Innovation Strategy Report: Tesla's Design Thinking Approach

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MGMT20132: Innovation and Sustainable Business Development
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Contents
Executive Summary.........................................................................................................................3
Introduction......................................................................................................................................4
Impact of design thinking movement on Tesla................................................................................5
Introduction to Tesla........................................................................................................................6
Introduction to design thinking........................................................................................................6
Definition of different concepts and their relationships..................................................................7
Description with regard to how the creation of an innovation strategy ensures strategic alignment
within organizations and why it is important..................................................................................8
Analyses of the impact of design thinking on Tesla; Use of business canvas model and SWOT
analysis for analyzing the impact, opportunities, and threats to Tesla............................................9
Recommend how the organization’s innovation strategy best responds to the innovation trend by
answering the following questions................................................................................................11
Recommendations how the organization best ensures strategic alignment to address the
innovation trend.............................................................................................................................12
Conclusion.....................................................................................................................................13
References......................................................................................................................................14
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Executive Summary
In this innovation strategy report, the Tesla Company has been taken for describing the impact of
design thinking on the company. It was found that there exists strong relationship among the
innovation and organizational environment as on the basis of the different elements of the
company existing outside the boundaries the decision is made regarding the adoption of which
innovation strategy will be the best for the company and at the time of making such decision the
management also considers the innovation trends existing in the market so as to gain the
competitive advantage from this. The strategic alignment of the innovation trends within the
organizational objectives and goals should also take place.
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Introduction
Tesla is energy and the automotive company of Australia and its headquarter is at Palo Alto,
California. The specialization of the company is in the manufacturing of electric cars. Through
solar panel manufacturing and subsidiary of the solar city, multiple assembly plants and
production plants are operated. In this innovation strategy report of Tesla, the impact of the
design thinking movement on Tesla will be described. The innovation trend selected in this
report is design thinking and the relationship between organizational environment, innovation
trends, innovation capabilities, and innovation capture an idea has been explained. The
importance of the creation of the innovation strategy in the strategic alignment will be described.
The recommendations will be made with respect to the organization of the innovation activities,
persuasion of the innovation initiatives, the additional innovational capabilities to be developed
by the organization will also be recommended.
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Impact of design thinking movement on Tesla
The Design thinking movement has imposed a great effect on Tesla as many benefits have been
identified by the application of the process of design thinking. By understanding the benefits the
measurable framework has been built which help Tesla in understanding the design thinking
impacts inside the organization. The design thinking movement helps Tesla and other businesses
in achieving user needs, technology viability, and business feasibility. While the approach of
managers towards the projects is from a business point of view and the approach of engineers is
technology-oriented viewpoint and designers of Tesla tend to focus on the needs of users and
they try to solve their customer’s problems being faced by them before the use of cars, at the
time of using them or after making use of their products or services. Design thinking has helped
the different companies and their businesses getting outside the box and exploring ideas outside
the thinking of traditional inside the organization (Liedtka, 2018).
The process of design thinking is agile at its core as the movement of the team can take place
between different phases at the time of need. The team of Tesla can return to the starting stage
and examination can be made by the company of different ideas. The qualities of choices have
been improved through this design thinking movement. The risks have been reduced and there is
also a reduction in the failure costs. The adaptability of the company has also been increased, this
has also enhanced the likelihood of successful implementation and creation of sets of local
capabilities. In recent years the design thinking has contributed to the great extent towards
management and businesses. The process of design thinking makes it easier for the team of Tesla
to design the car as per the needs of eth customers and this result in increasing the customer
satisfaction level which increases the customer loyalty resulting in the profitability of the
company. The design thinking movement works as a strong tool when the methodologies of
problem-solving fall shorts (MacFadyen, 2014).
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Introduction to Tesla
In 2003, the company Tesla was founded by engineers’ groups for proving that compromise
needs not to be made by the people for driving electric. In America, Tesla is an automotive
company which is also called as the energy company which is specialized in the manufacturing
of electric cars and operated in the multiple assembly and production plants. Power pack
batteries, power wall, solar panel, and solar roof tiles are also sold by the company. The belief of
Tesla is that it will be better for the world to stop relying on the fuels and should move towards
the future of zero-emission. Gigafactory 1 is the supporting energy and automotive product of
Tesla which is a facility that is designed for significantly reducing the cost of battery cells.
Introduction to design thinking
Design thinking is a term which is used for describing the application of the characteristics of the
process of design and distinguishing it from another process of development like the focus on the
needs of users. This term refers to the strategic, practical and cognitive process by which
concepts of design are developed by design teams and designers. This helps in making products
and services innovation within the business and within the social contexts. This methodology is
used in both business and creative sectors for establishing solutions to the multifaceted and
complex problems. At the time of shortage of the standard analytical methodology of problem-
solving, design thinking works as a strong and effective tool. The practitioners are encouraged
for thinking deeply into the problems, understanding the target customers, and enabling the
contribution of others views. This is a human-centered approach of innovation that draws from
the toolkit of designers for integrating the need of customers, technology possibilities and
requirements of the success of the business (Dunne, 2018).
