transparent roadmap which should perfectly satisfy their
potential concerns as when it comes to proper and ethical business record, Tesla is
controversial but stellar and clean at the end of the day
 Suppliers – In order to properly innovate their future operations and product lines by
following the roadmap and diversifying into new vehicle markets and becoming a global
mass supplier of EV batteries, the company will need proper compliance from their
robust supply chain. This includes both upstream and downstream suppliers as Tesla will
need the raw materials procured for its vehicles and batteries en masse and will also need
smart warehousing and delivery systems to undertaking such large scale innovative
growth models. Tesla is perfectly capable of such undertaking as the company possesses
great internal capabilities and financial resources (Strohmer, and et.al., 2020)
Knowledge transfer and management
In order to act upon the formulated innovation roadmap, the company must make sure
that its standards of knowledge management and transfer are up to the mark as they have a direct
bearing on its innovative capabilities which link back to the first CW1 project where detailed
analysis such as SWOT, PESTLE and Value chain analysis was applied on Tesla. Knowledge
management refers to the process of making the relevant company information available to all
the major stakeholders of the firm such as its employees in the form of training documents on