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Definition of different concepts and their relationships
Organizational environment- It is composed of different elements that exist outside the
organizational boundary that have great potential of affecting the organization as a whole. It
includes competitors, suppliers, public pressure, and regulatory agencies of government. For
effective management of the organization, a proper understanding of the environment is needed
by the managers (Meinhardt.et.al, 2018).
Innovation strategy- This is the plan of growing profits and market share through the
innovation of products and services. This plan is made by companies for encouraging
technological advancements, or services by making investments in the activities of research and
development.
Innovation trends- The innovative trends are the trends that are based on new thoughts, ideas
and images either in the method form or devise form. The introduction of such trends is made in
business with the goal of satisfying the needs and expectations of the customers.
Innovation capabilities- It is the company's ability to transform an idea, and thought into
something new that carry an economic value. It becomes the basis for the innovation of
enterprises (Camisón, & Villar-López, 2014).
Innovation value creation and value capture- Through the innovation value creation the value
of the company even in the economic terms gets enhanced resulting in increasing the profitability
of the company and making it a successful brand.
The relationship between organizational environment and innovation is strong as the strategies of
innovation are adopted by the company as per their organizational environment. The
organization must have innovation capabilities for the adoption of the new trends of innovation.
All the elements by which the company is being surrounded are taken into consideration while
planning and implementing the innovation strategies. The trends and strategy of innovation
adopted by the competitors are must to be considered so as to gain a competitive advantage. The
innovation value is created due to all this.
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Description with regard to how the creation of an innovation strategy ensures strategic
alignment within organizations and why it is important
The strategic alignment refers to the process in which the innovation strategies are linked with
corporate goals, vision, objectives, and strategies. The time and costs required for the creation of
new products and services are so much that it is significant to ensure the perfect alignment and
execute the strategy of innovation that can be wasteful. The company’s strategy focuses on
creating value by satisfying the wants and needs of clients. By aligning innovation into it the
innovations are focused on improving the value and more client satisfaction are generated by
this. The company that does not innovate will have to face a hard time surviving in the current
competitive environment. The innovation role should be communicated within the portfolio to
drive innovation across Tesla's units. The innovation can be successfully implemented by Tesla
or any other business companies only if the innovations strategies are properly embedded into
the strategies of the companies (Shapira, et.al, 2017).
There is extreme importance of strategic alignment as it enables the performance to be high by
making optimum utilization of the contributions made by people, inputs, processes, for realizing
the measurable objectives. Hence, the wastage is minimized through this and there is a
misdirection of resources and efforts for unintended and unspecified purposes. The picking up of
optimal metrics should be done and correct expectations should be set that will help in
monitoring and measuring the progress.
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Analyses of the impact of design thinking on Tesla; Use of business canvas model and
SWOT analysis for analyzing the impact, opportunities, and threats to Tesla
The design thinking process has imposed a good impact on Tesla as it has benefitted Tesla in
numerous ways which include the following-
 It helps the company Tesla in finding solutions to the complex problems and discern the
wants and needs that are unmet and create the values form the insights
 The immersive experience of humanizing is got through this
 This helps the company in developing the feeling of empathy with the customers by
which the customers’ satisfaction level get enhanced and customer loyalty also get
increased
 The problems can be tackled easily which are ill-defined and unknown by the reframing
of problems in the way that is human-centric.
 For testing and prototyping, new ideas can be developed, and a practical approach can be
adopted
 This has increased the productivity of the company as it leads to collaboration and
services for improving the constructive dialogue when the challenges for the future
arrives (Chamberlain, & Mendoza, 2017).
SWOT Analysis
The SWOT analysis is used for analyzing the impact, threats, and opportunities of design
thinking for Tesla
Strengths
 It provides the options of exhaustive
product mix to its customers
 Help Tesla in catering to a different
segment of customers
 Market leadership position
(Venkatesh.et.al, 2012)
Weakness
 Low investment into design thinking
can lead competitors to gain an
advantage in future
 Low supplier’s loyalty
 In monopoly markets and niche
markets, design thinking is less
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 High margins
 Different segments of customers can be
catered
 Wide geographic presence
effective
 Declining market share
Opportunities
 The rapid expansion of the economy
 preferences of customers are changing
fast
 more stability is bought in the market
due to the low inflation rate, enable
low-interest rate credit
 accelerated technological advancements
and innovations
 customer base can increase
Threats
 Shortage of skilled resources of human
 Competitors catching up with product
development
 Competitive pressures (Wang. et. al,
2011).
Business canvas Model of Tesla
Key partners
 Supplier
s of car
parts
 Battery
stations
Key activities
 Technolog
y in the
developin
g world
Value proposition
 Price
 Luxury
 Safety
 Autopilot
 Speed
acceleration
Customer
relationships
 Test
drive
 Autom
ated
service
Customer
segments
 Consum
ers who
love cars
 Custome
rs above
average
income
Key resources
 Culture
 Human or
software
Channels
Websites
affiliates
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engineers
 Hybrid
and
electric
cars
Cost structure
 Economies of scale
 Manufacturing
 Research
 Taxes
 Software Development
 ICT
Revenue streams
 Car sales
 Sale of batteries
 Wall connector sales
 Maintenance plans
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